For the fiscal year ended
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Commission file
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December 31, 2011
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number 1-5805
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Delaware
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13-2624428
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. employer
identification no.)
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270 Park Avenue, New York, New York
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10017
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(Address of principal executive offices)
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(Zip code)
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Title of each class
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Name of each exchange on which registered
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Common stock
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The New York Stock Exchange
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The London Stock Exchange
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The Tokyo Stock Exchange
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Warrants, each to purchase one share of Common Stock
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The New York Stock Exchange
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Depositary Shares, each representing a one-four hundredth interest in a share of 8.625% Non-Cumulative Preferred Stock, Series J
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The New York Stock Exchange
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Guarantee of 7.00% Capital Securities, Series J, of J.P. Morgan Chase Capital X
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The New York Stock Exchange
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Guarantee of 5.875% Capital Securities, Series K, of J.P. Morgan Chase Capital XI
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The New York Stock Exchange
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Guarantee of 6.25% Capital Securities, Series L, of J.P. Morgan Chase Capital XII
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The New York Stock Exchange
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Guarantee of 6.20% Capital Securities, Series N, of JPMorgan Chase Capital XIV
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The New York Stock Exchange
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Guarantee of 6.35% Capital Securities, Series P, of JPMorgan Chase Capital XVI
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The New York Stock Exchange
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Guarantee of 6.625% Capital Securities, Series S, of JPMorgan Chase Capital XIX
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The New York Stock Exchange
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Guarantee of 6.875% Capital Securities, Series X, of JPMorgan Chase Capital XXIV
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The New York Stock Exchange
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Guarantee of Fixed-to-Floating Rate Capital Securities, Series Z, of JPMorgan Chase Capital XXVI
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The New York Stock Exchange
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Guarantee of Fixed-to-Floating Rate Capital Securities, Series BB, of JPMorgan Chase Capital XXVIII
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The New York Stock Exchange
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Guarantee of 6.70% Capital Securities, Series CC, of JPMorgan Chase Capital XXIX
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The New York Stock Exchange
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Guarantee of 7.20% Preferred Securities of BANK ONE Capital VI
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The New York Stock Exchange
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KEYnotes Exchange Traded Notes Linked to the First Trust Enhanced 130/30 Large Cap Index
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The New York Stock Exchange
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Alerian MLP Index ETNs due May 24, 2024
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NYSE Arca, Inc.
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JPMorgan Double Short US 10 Year Treasury Futures ETNs due September 30, 2025
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NYSE Arca, Inc.
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JPMorgan Double Short US Long Bond Treasury Futures ETNs due September 30, 2025
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NYSE Arca, Inc.
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Euro Floating Rate Global Notes due July 27, 2012
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The NYSE Alternext U.S. LLC
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x
Large accelerated filer
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o
Accelerated filer
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o
Non-accelerated filer
(Do not check if a smaller reporting company)
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o
Smaller reporting company
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Page
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1
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1
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1
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1
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1-7
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312-316
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62, 305, 312
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317
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132-154, 231-252, 318-322
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155-157, 252-255, 323-324
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272, 325
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307
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7-17
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17
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17-18
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18
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18
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18-20
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20
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20
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20
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20
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20
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20
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20
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21
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21
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22
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22
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22
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22-25
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1
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•
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Resolution plan
. In September 2011, the Federal Deposit Insurance Corporation (“FDIC”) and the Board of Governors of the Federal Reserve System (the “Federal Reserve”) issued, pursuant to the Dodd-Frank Act, a final rule that will require bank holding companies with assets of $50 billion or more and companies designated as systemically important by the Financial Stability Oversight Council (the “FSOC”) to submit periodically to the Federal Reserve, the FDIC and the FSOC a plan for resolution under the Bankruptcy Code in the event of material distress or failure (a “resolution plan”). In January 2012, the FDIC also issued a final rule that will require insured depository institutions with assets of $50 billion or more to submit periodically to the FDIC a plan for resolution under the Federal Deposit Insurance Act in the event of failure. The timing of initial, annual and interim resolution plan submissions under both rules is the same. The Firm’s initial resolution plan submissions are due on July 1, 2012, with annual updates thereafter, and the Firm is in the process of developing its resolution plans.
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•
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Debit interchange
. On October 1, 2011, the Federal Reserve adopted final rules implementing the “Durbin Amendment” provisions of the Dodd-Frank Act, which limit the amount the Firm can charge for each debit card transaction it processes.
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•
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Derivatives
. Under the Dodd-Frank Act, the Firm will be subject to comprehensive regulation of its derivatives business, including capital and margin requirements, central clearing of standardized over-the-counter derivatives and the requirement that they be traded on regulated trading platforms, and heightened supervision. Further, the proposed margin rules for uncleared swaps may apply extraterritorially to U.S. firms doing business with clients outside of the United States. The Dodd-Frank Act also requires banking entities, such as JPMorgan Chase, to significantly restructure their derivatives businesses, including changing the legal entities through which certain transactions are conducted.
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•
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Volcker Rule
. The Firm will also be affected by the requirements of Section 619 of the Dodd-Frank Act, and specifically the provisions prohibiting proprietary trading and restricting the activities involving private equity and hedge funds (the “Volcker Rule”). On October 11, 2011, regulators proposed the remaining rules to implement the Volcker Rule, which are expected to be finalized sometime in 2012. Under the proposed rules, “proprietary trading” is defined as the trading of securities, derivatives, or futures (or options on any of the foregoing) that is predominantly for the purpose of short-term resale, benefiting from short-term movements
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•
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Capital
. The treatment of trust preferred securities as Tier 1 capital for regulatory capital purposes will be phased out over a three year period, beginning in 2013. In addition, in June 2011, the Basel Committee and the Financial Stability Board (“FSB”) announced that certain global systemically important banks (“GSIBs”) would be required to maintain additional capital, above the Basel III Tier 1 common equity minimum, in amounts ranging from 1% to 2.5%, depending upon the bank’s systemic importance. In December 2011, the Federal Reserve, the Office of the Comptroller of the Currency (“OCC”) and FDIC issued a notice of proposed rulemaking for implementing ratings alternatives for the computation of risk-based capital for market risk exposures, which, if implemented, would result in significantly higher capital requirements for many securitization exposures. For more information, see “Capital requirements” on pages 4–5.
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•
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FDIC Deposit Insurance Fund Assessments
. In February 2011, the FDIC issued a final rule changing the assessment base and the method for calculating the deposit insurance assessment rate. These changes became effective on April 1, 2011, and resulted in an aggregate annualized increase of approximately $600 million in the assessments that the Firm’s bank subsidiaries pay to the FDIC. For more information, see “Deposit insurance” on page 5.
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•
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Bureau of Consumer Financial Protection
. The Dodd-Frank Act established a new regulatory agency, the Bureau of Consumer Financial Protection (“CFPB”). The CFPB has authority to regulate providers of credit, payment and other consumer financial products and services. The CFPB has examination authority over large banks, such as JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A., with respect to the banks’ consumer financial products and services.
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•
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Heightened prudential standards for systemically important financial institutions
. The Dodd-Frank Act creates a structure to regulate systemically important financial companies, and subjects them to heightened prudential standards. For more information, see “Systemically important financial institutions” below.
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•
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Concentration limits
. The Dodd-Frank Act restricts acquisitions by financial companies if, as a result of the acquisition, the total liabilities of the financial company would exceed 10% of the total liabilities of all financial companies. The Federal Reserve is expected to issue rules related to this restriction in 2012.
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2
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3
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4
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•
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to transfer any assets and liabilities to a new obligor without the approval of the institution’s creditors;
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•
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to enforce the terms of the institution’s contracts pursuant to their terms; or
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•
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to repudiate or disaffirm any contract or lease to which the institution is a party.
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5
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6
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7
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8
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9
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10
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11
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12
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13
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14
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15
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16
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17
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18
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Common stock
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Warrants
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||||||||||||||
Year ended December 31, 2011
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Total shares of common stock repurchased
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Average price paid per share of common stock
(b)
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Total warrants
repurchased
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Average price
paid per warrant
(b)
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Aggregate repurchases of common equity (in millions)
(b)
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Dollar value
of remaining
authorized
repurchase
(in millions)
(c)
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||||||||||
Repurchases under the $10.0 billion program
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—
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$
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—
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—
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$
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—
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$
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—
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$
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3,222
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(d)
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Repurchases under the $15.0 billion program
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2,081,440
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45.66
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—
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—
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95
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14,905
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First quarter
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2,081,440
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45.66
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—
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—
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95
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14,905
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Second quarter
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80,309,432
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43.33
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—
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—
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3,480
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11,425
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Third quarter
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117,280,156
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36.69
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10,167,698
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12.03
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4,425
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7,000
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October
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—
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—
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—
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—
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—
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7,000
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November
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—
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—
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—
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—
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—
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7,000
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December
(a)
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27,201,553
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31.75
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—
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—
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863
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6,137
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Fourth quarter
(a)
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27,201,553
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31.75
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—
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—
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863
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6,137
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Total for 2011
(a)
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226,872,581
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$
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38.53
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10,167,698
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$
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12.03
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$
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8,863
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$
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6,137
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(e)
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(a)
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Excludes
$86 million
of repurchases in December 2011, which settled in early January 2012.
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(b)
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Excludes commissions cost.
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(c)
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The amount authorized by the Board of Directors excludes commissions cost.
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(d)
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The unused portion of the
$10.0 billion
program was canceled when the
$15.0 billion
program was authorized.
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(e)
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Dollar value remaining under the new
$15.0 billion
program.
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19
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Year ended December 31, 2011
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Total shares of common stock
repurchased
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Average price
paid per share of common stock
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First quarter
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442
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$
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45.89
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Second quarter
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—
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—
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Third quarter
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35
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40.63
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October
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—
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—
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November
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132,874
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30.40
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December
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—
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—
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Fourth quarter
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132,874
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30.40
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Total for 2011
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133,351
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$
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30.45
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20
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21
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Age
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Name
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(at December 31, 2011)
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Positions and offices
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James Dimon
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55
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Chairman of the Board, Chief Executive Officer and President.
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Frank J. Bisignano
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52
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Chief Administrative Officer since 2005 and Chief Executive Officer of Mortgage Banking since February 2011.
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Douglas L. Braunstein
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50
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Chief Financial Officer since June 2010. He had been head of Investment Banking for the Americas since 2008, prior to which he had served in a number of senior Investment Banking roles, including as head of Global Mergers and Acquisitions.
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Michael J. Cavanagh
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45
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Chief Executive Officer of Treasury & Securities Services since June 2010, prior to which he had been Chief Financial Officer.
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Stephen M. Cutler
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50
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General Counsel since February 2007. Prior to joining JPMorgan Chase, he was a partner and co-chair of the Securities Department at the law firm of WilmerHale.
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John L. Donnelly
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55
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Head of Human Resources since January 2009. Prior to joining JPMorgan Chase, he had been Global Head of Human Resources at Citigroup, Inc. since July 2007 and Head of Human Resources and Corporate Affairs for Citi Markets and Banking business from 1998 until 2007.
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Ina R. Drew
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55
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Chief Investment Officer.
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Mary Callahan Erdoes
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44
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Chief Executive Officer of Asset Management since September 2009, prior to which she had been Chief Executive Officer of Private Banking.
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John J. Hogan
(a)
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46
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Chief Risk Officer since January 2012. He had been Chief Risk Officer of the Investment Bank since 2006.
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Samuel Todd Maclin
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55
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Chief Executive Officer of Consumer and Business Banking since June 2011. He had been Chief Executive Officer of Commercial Banking from 2004 until January 2012.
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Jay Mandelbaum
(a)
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49
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Head of Strategy and Business Development.
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Douglas B. Petno
(a)
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46
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Chief Executive Officer of Commercial Banking since January 2012. He had been Chief Operating Officer of Commercial Banking since October 2010, prior to which he had been Global Head of Natural Resources in the Investment Bank.
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Gordon A. Smith
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53
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Chief Executive Officer of Card Services since June 2007 and of the Auto Finance and Student Lending businesses since June 2011. Prior to joining JPMorgan Chase, he was with American Express Company and was, from 2005 until 2007, president of American Express’ Global Commercial Card business.
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James E. Staley
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55
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Chief Executive Officer of the Investment Bank since September 2009, prior to which he had been Chief Executive Officer of Asset Management.
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Barry L. Zubrow
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58
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Head of Corporate and Regulatory Affairs since January 2012. He had been Chief Risk Officer since November 2007. Prior to joining JPMorgan Chase, he was a private investor and was Chairman of the New Jersey Schools Development Authority from March 2006 through August 2010.
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(a)
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On January 12, 2012, Mr. Hogan and Mr. Petno were appointed to, and Mr. Mandelbaum retired from, JPMorgan Chase’s Operating Committee.
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22
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JPMorgan Chase & Co./2011 Annual Report
|
December 31, 2011
|
Number of shares to be issued upon exercise of outstanding options/SARs
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Weighted-average exercise price of outstanding options/SARs
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Number of shares remaining available for future issuance under stock compensation plans
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|||||
Plan category
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||||
Employee stock-based incentive plans approved by shareholders
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133,727,720
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$
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41.47
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318,020,415
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(a)
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Employee stock-based incentive plans not approved by shareholders
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22,032,924
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35.18
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—
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Total
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155,760,644
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$
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40.58
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318,020,415
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(a)
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Represents future shares available under the shareholder-approved Long-Term Incentive Plan, as amended and restated effective May 17, 2011.
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1
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Financial statements
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The Consolidated Financial Statements, the Notes thereto and the report thereon listed in Item 8 are set forth commencing on page 177.
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2
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Financial statement schedules
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3
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Exhibits
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3.1
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Restated Certificate of Incorporation of JPMorgan Chase & Co., effective April 5, 2006 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of JPMorgan Chase & Co. (File No. 1-5805) filed April 7, 2006).
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3.2
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Certificate of Designations of Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series I (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of JPMorgan Chase & Co. (File No. 1-5805) filed April 24, 2008).
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3.3
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Certificate of Designations of 8.625% Non-Cumulative Preferred Stock, Series J (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K/A of JPMorgan Chase & Co. (File No. 1-5805) filed September 17, 2008).
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3.4
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By-laws of JPMorgan Chase & Co., effective January 19, 2010 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of JPMorgan Chase & Co. (File No. 1-5805) filed January 25, 2010).
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4.1
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Indenture, dated as of October 21, 2010, between JPMorgan Chase & Co. and Deutsche Bank Trust Company Americas, as Trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of JPMorgan Chase & Co. (File No.1-5805) filed October 21, 2010).
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4.2
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Indenture, dated as of October 21, 2010, between JPMorgan Chase & Co. and U.S. Bank Trust National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K of JPMorgan Chase & Co. (File No.1-5805) filed October 21, 2010).
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23
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10.7
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Excess Retirement Plan of JPMorgan Chase & Co., restated and amended as of December 31, 2008, as amended (incorporated by reference to Exhibit 10.7 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2009).
(a)
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10.8
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1995 Stock Incentive Plan of J.P. Morgan & Co. Incorporated and Affiliated Companies, as amended, dated December 11, 1996 (incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2008).
(a)
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10.9
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Executive Retirement Plan of JPMorgan Chase & Co., as amended and restated December 31, 2008 (incorporated by reference to Exhibit 10.9 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2008).
(a)
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10.10
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Amendment to Bank One Corporation Director Stock Plan, as amended and restated effective February 1, 2003 (incorporated by reference to Exhibit 10.10 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2008).
(a)
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10.11
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Summary of Bank One Corporation Director Deferred Compensation Plan (incorporated by reference to Exhibit 10.19 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2005).
(a)
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10.12
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Bank One Corporation Stock Performance Plan, as amended and restated effective February 20, 2001 (incorporated by reference to Exhibit 10.12 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2008).
(a)
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10.13
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Bank One Corporation Supplemental Savings and Investment Plan, as amended and restated effective December 31, 2008 (incorporated by reference to Exhibit 10.13 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2008).
(a)
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10.14
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Revised and Restated Banc One Corporation 1989 Stock Incentive Plan, effective January 18, 1989 (incorporated by reference to Exhibit 10.14 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2008).
(a)
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10.15
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Banc One Corporation Revised and Restated 1995 Stock Incentive Plan, effective April 17, 1995 (incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2008).
(a)
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24
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10.16
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Form of JPMorgan Chase & Co. Long-Term Incentive Plan Award Agreement of January 2005 stock appreciation rights (incorporated by reference to Exhibit 10.31 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2005).
(a)
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|
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10.17
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Form of JPMorgan Chase & Co. Long-Term Incentive Plan Award Agreement of October 2005 stock appreciation rights (incorporated by reference to Exhibit 10.33 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2005).
(a)
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10.18
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Form of JPMorgan Chase & Co. Long-Term Incentive Plan Award Agreement of January 22, 2008 stock appreciation rights (incorporated by reference to Exhibit 10.25 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2007).
(a)
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10.19
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Form of JPMorgan Chase & Co. Long-Term Incentive Plan Award Agreement of January 22, 2008 stock appreciation rights for James Dimon (incorporated by reference to Exhibit 10.27 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2007).
(a)
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10.20
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Form of JPMorgan Chase & Co. Long-Term Incentive Plan Terms and Conditions for stock appreciation rights, dated as of January 20, 2009 (incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2008).
(a)
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10.21
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Form of JPMorgan Chase & Co. Long-Term Incentive Plan Terms and Conditions for Operating Committee member stock appreciation rights, dated as of January 20, 2009 (incorporated by reference to Exhibit 10.21 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2008).
(a)
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|
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10.22
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Form of JPMorgan Chase & Co. Long-Term Incentive Plan Terms and Conditions for Operating Committee member stock appreciation rights, dated as of February 3, 2010 (incorporated by reference to Exhibit 10.23 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2009).
(a)
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10.23
|
|
Form of JPMorgan Chase & Co. Long-Term Incentive Plan Terms and Conditions for Operating Committee member restricted stock units, dated as of February 3, 2010 (incorporated by reference to Exhibit 10.24 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2009).
(a)
|
|
|
|
10.24
|
|
Forms of JPMorgan Chase & Co. Long-Term Incentive Plan Terms and Conditions for stock appreciation rights and restricted stock units, dated as of January 19, 2011 and February 16, 2011.
(a)(b)
|
|
|
|
10.25
|
|
Forms of JPMorgan Chase & Co. Long-Term Incentive Plan Terms and Conditions for stock appreciation rights and restricted stock units, dated as of January 18, 2012.
(a)(b)
|
|
|
|
10.26
|
|
Form of JPMorgan Chase & Co. Performance-Based Incentive Compensation Plan, effective as of January 1, 2006, as amended (incorporated by reference to Exhibit 10.27 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2009).
(a)
|
|
|
|
10.27
|
|
Form of Warrant to purchase common stock (incorporated by reference to Exhibit 4.2 to the Form 8-A of JPMorgan Chase & Co. (File No. 1-5805) filed December 11, 2009).
|
|
|
|
12.1
|
|
Computation of ratio of earnings to fixed charges.
(b)
|
|
|
|
12.2
|
|
Computation of ratio of earnings to fixed charges and preferred stock dividend requirements.
(b)
|
|
|
|
21
|
|
List of subsidiaries of JPMorgan Chase & Co.
(b)
|
|
|
|
22.1
|
|
Annual Report on Form 11-K of The JPMorgan Chase 401(k) Savings Plan for the year ended December 31, 2011 (to be filed pursuant to Rule 15d-21 under the Securities Exchange Act of 1934).
|
|
|
|
23
|
|
Consent of independent registered public accounting firm.
(b)
|
|
|
|
31.1
|
|
Certification.
(b)
|
|
|
|
31.2
|
|
Certification.
(b)
|
|
|
|
32
|
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(c)
|
|
|
|
101.INS
|
|
XBRL Instance Document.
(b)(d)
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
(b)
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
(b)
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
(b)
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
(b)
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
(b)
|
(a)
|
This exhibit is a management contract or compensatory plan or arrangement.
|
(b)
|
Filed herewith.
|
(c)
|
This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the
|
|
|
25
|
(d)
|
Pursuant to Rule 405 of Regulation S-T, includes the following financial information included in the Firm’s Annual Report on Form 10-K for the year ended
December 31, 2011
, formatted in XBRL (eXtensible Business Reporting Language) interactive data files: (i) the Consolidated Statements of Income for the years ended
December 31, 2011
, 2010 and 2009, (ii) the Consolidated Balance Sheets as of
December 31, 2011
and 2010, (iii) the Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income for the years ended
December 31, 2011
, 2010 and 2009, (iv) the Consolidated Statements of Cash Flows for the years ended
December 31, 2011
, 2010 and 2009, and (v) the Notes to Consolidated Financial Statements.
|
26
|
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
27
|
JPMorgan Chase & Co./2011 Annual Report
|
|
61
|
(unaudited)
(in millions, except per share, headcount and ratio data)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
As of or for the year ended December 31,
|
|
2011
|
|
2010
|
|
2009
|
|
2008
(c)
|
|
|
2007
|
|||||||||
Selected income statement data
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Noninterest revenue
|
|
$
|
49,545
|
|
|
$
|
51,693
|
|
|
$
|
49,282
|
|
|
$
|
28,473
|
|
|
$
|
44,966
|
|
Net interest income
|
|
47,689
|
|
|
51,001
|
|
|
51,152
|
|
|
38,779
|
|
|
26,406
|
|
|||||
Total net revenue
|
|
97,234
|
|
|
102,694
|
|
|
100,434
|
|
|
67,252
|
|
|
71,372
|
|
|||||
Total noninterest expense
|
|
62,911
|
|
|
61,196
|
|
|
52,352
|
|
|
43,500
|
|
|
41,703
|
|
|||||
Pre-provision profit
(a)
|
|
34,323
|
|
|
41,498
|
|
|
48,082
|
|
|
23,752
|
|
|
29,669
|
|
|||||
Provision for credit losses
|
|
7,574
|
|
|
16,639
|
|
|
32,015
|
|
|
19,445
|
|
|
6,864
|
|
|||||
Provision for credit losses - accounting conformity
(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,534
|
|
|
—
|
|
|||||
Income before income tax expense/(benefit) and extraordinary gain
|
|
26,749
|
|
|
24,859
|
|
|
16,067
|
|
|
2,773
|
|
|
22,805
|
|
|||||
Income tax expense/(benefit)
|
|
7,773
|
|
|
7,489
|
|
|
4,415
|
|
|
(926
|
)
|
|
7,440
|
|
|||||
Income before extraordinary gain
|
|
18,976
|
|
|
17,370
|
|
|
11,652
|
|
|
3,699
|
|
|
15,365
|
|
|||||
Extraordinary gain
(c)
|
|
—
|
|
|
—
|
|
|
76
|
|
|
1,906
|
|
|
—
|
|
|||||
Net income
|
|
$
|
18,976
|
|
|
$
|
17,370
|
|
|
$
|
11,728
|
|
|
$
|
5,605
|
|
|
$
|
15,365
|
|
Per common share data
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before extraordinary gain
|
|
$
|
4.50
|
|
|
$
|
3.98
|
|
|
$
|
2.25
|
|
|
$
|
0.81
|
|
|
$
|
4.38
|
|
Net income
|
|
4.50
|
|
|
3.98
|
|
|
2.27
|
|
|
1.35
|
|
|
4.38
|
|
|||||
Diluted earnings
(d)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before extraordinary gain
|
|
$
|
4.48
|
|
|
$
|
3.96
|
|
|
$
|
2.24
|
|
|
$
|
0.81
|
|
|
$
|
4.33
|
|
Net income
|
|
4.48
|
|
|
3.96
|
|
|
2.26
|
|
|
1.35
|
|
|
4.33
|
|
|||||
Cash dividends declared per share
|
|
1.00
|
|
|
0.20
|
|
|
0.20
|
|
|
1.52
|
|
|
1.48
|
|
|||||
Book value per share
|
|
46.59
|
|
|
43.04
|
|
|
39.88
|
|
|
36.15
|
|
|
36.59
|
|
|||||
Common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average: Basic
|
|
3,900.4
|
|
|
3,956.3
|
|
|
3,862.8
|
|
|
3,501.1
|
|
|
3,403.6
|
|
|||||
Diluted
|
|
3,920.3
|
|
|
3,976.9
|
|
|
3,879.7
|
|
|
3,521.8
|
|
|
3,445.3
|
|
|||||
Common shares at period-end
|
|
3,772.7
|
|
|
3,910.3
|
|
|
3,942.0
|
|
|
3,732.8
|
|
|
3,367.4
|
|
|||||
Share price
(e)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
High
|
|
$
|
48.36
|
|
|
$
|
48.20
|
|
|
$
|
47.47
|
|
|
$
|
50.63
|
|
|
$
|
53.25
|
|
Low
|
|
27.85
|
|
|
35.16
|
|
|
14.96
|
|
|
19.69
|
|
|
40.15
|
|
|||||
Close
|
|
33.25
|
|
|
42.42
|
|
|
41.67
|
|
|
31.53
|
|
|
43.65
|
|
|||||
Market capitalization
|
|
125,442
|
|
|
165,875
|
|
|
164,261
|
|
|
117,695
|
|
|
146,986
|
|
|||||
Selected ratios
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Return on common equity (“ROE”)
(d)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before extraordinary gain
|
|
11
|
%
|
|
10
|
%
|
|
6
|
%
|
|
2
|
%
|
|
13
|
%
|
|||||
Net income
|
|
11
|
|
|
10
|
|
|
6
|
|
|
4
|
|
|
13
|
|
|||||
Return on tangible common equity (“ROTCE”)
(d)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before extraordinary gain
|
|
15
|
|
|
15
|
|
|
10
|
|
|
4
|
|
|
22
|
|
|||||
Net income
|
|
15
|
|
|
15
|
|
|
10
|
|
|
6
|
|
|
22
|
|
|||||
Return on assets (“ROA”)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before extraordinary gain
|
|
0.86
|
|
|
0.85
|
|
|
0.58
|
|
|
0.21
|
|
|
1.06
|
|
|||||
Net income
|
|
0.86
|
|
|
0.85
|
|
|
0.58
|
|
|
0.31
|
|
|
1.06
|
|
|||||
Overhead ratio
|
|
65
|
|
|
60
|
|
|
52
|
|
|
65
|
|
|
58
|
|
|||||
Deposits-to-loans ratio
|
|
156
|
|
|
134
|
|
|
148
|
|
|
135
|
|
|
143
|
|
|||||
Tier 1 capital ratio
(f)
|
|
12.3
|
|
|
12.1
|
|
|
11.1
|
|
|
10.9
|
|
|
8.4
|
|
|||||
Total capital ratio
|
|
15.4
|
|
|
15.5
|
|
|
14.8
|
|
|
14.8
|
|
|
12.6
|
|
|||||
Tier 1 leverage ratio
|
|
6.8
|
|
|
7.0
|
|
|
6.9
|
|
|
6.9
|
|
|
6.0
|
|
|||||
Tier 1 common capital ratio
(g)
|
|
10.1
|
|
|
9.8
|
|
|
8.8
|
|
|
7.0
|
|
|
7.0
|
|
|||||
Selected balance sheet data (period-end)
(f)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Trading assets
|
|
$
|
443,963
|
|
|
$
|
489,892
|
|
|
$
|
411,128
|
|
|
$
|
509,983
|
|
|
$
|
491,409
|
|
Securities
|
|
364,793
|
|
|
316,336
|
|
|
360,390
|
|
|
205,943
|
|
|
85,450
|
|
|||||
Loans
|
|
723,720
|
|
|
692,927
|
|
|
633,458
|
|
|
744,898
|
|
|
519,374
|
|
|||||
Total assets
|
|
2,265,792
|
|
|
2,117,605
|
|
|
2,031,989
|
|
|
2,175,052
|
|
|
1,562,147
|
|
|||||
Deposits
|
|
1,127,806
|
|
|
930,369
|
|
|
938,367
|
|
|
1,009,277
|
|
|
740,728
|
|
|||||
Long-term debt
(h)
|
|
256,775
|
|
|
270,653
|
|
|
289,165
|
|
|
302,959
|
|
|
199,010
|
|
|||||
Common stockholders’ equity
|
|
175,773
|
|
|
168,306
|
|
|
157,213
|
|
|
134,945
|
|
|
123,221
|
|
|||||
Total stockholders’ equity
|
|
183,573
|
|
|
176,106
|
|
|
165,365
|
|
|
166,884
|
|
|
123,221
|
|
|||||
Headcount
|
|
260,157
|
|
|
239,831
|
|
|
222,316
|
|
|
224,961
|
|
|
180,667
|
|
|||||
Credit quality metrics
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for credit losses
|
|
$
|
28,282
|
|
|
$
|
32,983
|
|
|
$
|
32,541
|
|
|
$
|
23,823
|
|
|
$
|
10,084
|
|
Allowance for loan losses to total retained loans
|
|
3.84
|
%
|
|
4.71
|
%
|
|
5.04
|
%
|
|
3.18
|
%
|
|
1.88
|
%
|
|||||
Allowance for loan losses to retained loans excluding purchased credit-impaired loans
(i)
|
|
3.35
|
|
|
4.46
|
|
|
5.51
|
|
|
3.62
|
|
|
1.88
|
|
|||||
Nonperforming assets
|
|
$
|
11,036
|
|
|
$
|
16,557
|
|
|
$
|
19,741
|
|
|
$
|
12,714
|
|
|
$
|
3,933
|
|
Net charge-offs
|
|
12,237
|
|
|
23,673
|
|
|
22,965
|
|
|
9,835
|
|
|
4,538
|
|
|||||
Net charge-off rate
|
|
1.78
|
%
|
|
3.39
|
%
|
|
3.42
|
%
|
|
1.73
|
%
|
|
1.00
|
%
|
(a)
|
Pre-provision profit is total net revenue less noninterest expense. The Firm believes that this financial measure is useful in assessing the ability of a lending institution to generate income in excess of its provision for credit losses.
|
62
|
|
JPMorgan Chase & Co./2011 Annual Report
|
(b)
|
Results for 2008 included an accounting conformity loan loss reserve provision related to the acquisition of Washington Mutual Bank’s (“Washington Mutual”) banking operations.
|
(c)
|
On September 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual. The acquisition resulted in negative goodwill, and accordingly, the Firm recorded an extraordinary gain. A preliminary gain of $1.9 billion was recognized at December 31, 2008. The final total extraordinary gain that resulted from the Washington Mutual transaction was $2.0 billion.
|
(d)
|
The calculation of 2009 earnings per share (“EPS”) and net income applicable to common equity includes a one-time, noncash reduction of
$1.1 billion
, or
$0.27
per share, resulting from repayment of U.S. Troubled Asset Relief Program (“TARP”) preferred capital in the second quarter of 2009. Excluding this reduction, the adjusted ROE and ROTCE were
7%
and 11%, respectively, for 2009. The Firm views the adjusted ROE and ROTCE, both non-GAAP financial measures, as meaningful because they enable the comparability to prior periods.
|
(e)
|
Share prices shown for JPMorgan Chase’s common stock are from the New York Stock Exchange. JPMorgan Chase’s common stock is also listed and traded on the London Stock Exchange and the Tokyo Stock Exchange.
|
(f)
|
Effective January 1, 2010, the Firm adopted accounting guidance that amended the accounting for the transfer of financial assets and the consolidation of variable interest entities (“VIEs”). Upon adoption of the guidance, the Firm consolidated its Firm-sponsored credit card securitization trusts, Firm-administered multi-seller conduits and certain other consumer loan securitization entities, primarily mortgage-related, adding $87.7 billion and $92.2 billion of assets and liabilities, respectively, and decreasing stockholders’ equity and the Tier 1 capital ratio by $4.5 billion and 34 basis points, respectively. The reduction to stockholders’ equity was driven by the establishment of an allowance for loan losses of $7.5 billion (pretax) primarily related to receivables held in credit card securitization trusts that were consolidated at the adoption date.
|
(g)
|
Tier 1 common capital ratio (“Tier 1 common ratio”) is Tier 1 common capital (“Tier 1 common”) divided by risk-weighted assets. The Firm uses Tier 1 common capital along with the other capital measures to assess and monitor its capital position. For further discussion of Tier 1 common capital ratio, see Regulatory capital on pages 119–122 of this Annual Report.
|
(h)
|
Effective January 1, 2011, the long-term portion of advances from Federal Home Loan Banks (“FHLBs”) was reclassified from other borrowed funds to long-term debt. Prior periods have been revised to conform with the current presentation.
|
(i)
|
Excludes the impact of residential real estate purchased credit-impaired (“PCI”) loans. For further discussion, see Allowance for credit losses on pages 155–157 of this Annual Report.
|
December 31,
(in dollars)
|
2006
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
||||||||||||
JPMorgan Chase
|
$
|
100.00
|
|
|
$
|
93.07
|
|
|
$
|
69.58
|
|
|
$
|
93.39
|
|
|
$
|
95.50
|
|
|
$
|
76.29
|
|
S&P Financial Index
|
100.00
|
|
|
81.37
|
|
|
36.36
|
|
|
42.62
|
|
|
47.79
|
|
|
39.64
|
|
||||||
S&P 500 Index
|
100.00
|
|
|
105.49
|
|
|
66.46
|
|
|
84.05
|
|
|
96.71
|
|
|
98.75
|
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
63
|
INTRODUCTION
|
64
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
65
|
EXECUTIVE OVERVIEW
|
Financial performance of JPMorgan Chase
|
|
|
||||||||
Year ended December 31,
|
|
|||||||||
(in millions, except per share data and ratios)
|
2011
|
|
2010
|
|
Change
|
|||||
Selected income statement data
|
|
|
|
|
|
|||||
Total net revenue
|
$
|
97,234
|
|
|
$
|
102,694
|
|
|
(5
|
)%
|
Total noninterest expense
|
62,911
|
|
|
61,196
|
|
|
3
|
|
||
Pre-provision profit
|
34,323
|
|
|
41,498
|
|
|
(17
|
)
|
||
Provision for credit losses
|
7,574
|
|
|
16,639
|
|
|
(54
|
)
|
||
Net income
|
18,976
|
|
|
17,370
|
|
|
9
|
|
||
Diluted earnings per share
|
4.48
|
|
|
3.96
|
|
|
13
|
|
||
Return on common equity
|
11
|
%
|
|
10
|
%
|
|
|
|||
Capital ratios
|
|
|
|
|
|
|||||
Tier 1 capital
|
12.3
|
|
|
12.1
|
|
|
|
|||
Tier 1 common
|
10.1
|
|
|
9.8
|
|
|
|
66
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
67
|
68
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
69
|
70
|
|
JPMorgan Chase & Co./2011 Annual Report
|
CONSOLIDATED RESULTS OF OPERATIONS
|
Revenue
|
|
|
|
|
|
||||||
Year ended December 31,
|
|
|
|
|
|
||||||
(in millions)
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Investment banking fees
|
$
|
5,911
|
|
|
$
|
6,190
|
|
|
$
|
7,087
|
|
Principal transactions
|
10,005
|
|
|
10,894
|
|
|
9,796
|
|
|||
Lending- and deposit-related fees
|
6,458
|
|
|
6,340
|
|
|
7,045
|
|
|||
Asset management, administration and commissions
|
14,094
|
|
|
13,499
|
|
|
12,540
|
|
|||
Securities gains
|
1,593
|
|
|
2,965
|
|
|
1,110
|
|
|||
Mortgage fees and related income
|
2,721
|
|
|
3,870
|
|
|
3,678
|
|
|||
Credit card income
|
6,158
|
|
|
5,891
|
|
|
7,110
|
|
|||
Other income
|
2,605
|
|
|
2,044
|
|
|
916
|
|
|||
Noninterest revenue
|
49,545
|
|
|
51,693
|
|
|
49,282
|
|
|||
Net interest income
|
47,689
|
|
|
51,001
|
|
|
51,152
|
|
|||
Total net revenue
|
$
|
97,234
|
|
|
$
|
102,694
|
|
|
$
|
100,434
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
71
|
72
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Provision for credit losses
|
|
|
|
|
|||||||
Year ended December 31,
|
|
|
|
|
|
||||||
(in millions)
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Wholesale
|
$
|
(23
|
)
|
|
$
|
(850
|
)
|
|
$
|
3,974
|
|
Consumer, excluding credit card
|
4,672
|
|
|
9,452
|
|
|
16,022
|
|
|||
Credit card
|
2,925
|
|
|
8,037
|
|
|
12,019
|
|
|||
Total consumer
|
7,597
|
|
|
17,489
|
|
|
28,041
|
|
|||
Total provision for credit losses
|
$
|
7,574
|
|
|
$
|
16,639
|
|
|
$
|
32,015
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
73
|
Noninterest expense
|
|
|
|
|
|||||||
Year ended December 31,
|
|
||||||||||
(in millions)
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Compensation expense
|
$
|
29,037
|
|
|
$
|
28,124
|
|
|
$
|
26,928
|
|
Noncompensation expense:
|
|
|
|
|
|
||||||
Occupancy
|
3,895
|
|
|
3,681
|
|
|
3,666
|
|
|||
Technology, communications and equipment
|
4,947
|
|
|
4,684
|
|
|
4,624
|
|
|||
Professional and outside services
|
7,482
|
|
|
6,767
|
|
|
6,232
|
|
|||
Marketing
|
3,143
|
|
|
2,446
|
|
|
1,777
|
|
|||
Other
(a)(b)
|
13,559
|
|
|
14,558
|
|
|
7,594
|
|
|||
Amortization of intangibles
|
848
|
|
|
936
|
|
|
1,050
|
|
|||
Total noncompensation expense
|
33,874
|
|
|
33,072
|
|
|
24,943
|
|
|||
Merger costs
|
—
|
|
|
—
|
|
|
481
|
|
|||
Total noninterest expense
|
$
|
62,911
|
|
|
$
|
61,196
|
|
|
$
|
52,352
|
|
(a)
|
Included litigation expense of
$4.9 billion
,
$7.4 billion
and
$161 million
for the years ended December 31, 2011, 2010 and 2009, respectively.
|
(b)
|
Included foreclosed property expense of
$718 million
,
$1.0 billion
and
$1.4 billion
for the years ended
December 31, 2011
,
2010
and
2009
, respectively.
|
74
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Income tax expense
|
|
|
|
|
|
||||||
Year ended December 31,
(in millions, except rate)
|
|
|
|
|
|
||||||
2011
|
|
2010
|
|
2009
|
|||||||
Income before income tax expense and extraordinary gain
|
$
|
26,749
|
|
|
$
|
24,859
|
|
|
$
|
16,067
|
|
Income tax expense
|
7,773
|
|
|
7,489
|
|
|
4,415
|
|
|||
Effective tax rate
|
29.1
|
%
|
|
30.1
|
%
|
|
27.5
|
%
|
JPMorgan Chase & Co./2011 Annual Report
|
|
75
|
EXPLANATION AND RECONCILIATION OF THE FIRM’S USE OF NON-GAAP FINANCIAL MEASURES
|
76
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
2011
|
|
2010
|
|
2009
|
||||||||||||||||||||||||||||||||||
Year ended
December 31,
(in millions, except per share and ratios)
|
Reported
Results
|
|
Fully tax-equivalent adjustments
|
|
Managed
basis
|
|
Reported
Results
|
|
Fully tax-equivalent adjustments
|
|
Managed
basis
|
|
Reported
Results
|
|
Credit card
(b)
|
|
Fully tax-equivalent adjustments
|
|
Managed
basis
|
||||||||||||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Investment banking fees
|
$
|
5,911
|
|
|
$
|
—
|
|
|
$
|
5,911
|
|
|
$
|
6,190
|
|
|
$
|
—
|
|
|
$
|
6,190
|
|
|
$
|
7,087
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,087
|
|
Principal transactions
|
10,005
|
|
|
—
|
|
|
10,005
|
|
|
10,894
|
|
|
—
|
|
|
10,894
|
|
|
9,796
|
|
|
—
|
|
|
—
|
|
|
9,796
|
|
||||||||||
Lending- and deposit-related fees
|
6,458
|
|
|
—
|
|
|
6,458
|
|
|
6,340
|
|
|
—
|
|
|
6,340
|
|
|
7,045
|
|
|
—
|
|
|
—
|
|
|
7,045
|
|
||||||||||
Asset management, administration and commissions
|
14,094
|
|
|
—
|
|
|
14,094
|
|
|
13,499
|
|
|
—
|
|
|
13,499
|
|
|
12,540
|
|
|
—
|
|
|
—
|
|
|
12,540
|
|
||||||||||
Securities gains
|
1,593
|
|
|
—
|
|
|
1,593
|
|
|
2,965
|
|
|
—
|
|
|
2,965
|
|
|
1,110
|
|
|
—
|
|
|
—
|
|
|
1,110
|
|
||||||||||
Mortgage fees and related income
|
2,721
|
|
|
—
|
|
|
2,721
|
|
|
3,870
|
|
|
—
|
|
|
3,870
|
|
|
3,678
|
|
|
—
|
|
|
—
|
|
|
3,678
|
|
||||||||||
Credit card income
|
6,158
|
|
|
—
|
|
|
6,158
|
|
|
5,891
|
|
|
—
|
|
|
5,891
|
|
|
7,110
|
|
|
(1,494
|
)
|
|
—
|
|
|
5,616
|
|
||||||||||
Other income
|
2,605
|
|
|
2,003
|
|
|
4,608
|
|
|
2,044
|
|
|
1,745
|
|
|
3,789
|
|
|
916
|
|
|
—
|
|
|
1,440
|
|
|
2,356
|
|
||||||||||
Noninterest revenue
|
49,545
|
|
|
2,003
|
|
|
51,548
|
|
|
51,693
|
|
|
1,745
|
|
|
53,438
|
|
|
49,282
|
|
|
(1,494
|
)
|
|
1,440
|
|
|
49,228
|
|
||||||||||
Net interest income
|
47,689
|
|
|
530
|
|
|
48,219
|
|
|
51,001
|
|
|
403
|
|
|
51,404
|
|
|
51,152
|
|
|
7,937
|
|
|
330
|
|
|
59,419
|
|
||||||||||
Total net revenue
|
97,234
|
|
|
2,533
|
|
|
99,767
|
|
|
102,694
|
|
|
2,148
|
|
|
104,842
|
|
|
100,434
|
|
|
6,443
|
|
|
1,770
|
|
|
108,647
|
|
||||||||||
Noninterest expense
|
62,911
|
|
|
—
|
|
|
62,911
|
|
|
61,196
|
|
|
—
|
|
|
61,196
|
|
|
52,352
|
|
|
—
|
|
|
—
|
|
|
52,352
|
|
||||||||||
Pre-provision profit
|
34,323
|
|
|
2,533
|
|
|
36,856
|
|
|
41,498
|
|
|
2,148
|
|
|
43,646
|
|
|
48,082
|
|
|
6,443
|
|
|
1,770
|
|
|
56,295
|
|
||||||||||
Provision for credit losses
|
7,574
|
|
|
—
|
|
|
7,574
|
|
|
16,639
|
|
|
—
|
|
|
16,639
|
|
|
32,015
|
|
|
6,443
|
|
|
—
|
|
|
38,458
|
|
||||||||||
Income before income tax expense and extraordinary gain
|
26,749
|
|
|
2,533
|
|
|
29,282
|
|
|
24,859
|
|
|
2,148
|
|
|
27,007
|
|
|
16,067
|
|
|
—
|
|
|
1,770
|
|
|
17,837
|
|
||||||||||
Income tax expense
|
7,773
|
|
|
2,533
|
|
|
10,306
|
|
|
7,489
|
|
|
2,148
|
|
|
9,637
|
|
|
4,415
|
|
|
—
|
|
|
1,770
|
|
|
6,185
|
|
||||||||||
Income before extraordinary gain
|
18,976
|
|
|
—
|
|
|
18,976
|
|
|
17,370
|
|
|
—
|
|
|
17,370
|
|
|
11,652
|
|
|
—
|
|
|
—
|
|
|
11,652
|
|
||||||||||
Extraordinary gain
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
76
|
|
|
—
|
|
|
—
|
|
|
76
|
|
||||||||||
Net income
|
$
|
18,976
|
|
|
$
|
—
|
|
|
$
|
18,976
|
|
|
$
|
17,370
|
|
|
$
|
—
|
|
|
$
|
17,370
|
|
|
$
|
11,728
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,728
|
|
Diluted earnings per share
(a)
|
$
|
4.48
|
|
|
$
|
—
|
|
|
$
|
4.48
|
|
|
$
|
3.96
|
|
|
$
|
—
|
|
|
$
|
3.96
|
|
|
$
|
2.24
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.24
|
|
Return on assets
(a)
|
0.86
|
%
|
|
NM
|
|
|
0.86
|
%
|
|
0.85
|
%
|
|
NM
|
|
|
0.85
|
%
|
|
0.58
|
%
|
|
NM
|
|
|
NM
|
|
|
0.55
|
%
|
||||||||||
Overhead ratio
|
65
|
|
|
NM
|
|
|
63
|
|
|
60
|
|
|
NM
|
|
|
58
|
|
|
52
|
|
|
NM
|
|
|
NM
|
|
|
48
|
|
||||||||||
Loans – period-end
|
$
|
723,720
|
|
|
$
|
—
|
|
|
$
|
723,720
|
|
|
$
|
692,927
|
|
|
$
|
—
|
|
|
$
|
692,927
|
|
|
$
|
633,458
|
|
|
$
|
84,626
|
|
|
$
|
—
|
|
|
$
|
718,084
|
|
Total assets – average
|
2,198,198
|
|
|
—
|
|
|
2,198,198
|
|
|
2,053,251
|
|
|
—
|
|
|
2,053,251
|
|
|
2,024,201
|
|
|
82,233
|
|
|
—
|
|
|
2,106,434
|
|
(a)
|
Based on income before extraordinary gain.
|
(b)
|
See pages 94–97 of this Annual Report for a discussion of the effect of credit card securitizations on Card's results.
|
Calculation of certain U.S. GAAP and non-GAAP metrics
|
||||
The table below reflects the formulas used to calculate both the
following U.S. GAAP and non-GAAP measures. |
||||
Return on common equity
Net income* / Average common stockholders’ equity
|
||||
Return on tangible common equity
(c)
Net income* / Average tangible common equity
|
||||
Return on assets
Reported net income / Total average assets
Managed net income / Total average managed assets (d) |
||||
Overhead ratio
Total noninterest expense / Total net revenue
|
||||
* Represents net income applicable to common equity
|
||||
(c) The Firm uses ROTCE, a non-GAAP financial measure, to evaluate its
use of equity and to facilitate comparisons with competitors. Refer to the following table for the calculation of average tangible common equity. |
||||
(d) The Firm uses return on managed assets, a non-GAAP financial measure, to
evaluate the overall performance of the managed credit card portfolio, including securitized credit card loans. |
Average tangible common equity
|
|
|
|
|
||||||||
Year ended December 31, (in millions)
|
|
2011
|
|
2010
|
|
2009
|
||||||
Common stockholders’ equity
|
|
$
|
173,266
|
|
|
$
|
161,520
|
|
|
$
|
145,903
|
|
Less: Goodwill
|
|
48,632
|
|
|
48,618
|
|
|
48,254
|
|
|||
Less: Certain identifiable intangible assets
|
|
3,632
|
|
|
4,178
|
|
|
5,095
|
|
|||
Add: Deferred tax liabilities
(a)
|
|
2,635
|
|
|
2,587
|
|
|
2,547
|
|
|||
Tangible common equity
|
|
$
|
123,637
|
|
|
$
|
111,311
|
|
|
$
|
95,101
|
|
(a)
|
Represents deferred tax liabilities related to tax-deductible goodwill and to identifiable intangibles created in nontaxable transactions, which are netted against goodwill and other intangibles when calculating TCE.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
77
|
Year ended December 31, 2009
(in millions, except ratios)
|
As reported
|
|
Excluding the
TARP redemption
|
||||
Return on equity
|
|
|
|
||||
Net income
|
$
|
11,728
|
|
|
$
|
11,728
|
|
Less: Preferred stock dividends
|
1,327
|
|
|
1,327
|
|
||
Less: Accelerated amortization from redemption of preferred stock issued to the U.S. Treasury
|
1,112
|
|
|
—
|
|
||
Net income applicable to common equity
|
$
|
9,289
|
|
|
$
|
10,401
|
|
Average common stockholders’ equity
|
$
|
145,903
|
|
|
$
|
145,903
|
|
ROE
|
6
|
%
|
|
7
|
%
|
Year ended December 31, 2009
(in millions, except per share)
|
As reported
|
|
Effect of
TARP redemption
|
||||
Diluted earnings per share
|
|
|
|
||||
Net income
|
$
|
11,728
|
|
|
$
|
—
|
|
Less: Preferred stock dividends
|
1,327
|
|
|
—
|
|
||
Less: Accelerated amortization from redemption of preferred stock issued to the U.S. Treasury
|
1,112
|
|
|
1,112
|
|
||
Net income applicable to common equity
|
9,289
|
|
|
(1,112
|
)
|
||
Less: Dividends and undistributed earnings allocated to participating securities
|
515
|
|
|
(62
|
)
|
||
Net income applicable to common stockholders
|
8,774
|
|
|
(1,050
|
)
|
||
Total weighted average diluted shares outstanding
|
3,879.7
|
|
|
3,879.7
|
|
||
Net income per share
|
$
|
2.26
|
|
|
$
|
(0.27
|
)
|
78
|
|
JPMorgan Chase & Co./2011 Annual Report
|
BUSINESS SEGMENT RESULTS
|
|
|
|
|
|
|
|
JPMorgan Chase
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
Bank
|
|
Retail Financial Services
|
|
Card Services
& Auto
|
|
Commercial
Banking
|
|
Treasury & Securities Services
|
|
Asset Management
|
||||||
Businesses:
|
|
Businesses:
|
|
Businesses:
|
|
Businesses:
|
|
Businesses:
|
|
Businesses:
|
||||||
Investment Banking
– Advisory
– Debt and equity underwriting |
|
Consumer & Business Banking
|
|
Card Services
– Credit Card
– Merchant Services |
|
Middle Market Banking
|
|
Treasury Services
|
|
Private Banking
|
||||||
|
Mortgage Production and Servicing
|
|
|
Commercial Term
Lending
|
|
Worldwide Securities
Services
|
|
Investment
Management:
– Institutional
– Retail |
||||||||
Market-making
– Fixed income
– Commodities – Equities |
|
Real Estate Portfolios
– Residential mortgage
loans – Home equity loans and originations |
|
Auto
|
|
Corporate Client
Banking
|
|
|
|
|||||||
|
|
Student
|
|
Real Estate Banking
|
|
|
|
Highbridge
|
||||||||
Prime Services
Research
Corporate Lending
Credit Portfolio
Management |
|
|
|
|
|
|
|
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
79
|
Year ended December 31,
|
Total net revenue
|
|
Noninterest expense
|
|
Pre-provision profit
(b)
|
||||||||||||||||||||||||
(in millions)
|
2011
|
|
2010
|
|
2009
|
|
|
2011
|
|
2010
|
|
2009
|
|
|
2011
|
|
2010
|
|
2009
|
|
|||||||||
Investment Bank
(a)
|
$
|
26,274
|
|
$
|
26,217
|
|
$
|
28,109
|
|
|
$
|
16,116
|
|
$
|
17,265
|
|
$
|
15,401
|
|
|
$
|
10,158
|
|
$
|
8,952
|
|
$
|
12,708
|
|
Retail Financial Services
|
26,538
|
|
28,447
|
|
29,797
|
|
|
19,458
|
|
16,483
|
|
15,512
|
|
|
7,080
|
|
11,964
|
|
14,285
|
|
|||||||||
Card Services & Auto
|
19,141
|
|
20,472
|
|
23,199
|
|
|
8,045
|
|
7,178
|
|
6,617
|
|
|
11,096
|
|
13,294
|
|
16,582
|
|
|||||||||
Commercial Banking
|
6,418
|
|
6,040
|
|
5,720
|
|
|
2,278
|
|
2,199
|
|
2,176
|
|
|
4,140
|
|
3,841
|
|
3,544
|
|
|||||||||
Treasury & Securities Services
|
7,702
|
|
7,381
|
|
7,344
|
|
|
5,863
|
|
5,604
|
|
5,278
|
|
|
1,839
|
|
1,777
|
|
2,066
|
|
|||||||||
Asset Management
|
9,543
|
|
8,984
|
|
7,965
|
|
|
7,002
|
|
6,112
|
|
5,473
|
|
|
2,541
|
|
2,872
|
|
2,492
|
|
|||||||||
Corporate/Private Equity
(a)
|
4,151
|
|
7,301
|
|
6,513
|
|
|
4,149
|
|
6,355
|
|
1,895
|
|
|
2
|
|
946
|
|
4,618
|
|
|||||||||
Total
|
$
|
99,767
|
|
$
|
104,842
|
|
$
|
108,647
|
|
|
$
|
62,911
|
|
$
|
61,196
|
|
$
|
52,352
|
|
|
$
|
36,856
|
|
$
|
43,646
|
|
$
|
56,295
|
|
Year ended December 31,
|
Provision for credit losses
|
|
Net income/(loss)
|
|
Return on equity
|
|||||||||||||||||||||
(in millions, except ratios)
|
2011
|
|
2010
|
|
2009
|
|
|
2011
|
|
2010
|
|
2009
|
|
|
2011
|
|
2010
|
|
2009
|
|
||||||
Investment Bank
(a)
|
$
|
(286
|
)
|
$
|
(1,200
|
)
|
$
|
2,279
|
|
|
$
|
6,789
|
|
$
|
6,639
|
|
$
|
6,899
|
|
|
17
|
%
|
17
|
%
|
21
|
%
|
Retail Financial Services
|
3,999
|
|
8,919
|
|
14,754
|
|
|
1,678
|
|
1,728
|
|
(335
|
)
|
|
7
|
|
7
|
|
(1
|
)
|
||||||
Card Services & Auto
|
3,621
|
|
8,570
|
|
19,648
|
|
|
4,544
|
|
2,872
|
|
(1,793
|
)
|
|
28
|
|
16
|
|
(10
|
)
|
||||||
Commercial Banking
|
208
|
|
297
|
|
1,454
|
|
|
2,367
|
|
2,084
|
|
1,271
|
|
|
30
|
|
26
|
|
16
|
|
||||||
Treasury & Securities Services
|
1
|
|
(47
|
)
|
55
|
|
|
1,204
|
|
1,079
|
|
1,226
|
|
|
17
|
|
17
|
|
25
|
|
||||||
Asset Management
|
67
|
|
86
|
|
188
|
|
|
1,592
|
|
1,710
|
|
1,430
|
|
|
25
|
|
26
|
|
20
|
|
||||||
Corporate/Private Equity
(a)
|
(36
|
)
|
14
|
|
80
|
|
|
802
|
|
1,258
|
|
3,030
|
|
|
NM
|
|
NM
|
|
NM
|
|
||||||
Total
|
$
|
7,574
|
|
$
|
16,639
|
|
$
|
38,458
|
|
|
$
|
18,976
|
|
$
|
17,370
|
|
$
|
11,728
|
|
|
11
|
%
|
10
|
%
|
6
|
%
|
(a)
|
Corporate/Private Equity includes an adjustment to offset IB’s inclusion of a credit allocation income/(expense) to TSS in total net revenue; TSS reports the credit allocation as a separate line item on its income statement (not within total net revenue).
|
(b)
|
Pre-provision profit is total net revenue less noninterest expense. The Firm believes that this financial measure is useful in assessing the ability of a lending institution to generate income in excess of its provision for credit losses.
|
80
|
|
JPMorgan Chase & Co./2011 Annual Report
|
INVESTMENT BANK
|
J.P. Morgan is one of the world’s leading investment banks, with deep client relationships and broad product capabilities. The clients of IB are corporations, financial institutions, governments and institutional investors. The Firm offers a full range of investment banking products and services in all major capital markets, including advising on corporate strategy and structure, capital-raising in equity and debt markets, sophisticated risk management, market-making in cash securities and derivative instruments, prime brokerage, and research.
|
Selected income statement data
|
|
|
|||||||||
Year ended December 31,
|
|
||||||||||
(in millions, except ratios)
|
2011
|
|
2010
|
|
2009
|
||||||
Revenue
|
|
|
|
|
|
||||||
Investment banking fees
|
$
|
5,859
|
|
|
$
|
6,186
|
|
|
$
|
7,169
|
|
Principal transactions
(a)
|
8,324
|
|
|
8,454
|
|
|
8,154
|
|
|||
Lending- and deposit-related fees
|
858
|
|
|
819
|
|
|
664
|
|
|||
Asset management, administration and commissions
|
2,207
|
|
|
2,413
|
|
|
2,650
|
|
|||
All other income
(b)
|
723
|
|
|
381
|
|
|
(115
|
)
|
|||
Noninterest revenue
|
17,971
|
|
|
18,253
|
|
|
18,522
|
|
|||
Net interest income
|
8,303
|
|
|
7,964
|
|
|
9,587
|
|
|||
Total net revenue
(c)
|
26,274
|
|
|
26,217
|
|
|
28,109
|
|
|||
|
|
|
|
|
|
||||||
Provision for credit losses
|
(286
|
)
|
|
(1,200
|
)
|
|
2,279
|
|
|||
|
|
|
|
|
|
||||||
Noninterest expense
|
|
|
|
|
|
||||||
Compensation expense
|
8,880
|
|
|
9,727
|
|
|
9,334
|
|
|||
Noncompensation expense
|
7,236
|
|
|
7,538
|
|
|
6,067
|
|
|||
Total noninterest expense
|
16,116
|
|
|
17,265
|
|
|
15,401
|
|
|||
Income before income tax expense
|
10,444
|
|
|
10,152
|
|
|
10,429
|
|
|||
Income tax expense
|
3,655
|
|
|
3,513
|
|
|
3,530
|
|
|||
Net income
|
$
|
6,789
|
|
|
$
|
6,639
|
|
|
$
|
6,899
|
|
Financial ratios
|
|
|
|
|
|
||||||
Return on common equity
|
17
|
%
|
|
17
|
%
|
|
21
|
%
|
|||
Return on assets
|
0.84
|
|
|
0.91
|
|
|
0.99
|
|
|||
Overhead ratio
|
61
|
|
|
66
|
|
|
55
|
|
|||
Compensation expense as a percentage of total net revenue
(d)
|
34
|
|
|
37
|
|
|
33
|
|
(a)
|
Principal transactions included DVA related to derivatives and structured liabilities measured at fair value. DVA gains/(losses) were $1.4 billion, $509 million, and ($2.3) billion for the years ended December 31, 2011, 2010, and 2009, respectively.
|
(b)
|
IB manages traditional credit exposures related to GCB on behalf of IB and TSS. Effective
January 1, 2011
, IB and TSS share the economics related to the Firm’s GCB clients. IB recognizes this sharing agreement within all other income. The prior-year periods reflected the reimbursement from TSS for a portion of the total costs of managing the credit portfolio on behalf of TSS.
|
(c)
|
Total net revenue included tax-equivalent adjustments, predominantly due to income tax credits related to affordable housing and alternative energy investments as well as tax-exempt income from municipal bond investments of $1.9 billion, $1.7 billion and $1.4 billion for the years ended
December 31, 2011
,
2010
and
2009
, respectively.
|
(d)
|
The compensation expense as a percentage of total net revenue ratio for the year ended
December 31, 2010
, excluding the payroll tax expense related to the U.K. Bank Payroll Tax on certain compensation awarded from December 9, 2009, to April 5, 2010, to relevant banking employees, which is a non-GAAP financial measure, was 35%. IB excluded this tax from the ratio because it enables comparability between periods.
|
Year ended December 31,
|
|
||||||||||
(in millions)
|
2011
|
|
2010
|
|
2009
|
||||||
Revenue by business
|
|
|
|
|
|
||||||
Investment banking fees:
|
|
|
|
|
|
||||||
Advisory
|
$
|
1,792
|
|
|
$
|
1,469
|
|
|
$
|
1,867
|
|
Equity underwriting
|
1,181
|
|
|
1,589
|
|
|
2,641
|
|
|||
Debt underwriting
|
2,886
|
|
|
3,128
|
|
|
2,661
|
|
|||
Total investment banking fees
|
5,859
|
|
|
6,186
|
|
|
7,169
|
|
|||
Fixed income markets
(a)
|
15,337
|
|
|
15,025
|
|
|
17,564
|
|
|||
Equity markets
(b)
|
4,832
|
|
|
4,763
|
|
|
4,393
|
|
|||
Credit portfolio
(c)(d)
|
246
|
|
|
243
|
|
|
(1,017
|
)
|
|||
Total net revenue
|
$
|
26,274
|
|
|
$
|
26,217
|
|
|
$
|
28,109
|
|
(a)
|
Fixed income markets primarily include revenue related to market-making across global fixed income markets, including foreign exchange, interest rate, credit and commodities markets.
|
(b)
|
Equity markets primarily include revenue related to market-making across global equity products, including cash instruments, derivatives, convertibles and Prime Services.
|
(c)
|
Credit portfolio revenue includes net interest income, fees and loan sale activity, as well as gains or losses on securities received as part of a loan restructuring, for IB’s credit portfolio. Credit portfolio revenue also includes the results of risk management related to the Firm's lending and derivative activities. See pages 143–144 of the Credit Risk Management section of this Annual Report for further discussion.
|
(d)
|
IB manages traditional credit exposures related to GCB on behalf of IB and TSS. Effective
January 1, 2011
, IB and TSS share the economics related to the Firm’s GCB clients. IB recognizes this sharing agreement within all other income. The prior-year periods reflected the reimbursement from TSS for a portion of the total costs of managing the credit portfolio on behalf of TSS.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
81
|
Selected metrics
|
|
|
|
|
|||||||
As of or for the year ended December 31,
|
|
||||||||||
(in millions, except headcount)
|
2011
|
|
2010
|
|
2009
|
||||||
Selected balance sheet data (period-end)
|
|
|
|
|
|
||||||
Total assets
|
$
|
776,430
|
|
|
$
|
825,150
|
|
|
$
|
706,944
|
|
Loans:
|
|
|
|
|
|
||||||
Loans retained
(a)
|
68,208
|
|
|
53,145
|
|
|
45,544
|
|
|||
Loans held-for-sale and loans at fair value
|
2,915
|
|
|
3,746
|
|
|
3,567
|
|
|||
Total loans
|
71,123
|
|
|
56,891
|
|
|
49,111
|
|
|||
Equity
|
40,000
|
|
|
40,000
|
|
|
33,000
|
|
|||
Selected balance sheet data (average)
|
|
|
|
|
|
||||||
Total assets
|
$
|
812,779
|
|
|
$
|
731,801
|
|
|
$
|
699,039
|
|
Trading assets-debt and equity instruments
|
346,461
|
|
|
307,061
|
|
|
273,624
|
|
|||
Trading assets-derivative receivables
|
73,201
|
|
|
70,289
|
|
|
96,042
|
|
|||
Loans:
|
|
|
|
|
|
||||||
Loans retained
(a)
|
57,007
|
|
|
54,402
|
|
|
62,722
|
|
|||
Loans held-for-sale and loans at fair value
|
3,119
|
|
|
3,215
|
|
|
7,589
|
|
|||
Total loans
|
60,126
|
|
|
57,617
|
|
|
70,311
|
|
|||
Adjusted assets
(b)
|
600,160
|
|
|
540,449
|
|
|
538,724
|
|
|||
Equity
|
40,000
|
|
|
40,000
|
|
|
33,000
|
|
|||
|
|
|
|
|
|
||||||
Headcount
|
25,999
|
|
|
26,314
|
|
|
24,654
|
|
(a)
|
Loans retained included credit portfolio loans, leveraged leases and other held-for-investment loans, and excluded loans held-for-sale and loans at fair value.
|
(b)
|
Adjusted assets, a non-GAAP financial measure, equals total assets minus: (1) securities purchased under resale agreements and securities borrowed less securities sold, not yet purchased; (2) assets of consolidated VIEs; (3) cash and securities segregated and on deposit for regulatory and other purposes; (4) goodwill and intangibles; and (5) securities received as collateral. The amount of adjusted assets is presented to assist the reader in comparing IB’s asset and capital levels to other investment banks in the securities industry. Asset-to-equity leverage ratios are commonly used as one measure to assess a company's capital adequacy. IB believes an adjusted asset amount that excludes the assets discussed above, which were considered to have a low risk profile, provides a more meaningful measure of balance sheet leverage in the securities industry.
|
82
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Selected metrics
|
|
|
|
|
|
||||||
As of or for the year ended December 31,
|
|
||||||||||
(in millions, except ratios)
|
2011
|
|
2010
|
|
2009
|
||||||
Credit data and quality statistics
|
|
|
|
|
|
||||||
Net charge-offs
|
$
|
161
|
|
|
$
|
735
|
|
|
$
|
1,904
|
|
Nonperforming assets:
|
|
|
|
|
|
||||||
Nonaccrual loans:
|
|
|
|
|
|
||||||
Nonaccrual loans retained
(a)(b)
|
1,035
|
|
|
3,159
|
|
|
3,196
|
|
|||
Nonaccrual loans
held-for-sale and loans at fair value
|
166
|
|
|
460
|
|
|
308
|
|
|||
Total nonaccrual loans
|
1,201
|
|
|
3,619
|
|
|
3,504
|
|
|||
Derivative receivables
|
14
|
|
|
34
|
|
|
529
|
|
|||
Assets acquired in loan satisfactions
|
79
|
|
|
117
|
|
|
203
|
|
|||
Total nonperforming assets
|
1,294
|
|
|
3,770
|
|
|
4,236
|
|
|||
Allowance for credit losses:
|
|
|
|
|
|
||||||
Allowance for loan losses
|
1,436
|
|
|
1,863
|
|
|
3,756
|
|
|||
Allowance for lending-related commitments
|
418
|
|
|
447
|
|
|
485
|
|
|||
Total allowance for credit losses
|
1,854
|
|
|
2,310
|
|
|
4,241
|
|
|||
Net charge-off rate
(a)(c)
|
0.28
|
%
|
|
1.35
|
%
|
|
3.04
|
%
|
|||
Allowance for loan losses to period-end loans retained
(a)(c)
|
2.11
|
|
|
3.51
|
|
|
8.25
|
|
|||
Allowance for loan losses to nonaccrual loans retained
(a)(b)(c)
|
139
|
|
|
59
|
|
|
118
|
|
|||
Nonaccrual loans to period-end loans
|
1.69
|
|
|
6.36
|
|
|
7.13
|
|
|||
Market risk-average trading and credit portfolio VaR – 95% confidence level
|
|
|
|
|
|
||||||
Trading activities:
|
|
|
|
|
|
||||||
Fixed income
|
$
|
50
|
|
|
$
|
65
|
|
|
$
|
160
|
|
Foreign exchange
|
11
|
|
|
11
|
|
|
18
|
|
|||
Equities
|
23
|
|
|
22
|
|
|
47
|
|
|||
Commodities and other
|
16
|
|
|
16
|
|
|
20
|
|
|||
Diversification
(d)
|
(42
|
)
|
|
(43
|
)
|
|
(91
|
)
|
|||
Total trading VaR
(e)
|
58
|
|
|
71
|
|
|
154
|
|
|||
Credit portfolio VaR
(f)
|
33
|
|
|
26
|
|
|
52
|
|
|||
Diversification
(d)
|
(15
|
)
|
|
(10
|
)
|
|
(42
|
)
|
|||
Total trading and credit portfolio VaR
|
$
|
76
|
|
|
$
|
87
|
|
|
$
|
164
|
|
(a)
|
Loans retained included credit portfolio loans, leveraged leases and other held-for-investment loans, and excluded loans held-for-sale and loans at fair value.
|
(b)
|
Allowance for loan losses of $263 million, $1.1 billion and $1.3 billion were held against these nonaccrual loans at
December 31, 2011
,
2010
and
2009
, respectively.
|
(c)
|
Loans held-for-sale and loans at fair value were excluded when calculating the allowance coverage ratio and net charge-off rate.
|
(d)
|
Average value-at-risk (“VaR”) was less than the sum of the VaR of the components described above, due to portfolio diversification. The diversification effect reflects the fact that the risks were not perfectly correlated. The risk of a portfolio of positions is therefore usually less than the sum of the risks of the positions themselves.
|
(e)
|
Trading VaR includes substantially all market-making and client-driven activities as well as certain risk management activities in IB, including the credit spread sensitivities of certain mortgage products and syndicated lending facilities that the Firm intends to distribute; however, particular risk parameters of certain products are not fully captured, for example, correlation risk. Trading VaR does not include the DVA on derivative and structured liabilities to reflect the credit
|
(f)
|
Credit portfolio VaR includes the derivative CVA, hedges of the CVA and mark-to-market (“MTM”) hedges of the retained loan portfolio, which are all reported in principal transactions revenue. This VaR does not include the retained loan portfolio, which is not MTM.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
83
|
International metrics
|
|
|
|
|
|||||||
Year ended December 31,
|
|
||||||||||
(in millions)
|
2011
|
|
2010
|
|
2009
|
||||||
Total net revenue
(a)
|
|
|
|
|
|
||||||
Europe/Middle East/Africa
|
$
|
8,418
|
|
|
$
|
7,380
|
|
|
$
|
9,164
|
|
Asia/Pacific
|
3,334
|
|
|
3,809
|
|
|
3,470
|
|
|||
Latin America/Caribbean
|
1,079
|
|
|
897
|
|
|
1,157
|
|
|||
North America
|
13,443
|
|
|
14,131
|
|
|
14,318
|
|
|||
Total net revenue
|
$
|
26,274
|
|
|
$
|
26,217
|
|
|
$
|
28,109
|
|
Loans retained (period-end)
(b)
|
|
|
|
|
|
||||||
Europe/Middle East/Africa
|
$
|
15,905
|
|
|
$
|
13,961
|
|
|
$
|
13,079
|
|
Asia/Pacific
|
7,889
|
|
|
5,924
|
|
|
4,542
|
|
|||
Latin America/Caribbean
|
3,148
|
|
|
2,200
|
|
|
2,523
|
|
|||
North America
|
41,266
|
|
|
31,060
|
|
|
25,400
|
|
|||
Total loans
|
$
|
68,208
|
|
|
$
|
53,145
|
|
|
$
|
45,544
|
|
(a)
|
Regional revenue is based primarily on the domicile of the client and/or location of the trading desk.
|
(b)
|
Includes retained loans based on the domicile of the customer. Excludes loans held-for-sale and loans at fair value.
|
84
|
|
JPMorgan Chase & Co./2011 Annual Report
|
RETAIL FINANCIAL SERVICES
|
Retail Financial Services serves consumers and businesses through personal service at bank branches and through ATMs, online banking and telephone banking. RFS is organized into Consumer & Business Banking and Mortgage Banking (including Mortgage Production and Servicing, and Real Estate Portfolios). Consumer & Business Banking includes branch banking and business banking activities. Mortgage Production and Servicing includes mortgage origination and servicing activities. Real Estate Portfolios comprises residential mortgages and home equity loans, including the PCI portfolio acquired in the Washington Mutual transaction. Customers can use more than 5,500 bank branches (third largest nationally) and more than 17,200 ATMs (second largest nationally), as well as online and mobile banking around the clock. More than 33,500 branch salespeople assist customers with checking and savings accounts, mortgages, home equity and business loans, and investments across the 23-state footprint from New York and Florida to California. As one of the largest mortgage originators in the U.S., Chase helps customers buy or refinance homes resulting in approximately $150 billion of mortgage originations annually. Chase also services more than 8 million mortgages and home equity loans.
|
Selected income statement data
|
|
|
|
|
|||||||
Year ended December 31,
|
|
||||||||||
(in millions, except ratios)
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Revenue
|
|
|
|
|
|
||||||
Lending- and deposit-related fees
|
$
|
3,190
|
|
|
$
|
3,061
|
|
|
$
|
3,897
|
|
Asset management, administration and commissions
|
1,991
|
|
|
1,776
|
|
|
1,665
|
|
|||
Mortgage fees and related income
|
2,714
|
|
|
3,855
|
|
|
3,794
|
|
|||
Credit card income
|
2,025
|
|
|
1,955
|
|
|
1,634
|
|
|||
Other income
|
485
|
|
|
580
|
|
|
424
|
|
|||
Noninterest revenue
|
10,405
|
|
|
11,227
|
|
|
11,414
|
|
|||
Net interest income
|
16,133
|
|
|
17,220
|
|
|
18,383
|
|
|||
Total net revenue
(a)
|
26,538
|
|
|
28,447
|
|
|
29,797
|
|
|||
|
|
|
|
|
|
||||||
Provision for credit losses
|
3,999
|
|
|
8,919
|
|
|
14,754
|
|
|||
|
|
|
|
|
|
||||||
Noninterest expense
|
|
|
|
|
|
||||||
Compensation expense
|
8,044
|
|
|
7,072
|
|
|
6,349
|
|
|||
Noncompensation expense
|
11,176
|
|
|
9,135
|
|
|
8,834
|
|
|||
Amortization of intangibles
|
238
|
|
|
276
|
|
|
329
|
|
|||
Total noninterest expense
|
19,458
|
|
|
16,483
|
|
|
15,512
|
|
|||
Income/(loss) before income tax expense/(benefit)
|
3,081
|
|
|
3,045
|
|
|
(469
|
)
|
|||
Income tax expense/(benefit)
|
1,403
|
|
|
1,317
|
|
|
(134
|
)
|
|||
Net income/(loss)
|
$
|
1,678
|
|
|
$
|
1,728
|
|
|
$
|
(335
|
)
|
Financial ratios
|
|
|
|
|
|
||||||
Return on common equity
|
7
|
%
|
|
7
|
%
|
|
(1
|
)%
|
|||
Overhead ratio
|
73
|
|
|
58
|
|
|
52
|
|
|||
Overhead ratio excluding core deposit intangibles
(b)
|
72
|
|
|
57
|
|
|
51
|
|
(a)
|
Total net revenue included tax-equivalent adjustments associated with tax-exempt loans to municipalities and other qualified entities of $
7 million
, $
8 million
and
$9 million
for the years ended
December 31, 2011
,
2010
and
2009
, respectively.
|
(b)
|
RFS uses the overhead ratio (excluding the amortization of core deposit intangibles (“CDI”)), a non-GAAP financial measure, to evaluate the underlying expense trends of the business. Including CDI amortization expense in the overhead ratio calculation would result in a higher overhead ratio in the earlier years and a lower overhead ratio in later years; this method would therefore result in an improving overhead ratio over time, all things remaining equal. This non-GAAP ratio excluded
Consumer & Business Banking
's CDI amortization expense related to prior business combination transactions of
$238 million
,
$276 million
and
$328 million
for the years ended
December 31, 2011
,
2010
and
2009
, respectively.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
85
|
Selected metrics
|
|
|
|
|
|||||||
As of or for the year ended December 31,
|
|
||||||||||
(in millions, except headcount and ratios)
|
2011
|
|
2010
|
|
2009
|
||||||
Selected balance sheet data (period-end)
|
|
|
|
|
|
||||||
Total assets
|
$
|
274,795
|
|
|
$
|
299,950
|
|
|
$
|
322,185
|
|
Loans:
|
|
|
|
|
|
||||||
Loans retained
|
232,555
|
|
|
253,904
|
|
|
280,246
|
|
|||
Loans held-for-sale and loans at fair value
(a)
|
12,694
|
|
|
14,863
|
|
|
12,920
|
|
|||
Total loans
|
245,249
|
|
|
268,767
|
|
|
293,166
|
|
|||
Deposits
|
395,797
|
|
|
369,925
|
|
|
356,614
|
|
|||
Equity
|
25,000
|
|
|
24,600
|
|
|
22,457
|
|
|||
Selected balance sheet data (average)
|
|
|
|
|
|
||||||
Total assets
|
$
|
286,716
|
|
|
$
|
314,046
|
|
|
$
|
344,727
|
|
Loans:
|
|
|
|
|
|
||||||
Loans retained
|
241,621
|
|
|
268,902
|
|
|
296,959
|
|
|||
Loans held-for-sale and loans at fair value
(a)
|
16,354
|
|
|
15,395
|
|
|
16,236
|
|
|||
Total loans
|
257,975
|
|
|
284,297
|
|
|
313,195
|
|
|||
Deposits
|
380,663
|
|
|
361,525
|
|
|
366,996
|
|
|||
Equity
|
25,000
|
|
|
24,600
|
|
|
22,457
|
|
|||
|
|
|
|
|
|
||||||
Headcount
|
133,075
|
|
|
116,882
|
|
|
103,733
|
|
As of or for the year ended December 31,
|
|
||||||||||
(in millions, except ratios)
|
2011
|
|
2010
|
|
2009
|
||||||
Credit data and quality statistics
|
|
|
|
|
|
||||||
Net charge-offs
|
$
|
4,304
|
|
|
$
|
7,221
|
|
|
$
|
9,233
|
|
Nonaccrual loans:
|
|
|
|
|
|
||||||
Nonaccrual loans retained
|
7,170
|
|
|
8,568
|
|
|
10,373
|
|
|||
Nonaccrual loans held-for-sale and loans at fair value
|
103
|
|
|
145
|
|
|
234
|
|
|||
Total nonaccrual loans
(b)(c)(d)
|
7,273
|
|
|
8,713
|
|
|
10,607
|
|
|||
Nonperforming assets
(b)(c)(d)
|
8,064
|
|
|
9,999
|
|
|
11,761
|
|
|||
Allowance for loan losses
|
15,247
|
|
|
15,554
|
|
|
13,734
|
|
|||
Net charge-off rate
(e)
|
1.78
|
%
|
|
2.69
|
%
|
|
3.11
|
%
|
|||
Net charge-off rate
excluding PCI loans
(e)(f)
|
2.49
|
|
|
3.76
|
|
|
4.36
|
|
|||
Allowance for loan losses to ending loans retained
|
6.56
|
|
|
6.13
|
|
|
4.90
|
|
|||
Allowance for loan losses to ending loans retained
excluding PCI loans
(f)
|
5.71
|
|
|
5.86
|
|
|
6.11
|
|
|||
Allowance for loan losses to nonaccrual loans retained
(b)(f)
|
133
|
|
|
124
|
|
|
117
|
|
|||
Nonaccrual loans to total loans
|
2.97
|
|
|
3.24
|
|
|
3.62
|
|
|||
Nonaccrual loans to total loans excluding PCI loans
(b)
|
4.05
|
|
|
4.45
|
|
|
5.01
|
|
(a)
|
Predominantly consists of prime mortgages originated with the intent to sell that are accounted for at fair value and classified as trading assets on the Consolidated Balance Sheets.
|
(b)
|
Excludes PCI loans that were acquired as part of the Washington Mutual transaction, which are accounted for on a pool basis. Since each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, the past-due status of the pools, or that of the individual loans within the pools, is not meaningful. Because the Firm is recognizing interest income on each pool of loans, they are all considered to be performing.
|
(c)
|
Certain of these loans are classified as trading assets on the Consolidated Balance Sheets.
|
(d)
|
At
December 31, 2011
,
2010
and
2009
, nonperforming assets excluded: (1) mortgage loans insured by U.S. government agencies of
$11.5 billion
,
$9.4 billion
and
$9.0 billion
, respectively, that are 90 or more days past due; and (2) real estate owned insured by U.S. government agencies of
$954 million
,
$1.9 billion
and
$579 million
, respectively. These amounts were excluded as reimbursement of insured amounts is proceeding normally. For further discussion, see Note 14 on pages 231–252 of this Annual Report which summarizes loan delinquency information.
|
(e)
|
Loans held-for-sale and loans accounted for at fair value were excluded when calculating the net charge-off rate.
|
(f)
|
Excludes the impact of PCI loans that were acquired as part of the Washington Mutual transaction. These loans were accounted for at fair value on the acquisition date, which incorporated management's estimate, as of that date, of credit losses over the remaining life of the portfolio. An allowance for loan losses of
$5.7 billion
,
$4.9 billion
and
$1.6 billion
was recorded for these loans at
December 31, 2011
,
2010
and
2009
, respectively; these amounts were also excluded from the applicable ratios. To date, no charge-offs have been recorded for these loans.
|
86
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Selected income statement data
|
|
|
|
|
|||||||
Year ended December 31,
|
|
||||||||||
(in millions, except ratios)
|
2011
|
|
2010
|
|
2009
|
||||||
Noninterest revenue
|
$
|
7,201
|
|
|
$
|
6,844
|
|
|
$
|
7,204
|
|
Net interest income
|
10,809
|
|
|
10,884
|
|
|
10,864
|
|
|||
Total net revenue
|
18,010
|
|
|
17,728
|
|
|
18,068
|
|
|||
|
|
|
|
|
|
||||||
Provision for credit losses
|
419
|
|
|
630
|
|
|
1,176
|
|
|||
|
|
|
|
|
|
||||||
Noninterest expense
|
11,202
|
|
|
10,717
|
|
|
10,421
|
|
|||
Income before income tax expense
|
6,389
|
|
|
6,381
|
|
|
6,471
|
|
|||
Net income
|
$
|
3,816
|
|
|
$
|
3,652
|
|
|
$
|
3,915
|
|
Overhead ratio
|
62
|
%
|
|
60
|
%
|
|
58
|
%
|
|||
Overhead ratio excluding core deposit intangibles
(a)
|
61
|
|
|
59
|
|
|
56
|
|
(a)
|
Consumer & Business Banking
uses the overhead ratio (excluding the amortization of CDI), a non-GAAP financial measure, to evaluate the underlying expense trends of the business. Including CDI amortization expense in the overhead ratio calculation would result in a higher overhead ratio in the earlier years and a lower overhead ratio in later years; this method would therefore result in an improving overhead ratio over time, all things remaining equal. This non-GAAP ratio excluded
Consumer & Business Banking
's CDI amortization expense related to prior business combination transactions of
$238 million
and
$276 million
and
$328 million
for the years ended
December 31, 2011
,
2010
and
2009
, respectively.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
87
|
Selected metrics
|
|
|
|
|
|||||||
As of or for the year ended December 31,
|
|
||||||||||
(in millions, except ratios)
|
2011
|
|
|
2010
|
|
|
2009
|
||||
Business metrics
|
|
|
|
|
|
||||||
Business banking origination volume
|
$
|
5,827
|
|
|
$
|
4,688
|
|
|
$
|
2,299
|
|
End-of-period loans
|
17,652
|
|
|
16,812
|
|
|
16,974
|
|
|||
End-of-period deposits:
|
|
|
|
|
|
||||||
Checking
|
147,779
|
|
|
131,702
|
|
|
123,220
|
|
|||
Savings
|
191,891
|
|
|
170,604
|
|
|
156,140
|
|
|||
Time and other
|
36,743
|
|
|
45,967
|
|
|
58,185
|
|
|||
Total end-of-period deposits
|
376,413
|
|
|
348,273
|
|
|
337,545
|
|
|||
Average loans
|
17,121
|
|
|
16,863
|
|
|
17,991
|
|
|||
Average deposits:
|
|
|
|
|
|
||||||
Checking
|
136,579
|
|
|
123,490
|
|
|
116,568
|
|
|||
Savings
|
182,587
|
|
|
166,112
|
|
|
151,909
|
|
|||
Time and other
|
41,574
|
|
|
51,149
|
|
|
76,550
|
|
|||
Total average deposits
|
360,740
|
|
|
340,751
|
|
|
345,027
|
|
|||
Deposit margin
|
2.82
|
%
|
|
3.00
|
%
|
|
2.92
|
%
|
|||
Average assets
|
$
|
29,729
|
|
|
$
|
29,307
|
|
|
$
|
29,791
|
|
Selected metrics
|
|
|
|
|
|||||||
As of or for the year ended December 31,
|
|
||||||||||
(in millions, except ratios and where otherwise noted)
|
2011
|
|
|
2010
|
|
|
2009
|
||||
Credit data and quality statistics
|
|
|
|
|
|||||||
Net charge-offs
|
$
|
494
|
|
|
$
|
730
|
|
|
$
|
876
|
|
Net charge-off rate
|
2.89
|
%
|
|
4.32
|
%
|
|
4.87
|
%
|
|||
Allowance for loan losses
|
$
|
798
|
|
|
$
|
875
|
|
|
$
|
977
|
|
Nonperforming assets
|
710
|
|
|
846
|
|
|
839
|
|
|||
Retail branch business metrics
|
|
|
|
|
|||||||
Investment sales volume
|
$
|
22,716
|
|
|
$
|
23,579
|
|
|
$
|
21,784
|
|
Client investment assets
|
137,853
|
|
|
133,114
|
|
|
120,507
|
|
|||
% managed accounts
|
24
|
%
|
|
20
|
%
|
|
13
|
%
|
|||
Number of:
|
|
|
|
|
|
||||||
Branches
|
5,508
|
|
|
5,268
|
|
|
5,154
|
|
|||
Chase Private Client branch locations
|
262
|
|
|
16
|
|
|
16
|
|
|||
ATMs
|
17,235
|
|
|
16,145
|
|
|
15,406
|
|
|||
Personal bankers
(a)
|
24,308
|
|
|
21,735
|
|
|
18,009
|
|
|||
Sales specialists
(a)
|
6,017
|
|
|
4,876
|
|
|
3,915
|
|
|||
Client advisors
|
3,201
|
|
|
3,066
|
|
|
2,731
|
|
|||
Active online customers (in thousands)
(a)
|
17,334
|
|
|
16,855
|
|
|
14,627
|
|
|||
Active mobile customers (in thousands)
(a)
|
8,391
|
|
|
5,337
|
|
|
1,249
|
|
|||
Chase Private Clients
|
21,723
|
|
|
4,242
|
|
|
2,933
|
|
|||
Checking accounts (in thousands)
|
26,626
|
|
|
27,252
|
|
|
25,712
|
|
|||
(a) In 2011, the classification of personal bankers, sales specialists, and active online and mobile customers was refined; as such, prior periods have been revised to conform with the current presentation.
|
88
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Selected income statement data
|
|||||||||||
Year ended December 31,
|
|
|
|
|
|
||||||
(in millions, except ratios)
|
2011
|
|
|
2010
|
|
|
2009
|
||||
Mortgage fees and related income
|
$
|
2,714
|
|
|
$
|
3,855
|
|
|
$
|
3,794
|
|
Other noninterest revenue
|
452
|
|
|
413
|
|
|
442
|
|
|||
Net interest income
|
770
|
|
|
904
|
|
|
973
|
|
|||
Total net revenue
|
3,936
|
|
|
5,172
|
|
|
5,209
|
|
|||
|
|
|
|
|
|
||||||
Provision for credit losses
|
5
|
|
|
58
|
|
|
15
|
|
|||
|
|
|
|
|
|
||||||
Noninterest expense
|
6,735
|
|
|
4,139
|
|
|
3,244
|
|
|||
Income/(loss) before income tax expense/(benefit)
|
(2,804
|
)
|
|
975
|
|
|
1,950
|
|
|||
Net income/(loss)
|
$
|
(1,832
|
)
|
|
$
|
569
|
|
|
$
|
1,199
|
|
Overhead ratio
|
171
|
%
|
|
80
|
%
|
|
62
|
%
|
|||
|
|
|
|
|
|
||||||
Functional results
|
|
|
|
|
|
||||||
Production
|
|
|
|
|
|
||||||
Production revenue
|
$
|
3,395
|
|
|
$
|
3,440
|
|
|
$
|
2,115
|
|
Production-related net interest & other income
|
840
|
|
|
869
|
|
|
1,079
|
|
|||
Production-related revenue, excluding repurchase losses
|
4,235
|
|
|
4,309
|
|
|
3,194
|
|
|||
Production expense
|
1,895
|
|
|
1,613
|
|
|
1,575
|
|
|||
Income, excluding repurchase losses
|
2,340
|
|
|
2,696
|
|
|
1,619
|
|
|||
Repurchase losses
|
(1,347
|
)
|
|
(2,912
|
)
|
|
(1,612
|
)
|
|||
Income/(loss) before income tax expense/(benefit)
|
993
|
|
|
(216
|
)
|
|
7
|
|
|||
Servicing
|
|
|
|
|
|
||||||
Loan servicing revenue
|
4,134
|
|
|
4,575
|
|
|
4,942
|
|
|||
Servicing-related net interest & other income
|
390
|
|
|
433
|
|
|
240
|
|
|||
Servicing-related revenue
|
4,524
|
|
|
5,008
|
|
|
5,182
|
|
|||
MSR asset modeled amortization
|
(1,904
|
)
|
|
(2,384
|
)
|
|
(3,279
|
)
|
|||
Default servicing expense
(a)
|
3,814
|
|
|
1,747
|
|
|
1,002
|
|
|||
Core servicing expense
|
1,031
|
|
|
837
|
|
|
682
|
|
|||
Income/(loss), excluding MSR risk management
|
(2,225
|
)
|
|
40
|
|
|
219
|
|
|||
MSR risk management, including related net interest income/(expense)
(b)
|
(1,572
|
)
|
|
1,151
|
|
|
1,724
|
|
|||
Income/(loss) before income tax expense/(benefit)
|
(3,797
|
)
|
|
1,191
|
|
|
1,943
|
|
|||
Net income/(loss)
|
$
|
(1,832
|
)
|
|
$
|
569
|
|
|
$
|
1,199
|
|
Selected income statement data
|
|||||||||||
Year ended December 31,
|
|
|
|
|
|
||||||
(in millions)
|
2011
|
|
|
2010
|
|
|
2009
|
||||
Supplemental mortgage fees and related income details
|
|
|
|
|
|
||||||
Net production revenue:
|
|
|
|
|
|
||||||
Production revenue
|
$
|
3,395
|
|
|
$
|
3,440
|
|
|
$
|
2,115
|
|
Repurchase losses
|
(1,347
|
)
|
|
(2,912
|
)
|
|
(1,612
|
)
|
|||
Net production revenue
|
2,048
|
|
|
528
|
|
|
503
|
|
|||
Net mortgage servicing revenue:
|
|
|
|
|
|
|
|||||
Operating revenue:
|
|
|
|
|
|
|
|||||
Loan servicing revenue
|
4,134
|
|
|
4,575
|
|
|
4,942
|
|
|||
Changes in MSR asset fair value due to modeled amortization
|
(1,904
|
)
|
|
(2,384
|
)
|
|
(3,279
|
)
|
|||
Total operating revenue
|
2,230
|
|
|
2,191
|
|
|
1,663
|
|
|||
Risk management:
|
|
|
|
|
|
||||||
Changes in MSR asset fair value due to inputs or assumptions in model
|
(7,117
|
)
|
|
(2,268
|
)
|
|
5,804
|
|
|||
Derivative valuation adjustments and other
|
5,553
|
|
|
3,404
|
|
|
(4,176
|
)
|
|||
Total risk management
(b)
|
(1,564
|
)
|
|
1,136
|
|
|
1,628
|
|
|||
Total net mortgage servicing revenue
|
666
|
|
|
3,327
|
|
|
3,291
|
|
|||
Mortgage fees and related income
|
$
|
2,714
|
|
|
$
|
3,855
|
|
|
$
|
3,794
|
|
(a)
|
Includes
$1.7 billion
of fees and assessments, as well as other costs of foreclosure-related matters for the year ended
December 31, 2011
, and
$350 million
for foreclosure-related matters for the year ended
December 31, 2010
.
|
(b)
|
Predominantly includes: (1) changes in the MSR asset fair value due to changes in market interest rates and other modeled inputs and assumptions, and (2) changes in the value of the derivatives used to hedge the MSR asset. See Note 17 on pages 267–271 of this Annual Report for further information regarding changes in value of the MSR asset and related hedges.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
89
|
Selected metrics
|
|
|
||||||||||
As of or for the year ended December 31,
|
|
|
|
|
|
|
||||||
(in millions, except ratios and where otherwise noted)
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|||
Selected balance sheet data
|
|
|
|
|
|
|
||||||
End-of-period loans:
|
|
|
|
|
|
|
||||||
Prime mortgage, including option ARMs
(a)
|
$
|
16,891
|
|
|
$
|
14,186
|
|
|
$
|
11,964
|
|
|
Loans held-for-sale and loans at fair value
(b)
|
12,694
|
|
|
14,863
|
|
|
12,920
|
|
|
|||
Average loans:
|
|
|
|
|
|
|
||||||
Prime mortgage, including option ARMs
(a)
|
14,580
|
|
|
13,422
|
|
|
8,894
|
|
|
|||
Loans held-for-sale and loans at fair value
(b)
|
16,354
|
|
|
15,395
|
|
|
16,236
|
|
|
|||
Average assets
|
59,891
|
|
|
57,778
|
|
|
51,317
|
|
|
|||
Repurchase reserve (ending)
|
3,213
|
|
|
3,000
|
|
|
1,448
|
|
|
|||
Credit data and quality statistics
|
|
|
|
|
|
|
||||||
Net charge-offs:
|
|
|
|
|
|
|
||||||
Prime mortgage, including option ARMs
|
5
|
|
|
41
|
|
|
14
|
|
|
|||
Net charge-off rate:
|
|
|
|
|
|
|
||||||
Prime mortgage, including option ARMs
|
0.03
|
%
|
|
0.31
|
%
|
|
0.17
|
%
|
|
|||
30+ day delinquency rate
(c)
|
3.15
|
|
|
3.44
|
|
|
2.89
|
|
|
|||
Nonperforming assets
(d)
|
$
|
716
|
|
|
$
|
729
|
|
|
$
|
575
|
|
|
Business metrics (in billions)
|
|
|
|
|
|
|
||||||
Origination volume by channel
|
|
|
|
|
|
|
||||||
Retail
|
$
|
87.2
|
|
|
$
|
68.8
|
|
|
$
|
53.9
|
|
|
Wholesale
(e)
|
0.5
|
|
|
1.3
|
|
|
3.6
|
|
|
|||
Correspondent
(e)
|
52.1
|
|
|
75.3
|
|
|
81.0
|
|
|
|||
CNT (negotiated transactions)
|
5.8
|
|
|
10.2
|
|
|
12.2
|
|
|
|||
Total origination volume
|
$
|
145.6
|
|
|
$
|
155.6
|
|
|
$
|
150.7
|
|
|
Application volume by channel
|
|
|
|
|
|
|
||||||
Retail
|
$
|
137.2
|
|
|
$
|
115.1
|
|
|
$
|
90.9
|
|
|
Wholesale
(e)
|
1.0
|
|
|
2.4
|
|
|
4.9
|
|
|
|||
Correspondent
(e)
|
66.5
|
|
|
97.3
|
|
|
110.8
|
|
|
|||
Total application volume
|
$
|
204.7
|
|
|
$
|
214.8
|
|
|
$
|
206.6
|
|
|
Third-party mortgage loans serviced (ending)
|
$
|
902.2
|
|
|
$
|
967.5
|
|
|
$
|
1,082.1
|
|
|
Third-party mortgage loans serviced (average)
|
937.6
|
|
|
1,037.6
|
|
|
1,119.1
|
|
|
|||
MSR net carrying value (ending)
|
7.2
|
|
|
13.6
|
|
|
15.5
|
|
|
|||
Ratio of MSR net carrying value (ending) to third-party mortgage loans serviced (ending)
|
0.80
|
%
|
|
1.41
|
%
|
|
1.43
|
%
|
|
|||
Ratio of loan servicing revenue to third-party mortgage loans serviced (average)
|
0.44
|
|
|
0.44
|
|
|
0.44
|
|
|
|||
MSR revenue multiple
(f)
|
1.82x
|
|
|
3.20x
|
|
|
3.25x
|
|
|
(a)
|
Predominantly represents prime loans repurchased from Government National Mortgage Association (“Ginnie Mae”) pools, which are insured by U.S. government agencies. See further discussion of loans repurchased from Ginnie Mae pools in Mortgage repurchase liability on pages 115–118 of this Annual Report.
|
(b)
|
Loans at fair value consist of prime mortgages originated with the intent to sell that are accounted for at fair value and classified as trading assets on the Consolidated Balance Sheets. These loans
|
90
|
|
JPMorgan Chase & Co./2011 Annual Report
|
(c)
|
At
December 31, 2011
,
2010
and
2009
, excluded mortgage loans insured by U.S. government agencies of
$12.6 billion
,
$10.3 billion
and
$9.7 billion
, respectively, that are 30 or more days past due. These amounts were excluded as reimbursement of insured amounts is proceeding normally. For further discussion, see Note 14 on pages 231–252 of this Annual Report which summarizes loan delinquency information.
|
(d)
|
At
December 31, 2011
,
2010
and
2009
, nonperforming assets excluded: (1) mortgage loans insured by U.S. government agencies of
$11.5 billion
,
$9.4 billion
and
$9.0 billion
, respectively, that are 90 or more days past due; and (2) real estate owned insured by U.S. government agencies of
$954 million
,
$1.9 billion
and
$579 million
, respectively. These amounts were excluded as reimbursement of insured amounts is proceeding normally. For further discussion, see Note 14 on pages 231–252 of this Annual Report which summarizes loan delinquency information.
|
(e)
|
Includes rural housing loans sourced through brokers and correspondents, which are underwritten and closed in conjunction with the U.S. Department of Agriculture Rural Development, who acts as the guarantor in the transaction.
|
Mortgage Production and Servicing revenue comprises the following:
|
||||
Net production revenue
– Includes net gains or losses on originations and sales of prime and subprime mortgage loans, other production-related fees and losses related to the repurchase of previously-sold loans.
|
||||
Net mortgage servicing revenue
includes the following components:
|
||||
(a) Operating revenue comprises:
|
||||
– all gross income earned from servicing third-party mortgage loans including stated service fees, excess service fees, late fees and other ancillary fees; and
|
||||
– modeled MSR asset amortization (or time decay).
|
||||
(b) Risk management comprises:
|
||||
– changes in MSR asset fair value due to market-based inputs such as interest rates, as well as updates to assumptions used in the MSR valuation model; and
|
||||
– derivative valuation adjustments and other, which represents changes in the fair value of derivative instruments used to offset the impact of changes in interest rates to the MSR valuation model.
|
||||
Mortgage origination channels comprise the following:
|
||||
Retail
– Borrowers buy or refinance a home through direct contact with a mortgage banker employed by the Firm using a branch office, the Internet or by phone. Borrowers are frequently referred to a mortgage banker by a banker in a Chase branch, real estate brokers, home builders or other third parties.
|
||||
Wholesale
– Third-party mortgage brokers refer loan application packages to the Firm. The Firm then underwrites and funds the loan. Brokers are independent loan originators that specialize in counseling applicants on available home financing options, but do not provide funding for loans. Chase materially eliminated broker-originated loans in 2008, with the exception of a small number of loans guaranteed by the U.S. Department of Agriculture under its Section 502 Guaranteed Loan program that serves low-and-moderate income families in small rural communities.
|
||||
Correspondent
– Banks, thrifts, other mortgage banks and other financial institutions sell closed loans to the Firm.
|
||||
Correspondent negotiated transactions (“CNTs”)
– Mid-to-large-sized mortgage lenders, banks and bank-owned mortgage companies sell servicing to the Firm on an as-originated basis (excluding sales of bulk servicing). These transactions supplement traditional production channels and provide growth opportunities in the servicing portfolio in periods of stable and rising interest rates.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
91
|
Selected income statement data
|
|
|
|
|
|||||||
Year ended December 31,
(in millions, except ratios)
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Noninterest revenue
|
$
|
38
|
|
|
$
|
115
|
|
|
$
|
(26
|
)
|
Net interest income
|
4,554
|
|
|
5,432
|
|
|
6,546
|
|
|||
Total net revenue
|
4,592
|
|
|
5,547
|
|
|
6,520
|
|
|||
|
|
|
|
|
|
||||||
Provision for credit losses
|
3,575
|
|
|
8,231
|
|
|
13,563
|
|
|||
|
|
|
|
|
|
||||||
Noninterest expense
|
1,521
|
|
|
1,627
|
|
|
1,847
|
|
|||
Income/(loss) before income tax expense/(benefit)
|
(504
|
)
|
|
(4,311
|
)
|
|
(8,890
|
)
|
|||
Net income/(loss)
|
$
|
(306
|
)
|
|
$
|
(2,493
|
)
|
|
$
|
(5,449
|
)
|
Overhead ratio
|
33
|
%
|
|
29
|
%
|
|
28
|
%
|
92
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Selected metrics
|
|
|
|
|
|
||||||
As of or for the year ended December 31, (in millions)
|
2011
|
|
|
2010
|
|
|
2009
|
||||
Loans excluding PCI
(a)
|
|
|
|
|
|
||||||
End-of-period loans owned:
|
|
|
|
|
|
||||||
Home equity
|
$
|
77,800
|
|
|
$
|
88,385
|
|
|
$
|
101,425
|
|
Prime mortgage, including option ARMs
|
44,284
|
|
|
49,768
|
|
|
55,891
|
|
|||
Subprime mortgage
|
9,664
|
|
|
11,287
|
|
|
12,526
|
|
|||
Other
|
718
|
|
|
857
|
|
|
671
|
|
|||
Total end-of-period loans owned
|
$
|
132,466
|
|
|
$
|
150,297
|
|
|
$
|
170,513
|
|
Average loans owned:
|
|
|
|
|
|
||||||
Home equity
|
$
|
82,886
|
|
|
$
|
94,835
|
|
|
$
|
108,333
|
|
Prime mortgage, including option ARMs
|
46,971
|
|
|
53,431
|
|
|
62,155
|
|
|||
Subprime mortgage
|
10,471
|
|
|
12,729
|
|
|
13,901
|
|
|||
Other
|
773
|
|
|
954
|
|
|
841
|
|
|||
Total average loans owned
|
$
|
141,101
|
|
|
$
|
161,949
|
|
|
$
|
185,230
|
|
PCI loans
(a)
|
|
|
|
|
|
||||||
End-of-period loans owned:
|
|
|
|
|
|
||||||
Home equity
|
$
|
22,697
|
|
|
$
|
24,459
|
|
|
$
|
26,520
|
|
Prime mortgage
|
15,180
|
|
|
17,322
|
|
|
19,693
|
|
|||
Subprime mortgage
|
4,976
|
|
|
5,398
|
|
|
5,993
|
|
|||
Option ARMs
|
22,693
|
|
|
25,584
|
|
|
29,039
|
|
|||
Total end-of-period loans owned
|
$
|
65,546
|
|
|
$
|
72,763
|
|
|
$
|
81,245
|
|
Average loans owned:
|
|
|
|
|
|
||||||
Home equity
|
$
|
23,514
|
|
|
$
|
25,455
|
|
|
$
|
27,627
|
|
Prime mortgage
|
16,181
|
|
|
18,526
|
|
|
20,791
|
|
|||
Subprime mortgage
|
5,170
|
|
|
5,671
|
|
|
6,350
|
|
|||
Option ARMs
|
24,045
|
|
|
27,220
|
|
|
30,464
|
|
|||
Total average loans owned
|
$
|
68,910
|
|
|
$
|
76,872
|
|
|
$
|
85,232
|
|
Total Real Estate Portfolios
|
|
|
|
|
|
||||||
End-of-period loans owned:
|
|
|
|
|
|
||||||
Home equity
|
$
|
100,497
|
|
|
$
|
112,844
|
|
|
$
|
127,945
|
|
Prime mortgage, including option ARMs
|
82,157
|
|
|
92,674
|
|
|
104,623
|
|
|||
Subprime mortgage
|
14,640
|
|
|
16,685
|
|
|
18,519
|
|
|||
Other
|
718
|
|
|
857
|
|
|
671
|
|
|||
Total end-of-period loans owned
|
$
|
198,012
|
|
|
$
|
223,060
|
|
|
$
|
251,758
|
|
Average loans owned:
|
|
|
|
|
|
||||||
Home equity
|
$
|
106,400
|
|
|
$
|
120,290
|
|
|
$
|
135,960
|
|
Prime mortgage, including option ARMs
|
87,197
|
|
|
99,177
|
|
|
113,410
|
|
|||
Subprime mortgage
|
15,641
|
|
|
18,400
|
|
|
20,251
|
|
|||
Other
|
773
|
|
|
954
|
|
|
841
|
|
|||
Total average loans owned
|
$
|
210,011
|
|
|
$
|
238,821
|
|
|
$
|
270,462
|
|
Average assets
|
$
|
197,096
|
|
|
$
|
226,961
|
|
|
$
|
263,619
|
|
Home equity origination volume
|
1,127
|
|
|
1,203
|
|
|
2,479
|
|
(a)
|
PCI loans represent loans acquired in the Washington Mutual transaction for which a deterioration in credit quality occurred between the origination date and JPMorgan Chase's acquisition date.
|
(a)
|
Excludes the impact of PCI loans that were acquired as part of the Washington Mutual transaction. These loans were accounted for at fair value on the acquisition date, which incorporated management's estimate, as of that date, of credit losses over the remaining life of the portfolio. An allowance for loan losses of
$5.7 billion
,
$4.9 billion
and
$1.6 billion
was recorded for these loans at
December 31, 2011
,
2010
and
2009
, respectively; these amounts were also excluded from the applicable ratios. To date, no charge-offs have been recorded for these loans.
|
(b)
|
The delinquency rate for PCI loans was
23.30%
,
28.20%
and
27.62%
at
December 31, 2011
,
2010
and
2009
, respectively.
|
(c)
|
Excludes PCI loans that were acquired as part of the Washington Mutual transaction, which are accounted for on a pool basis. Since each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, the past-due status of the pools, or that of the individual loans within the pools, is not meaningful. Because the Firm is recognizing interest income on each pool of loans, they are all considered to be performing.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
93
|
CARD SERVICES & AUTO
|
Card Services & Auto is one of the nation’s largest credit card issuers, with over $132 billion in credit card loans. Customers have over 65 million open credit card accounts (excluding the commercial card portfolio), and used Chase credit cards to meet over $343 billion of their spending needs in 2011. Through its Merchant Services business, Chase Paymentech Solutions, Card is a global leader in payment processing and merchant acquiring. Consumers also can obtain loans through more than 17,200 auto dealerships and 2,000 schools and universities nationwide.
|
(a)
|
Effective
January 1, 2011
, the commercial card business that was previously in TSS was transferred to
Card
. There is no material impact on the financial data; prior-year periods were not revised.
|
(b)
|
Effective January 1, 2010, the Firm adopted accounting guidance related to VIEs. As a result of the consolidation of the securitization trusts, reported and managed basis are equivalent for periods beginning after January 1, 2010. See Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures on pages 76–78 of this Annual Report for additional information. Also, for further details regarding the Firm’s application and impact of the VIE guidance, see Note 16 on pages 256–267 of this Annual Report.
|
(c)
|
Included Commercial Card noninterest revenue of
$290 million
for the year ended December 31, 2011.
|
(d)
|
Total net revenue included tax-equivalent adjustments associated with tax-exempt loans to certain qualified entities of
$2 million
,
$7 million
and
$13 million
for the years ended
December 31, 2011
,
|
(e)
|
Included Commercial Card noninterest expense of
$298 million
for the year ended December 31, 2011.
|
94
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Selected metrics
|
|
|
|
|
|
||||||
As of or for the year ended December 31,
(in millions, except headcount and ratios)
|
2011
|
|
2010
|
|
2009
|
||||||
Selected balance sheet data (period-end)
(a)
|
|
|
|
|
|
||||||
Managed assets
|
$
|
208,467
|
|
|
$
|
208,793
|
|
|
$
|
255,029
|
|
Loans:
|
|
|
|
|
|
||||||
Credit Card
|
132,277
|
|
|
137,676
|
|
|
78,786
|
|
|||
Auto
|
47,426
|
|
|
48,367
|
|
|
46,031
|
|
|||
Student
|
13,425
|
|
|
14,454
|
|
|
15,747
|
|
|||
Total loans on balance sheets
|
193,128
|
|
|
200,497
|
|
|
140,564
|
|
|||
Securitized credit card loans
(b)
|
NA
|
|
|
NA
|
|
|
84,626
|
|
|||
Total loans
(c)
|
$
|
193,128
|
|
|
$
|
200,497
|
|
|
$
|
225,190
|
|
Equity
|
16,000
|
|
|
18,400
|
|
|
17,543
|
|
|||
Selected balance sheet
data (average)
(a)
|
|
|
|
|
|
||||||
Managed assets
|
$
|
201,162
|
|
|
$
|
213,041
|
|
|
$
|
255,519
|
|
Loans:
|
|
|
|
|
|
||||||
Credit Card
|
128,167
|
|
|
144,367
|
|
|
87,029
|
|
|||
Auto
|
47,034
|
|
|
47,603
|
|
|
43,558
|
|
|||
Student
|
13,986
|
|
|
15,945
|
|
|
16,108
|
|
|||
Total average loans on balance sheets
|
189,187
|
|
|
207,915
|
|
|
146,695
|
|
|||
Securitized credit card loans
(b)
|
NA
|
|
|
NA
|
|
|
85,378
|
|
|||
Total average loans
(d)
|
$
|
189,187
|
|
|
$
|
207,915
|
|
|
$
|
232,073
|
|
Equity
|
$
|
16,000
|
|
|
$
|
18,400
|
|
|
$
|
17,543
|
|
Headcount
(a)
|
27,585
|
|
|
25,733
|
|
|
27,914
|
|
|||
Credit data and quality statistics
(a)(b)
|
|
|
|
|
|
||||||
Net charge-offs:
|
|
|
|
|
|
||||||
Credit Card
|
$
|
6,925
|
|
|
$
|
14,037
|
|
|
$
|
16,077
|
|
Auto
|
152
|
|
|
298
|
|
|
627
|
|
|||
Student
|
434
|
|
|
387
|
|
|
253
|
|
|||
Total net charge-offs
|
$
|
7,511
|
|
|
$
|
14,722
|
|
|
$
|
16,957
|
|
Net charge-off rate:
|
|
|
|
|
|
||||||
Credit Card
(e)
|
5.44
|
%
|
|
9.73
|
%
|
|
9.33
|
%
|
|||
Auto
|
0.32
|
|
|
0.63
|
|
|
1.44
|
|
|||
Student
(f)
|
3.10
|
|
|
2.61
|
|
|
1.77
|
|
|||
Total net charge-off rate
|
3.99
|
|
|
7.12
|
|
|
7.37
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
95
|
Selected metrics
|
|
|
|
|
|
|
||||||
As of or for the year ended December 31,
(in millions, except ratios and where otherwise noted) |
|
2011
|
|
2010
|
|
2009
|
||||||
Delinquency rates
|
|
|
|
|
|
|
||||||
30+ day delinquency rate:
|
|
|
|
|
|
|
||||||
Credit Card
(g)
|
|
2.81
|
%
|
|
4.14
|
%
|
|
6.28
|
%
|
|||
Auto
|
|
1.13
|
|
|
1.22
|
|
|
1.63
|
|
|||
Student
(h)(i)
|
|
1.78
|
|
|
1.53
|
|
|
1.50
|
|
|||
Total 30+ day delinquency rate
|
|
2.32
|
|
|
3.23
|
|
|
5.02
|
|
|||
90+ day delinquency rate – Credit Card
(g)
|
|
1.44
|
|
|
2.25
|
|
|
3.59
|
|
|||
Nonperforming assets
(j)
|
|
$
|
228
|
|
|
$
|
269
|
|
|
$
|
340
|
|
Allowance for loan losses:
|
|
|
|
|
|
|
||||||
Credit Card
(k)
|
|
$
|
6,999
|
|
|
$
|
11,034
|
|
|
$
|
9,672
|
|
Auto and Student
|
|
1,010
|
|
|
899
|
|
|
1,042
|
|
|||
Total allowance for loan losses
|
|
$
|
8,009
|
|
|
$
|
11,933
|
|
|
$
|
10,714
|
|
Allowance for loan losses to period-end loans:
|
|
|
|
|
|
|
|
|||||
Credit Card
(g)(k)
|
|
5.30
|
%
|
|
8.14
|
%
|
|
12.28
|
%
|
|||
Auto and Student
(h)
|
|
1.66
|
|
|
1.43
|
|
|
1.73
|
|
|||
Total allowance for loan losses to period-end loans
|
|
4.15
|
|
|
6.02
|
|
|
7.72
|
|
|||
Business metrics
|
|
|
|
|
|
|
||||||
Credit Card, excluding Commercial Card
(a)
|
|
|
|
|
|
|
||||||
Sales volume (in billions)
|
|
$
|
343.7
|
|
|
$
|
313.0
|
|
|
$
|
294.1
|
|
New accounts opened
|
|
8.8
|
|
|
11.3
|
|
|
10.2
|
|
|||
Open accounts
(l)
|
|
65.2
|
|
|
90.7
|
|
|
93.3
|
|
|||
Merchant Services
|
|
|
|
|
|
|
||||||
Bank card volume
(in billions)
|
|
$
|
553.7
|
|
|
$
|
469.3
|
|
|
$
|
409.7
|
|
Total transactions
(in billions)
|
|
24.4
|
|
|
20.5
|
|
|
18.0
|
|
|||
Auto and Student
|
|
|
|
|
|
|
||||||
Origination volume
(in billions)
|
|
|
|
|
|
|
||||||
Auto
|
|
$
|
21.0
|
|
|
$
|
23.0
|
|
|
$
|
23.7
|
|
Student
|
|
0.3
|
|
|
1.9
|
|
|
4.2
|
|
The following are brief descriptions of selected business metrics within Card Services & Auto.
|
Sales volume
– Dollar amount of cardmember purchases, net of returns.
|
Open accounts
– Cardmember accounts with charging privileges.
|
Merchant Services business
– A business that processes bank card transactions for merchants.
|
Bank card volume
– Dollar amount of transactions processed for merchants.
|
Total transactions
– Number of transactions and authorizations processed for merchants.
|
Auto origination volume
- Dollar amount of loans and leases originated.
|
Commercial Card
provides a wide range of payment services to corporate and public sector clients worldwide through the commercial card products. Services include procurement, corporate travel and entertainment, expense management services and business-to-business payment solutions.
|
As of or for the year ended December 31,
(in millions, except ratios) |
|
2011
|
|
2010
|
|
2009
|
||||||
Supplemental information
(a)(m)
|
|
|
|
|
|
|
||||||
Card Services, excluding Washington Mutual portfolio
|
|
|
|
|
|
|
||||||
Loans (period-end)
|
|
$
|
121,224
|
|
|
$
|
123,943
|
|
|
$
|
143,759
|
|
Average loans
|
|
116,186
|
|
|
128,312
|
|
|
148,765
|
|
|||
Net interest income
(n)
|
|
8.70
|
%
|
|
8.86
|
%
|
|
8.97
|
%
|
|||
Net revenue
(n)
|
|
11.74
|
|
|
11.22
|
|
|
10.63
|
|
|||
Risk adjusted margin
(n)(o)
|
|
9.39
|
|
|
5.81
|
|
|
1.39
|
|
|||
Net charge-offs
|
|
$
|
5,668
|
|
|
$
|
11,191
|
|
|
$
|
12,574
|
|
Net charge-off rate
(e)
|
|
4.88
|
%
|
|
8.72
|
%
|
|
8.45
|
%
|
|||
30+ day delinquency rate
(g)
|
|
2.53
|
|
|
3.66
|
|
|
5.52
|
|
|||
90+ day delinquency rate
(g)
|
|
1.29
|
|
|
1.98
|
|
|
3.13
|
|
|||
Card Services, excluding Washington Mutual and Commercial Card portfolios
|
|
|
|
|
|
|
||||||
Loans (period-end)
|
|
$
|
119,966
|
|
|
$
|
123,943
|
|
|
$
|
143,759
|
|
Average loans
|
|
114,828
|
|
|
128,312
|
|
|
148,765
|
|
|||
Net interest income
(n)
|
|
8.87
|
%
|
|
8.86
|
%
|
|
8.97
|
%
|
|||
Net revenue
(n)
|
|
11.69
|
|
|
11.22
|
|
|
10.63
|
|
|||
Risk adjusted margin
(n)(o)
|
|
9.32
|
|
|
5.81
|
|
|
1.39
|
|
|||
Net charge-offs
|
|
$
|
5,666
|
|
|
$
|
11,191
|
|
|
$
|
12,574
|
|
Net charge-off rate
(e)
|
|
4.93
|
%
|
|
8.72
|
%
|
|
8.45
|
%
|
|||
30+ day delinquency rate
(g)(p)
|
|
2.54
|
|
|
3.66
|
|
|
5.52
|
|
|||
90+ day delinquency rate
(g)(q)
|
|
1.30
|
|
|
1.98
|
|
|
3.13
|
|
(a)
|
Effective
January 1, 2011
, the Commercial Card business that was previously in TSS was transferred to
Card
. There is no material impact on the financial data; prior-year periods were not revised. The commercial card portfolio is excluded from business metrics and supplemental information where noted. Headcount included 1,274 employees related to the transfer of this business.
|
(b)
|
Effective January 1, 2010, the Firm adopted accounting guidance related to VIEs. As a result of the consolidation of the credit card securitization trusts, reported and managed basis relating to credit card securitizations are equivalent for periods beginning after January 1, 2010. For further details regarding the Firm’s application and impact of the guidance, see Note 16 on pages 256–267 of this Annual Report.
|
(c)
|
Total period-end loans included loans held-for-sale of
$102 million
,
$2.2 billion
and
$1.7 billion
at
December 31, 2011
,
2010
and
2009
, respectively.
|
(d)
|
Total average loans included loans held-for-sale of
$833 million
,
$1.3 billion
and
$1.8 billion
for the years ended
December 31, 2011
,
2010
and
2009
, respectively.
|
(e)
|
Average credit card loans included loans held-for-sale of
$833 million
and
$148 million
for the years ended December 31, 2011 and 2010, respectively. These amounts are excluded when calculating the net charge-off rate. For Card Services, excluding the Washington Mutual portfolio, and Card Services, excluding the Washington Mutual and Commercial Card portfolios, these amounts are included when calculating the net charge-off rate.
|
(f)
|
Average student loans included loans held-for-sale of
$1.1 billion
and
$1.8 billion
for the years ended December 31, 2010 and 2009, respectively. These amounts are excluded when calculating the net charge-off rate.
|
(g)
|
Period-end credit card loans included loans held-for-sale of
$102 million
and
$2.2 billion
at
December 31, 2011
and
2010
, respectively. No allowance for loan losses was recorded for these loans. These amounts are excluded when calculating the allowance for loan losses to period-end loans and delinquency rates. For Card Services, excluding the Washington Mutual portfolio, and Card Services, excluding the Washington Mutual and Commercial Card portfolios, these amounts are included when calculating the delinquency rates.
|
96
|
|
JPMorgan Chase & Co./2011 Annual Report
|
(h)
|
Period-end student loans included loans held-for-sale of
$1.7 billion
at December 31, 2009. This amount is excluded when calculating the allowance for loan losses to period-end loans and the 30+ day delinquency rate.
|
(i)
|
Excluded student loans insured by U.S. government agencies under the Federal Family Education Loan Program (“FFELP”) of
$989 million
,
$1.1 billion
and
$942 million
at
December 31, 2011
,
2010
and
2009
, respectively, that are 30 or more days past due. These amounts are excluded as reimbursement of insured amounts is proceeding normally.
|
(j)
|
Nonperforming assets excluded student loans insured by U.S. government agencies under the FFELP of
$551 million
,
$625 million
and
$542 million
at
December 31, 2011
,
2010
and
2009
, respectively, that are 90 or more days past due. These amounts are excluded as reimbursement of insured amounts is proceeding normally.
|
(k)
|
Based on loans on the Consolidated Balance Sheets.
|
(l)
|
Reflected the impact of portfolio sales in the second quarter of 2011.
|
(m)
|
Supplemental information is provided for Card Services, excluding Washington Mutual and Commercial Card portfolios and including loans held-for-sale, which are non-GAAP financial measures, to provide more meaningful measures that enable comparability with prior periods.
|
(n)
|
As a percentage of average managed loans.
|
(o)
|
Represents total net revenue less provision for credit losses.
|
(p)
|
At
December 31, 2011
,
2010
and
2009
, the 30+ day delinquent loans for Card Services, excluding Washington Mutual and Commercial Card portfolios, were
$3,047 million
,
$4,541 million
and
$7,930 million
, respectively.
|
(q)
|
At
December 31, 2011
,
2010
and
2009
, the 90+ day delinquent loans for Card Services, excluding Washington Mutual and Commercial Card portfolios, were
$1,557 million
,
$2,449 million
and
$4,503 million
, respectively.
|
Year ended December 31,
(in millions, except ratios)
|
2011
|
|
2010
|
|
2009
|
||||||
Income statement data
|
|
|
|
|
|
||||||
Credit card income
|
|
|
|
|
|
||||||
Reported
|
$
|
4,127
|
|
|
$
|
3,514
|
|
|
$
|
5,107
|
|
Securitization adjustments
|
NA
|
|
|
NA
|
|
|
(1,494
|
)
|
|||
Managed credit card income
|
$
|
4,127
|
|
|
$
|
3,514
|
|
|
$
|
3,613
|
|
Net interest income
|
|
|
|
|
|
||||||
Reported
|
$
|
14,247
|
|
|
$
|
16,187
|
|
|
$
|
11,543
|
|
Securitization adjustments
|
NA
|
|
|
NA
|
|
|
7,937
|
|
|||
Fully tax-equivalent adjustments
|
2
|
|
|
7
|
|
|
13
|
|
|||
Managed net interest income
|
$
|
14,249
|
|
|
$
|
16,194
|
|
|
$
|
19,493
|
|
Total net revenue
|
|
|
|
|
|
||||||
Reported
|
$
|
19,139
|
|
|
$
|
20,465
|
|
|
$
|
16,743
|
|
Securitization adjustments
|
NA
|
|
|
NA
|
|
|
6,443
|
|
|||
Fully tax-equivalent adjustments
|
2
|
|
|
7
|
|
|
13
|
|
|||
Managed total net revenue
|
$
|
19,141
|
|
|
$
|
20,472
|
|
|
$
|
23,199
|
|
Provision for credit losses
|
|
|
|
|
|
||||||
Reported
|
$
|
3,621
|
|
|
$
|
8,570
|
|
|
$
|
13,205
|
|
Securitization adjustments
|
NA
|
|
|
NA
|
|
|
6,443
|
|
|||
Managed provision for credit losses
|
$
|
3,621
|
|
|
$
|
8,570
|
|
|
$
|
19,648
|
|
Income tax expense/(benefit)
|
|
|
|
|
|
||||||
Reported
|
$
|
2,929
|
|
|
$
|
1,845
|
|
|
$
|
(1,286
|
)
|
Fully tax-equivalent adjustments
|
2
|
|
|
7
|
|
|
13
|
|
|||
Managed income tax expense/(benefit)
|
$
|
2,931
|
|
|
$
|
1,852
|
|
|
$
|
(1,273
|
)
|
|
|
|
|
|
|
||||||
Balance sheet – average balances
|
|
|
|
|
|||||||
Total average assets
|
|
|
|
|
|
||||||
Reported
|
$
|
201,162
|
|
|
$
|
213,041
|
|
|
$
|
173,286
|
|
Securitization adjustments
|
NA
|
|
|
NA
|
|
|
82,233
|
|
|||
Managed average assets
|
$
|
201,162
|
|
|
$
|
213,041
|
|
|
$
|
255,519
|
|
|
|
|
|
|
|
||||||
Credit data and quality statistics
|
|
|
|
|
|||||||
Net charge-offs
|
|
|
|
|
|
||||||
Reported
|
$
|
7,511
|
|
|
$
|
14,722
|
|
|
$
|
10,514
|
|
Securitization adjustments
|
NA
|
|
|
NA
|
|
|
6,443
|
|
|||
Managed net charge-offs
|
$
|
7,511
|
|
|
$
|
14,722
|
|
|
$
|
16,957
|
|
Net charge-off rates
|
|
|
|
|
|
||||||
Reported
|
3.99
|
%
|
|
7.12
|
%
|
|
7.26
|
%
|
|||
Securitized
|
NA
|
|
|
NA
|
|
|
7.55
|
|
|||
Managed net charge-off rate
|
3.99
|
|
|
7.12
|
|
|
7.37
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
97
|
COMMERCIAL BANKING
|
Commercial Banking delivers extensive industry knowledge, local
expertise and dedicated service to more than 24,000 clients nationally, including corporations, municipalities, financial institutions and not-for-profit entities with annual revenue generally ranging from $10 million to $2 billion, and nearly 35,000 real estate investors/owners. CB partners with the Firm’s other businesses to provide comprehensive solutions, including lending, treasury services, investment banking and asset management to meet its clients’ domestic and international financial needs.
|
Selected income statement data
|
|
|
|
|
|||||||
Year ended December 31,
(in millions, except ratios)
|
2011
|
|
2010
|
|
2009
|
||||||
Revenue
|
|
|
|
|
|
||||||
Lending- and deposit-related fees
|
$
|
1,081
|
|
|
$
|
1,099
|
|
|
$
|
1,081
|
|
Asset management, administration and commissions
|
136
|
|
|
144
|
|
|
140
|
|
|||
All other income
(a)
|
978
|
|
|
957
|
|
|
596
|
|
|||
Noninterest revenue
|
2,195
|
|
|
2,200
|
|
|
1,817
|
|
|||
Net interest income
|
4,223
|
|
|
3,840
|
|
|
3,903
|
|
|||
Total net revenue
(b)
|
6,418
|
|
|
6,040
|
|
|
5,720
|
|
|||
Provision for credit losses
|
208
|
|
|
297
|
|
|
1,454
|
|
|||
Noninterest expense
|
|
|
|
|
|
||||||
Compensation expense
|
886
|
|
|
820
|
|
|
776
|
|
|||
Noncompensation expense
|
1,361
|
|
|
1,344
|
|
|
1,359
|
|
|||
Amortization of intangibles
|
31
|
|
|
35
|
|
|
41
|
|
|||
Total noninterest expense
|
2,278
|
|
|
2,199
|
|
|
2,176
|
|
|||
Income before income tax expense
|
3,932
|
|
|
3,544
|
|
|
2,090
|
|
|||
Income tax expense
|
1,565
|
|
|
1,460
|
|
|
819
|
|
|||
Net income
|
$
|
2,367
|
|
|
$
|
2,084
|
|
|
$
|
1,271
|
|
Revenue by product
|
|
|
|
|
|
||||||
Lending
(c)
|
$
|
3,455
|
|
|
$
|
2,749
|
|
|
$
|
2,663
|
|
Treasury services
(c)
|
2,270
|
|
|
2,632
|
|
|
2,642
|
|
|||
Investment banking
|
498
|
|
|
466
|
|
|
394
|
|
|||
Other
|
195
|
|
|
193
|
|
|
21
|
|
|||
Total Commercial Banking revenue
|
$
|
6,418
|
|
|
$
|
6,040
|
|
|
$
|
5,720
|
|
|
|
|
|
|
|
||||||
IB revenue, gross
(d)
|
$
|
1,421
|
|
|
$
|
1,335
|
|
|
$
|
1,163
|
|
|
|
|
|
|
|
||||||
Revenue by client segment
|
|
|
|
|
|
||||||
Middle Market Banking
|
$
|
3,145
|
|
|
$
|
3,060
|
|
|
$
|
3,055
|
|
Commercial Term Lending
|
1,168
|
|
|
1,023
|
|
|
875
|
|
|||
Corporate Client Banking
(e)
|
1,261
|
|
|
1,154
|
|
|
1,102
|
|
|||
Real Estate Banking
|
416
|
|
|
460
|
|
|
461
|
|
|||
Other
|
428
|
|
|
343
|
|
|
227
|
|
|||
Total Commercial Banking revenue
|
$
|
6,418
|
|
|
$
|
6,040
|
|
|
$
|
5,720
|
|
Financial ratios
|
|
|
|
|
|
||||||
Return on common equity
|
30
|
%
|
|
26
|
%
|
|
16
|
%
|
|||
Overhead ratio
|
35
|
|
|
36
|
|
|
38
|
|
(a)
|
CB client revenue from investment banking products and commercial card transactions is included in all other income.
|
(b)
|
Total net revenue included tax-equivalent adjustments from income tax credits related to equity investments in designated community development entities that provide loans to qualified businesses in low-income communities, as well as tax-exempt income from municipal bond activity, totaling $345 million, $238 million, and $170 million for the years ended
December 31, 2011
,
2010
and
2009
, respectively.
|
(c)
|
Effective
January 1, 2011
, product revenue from commercial card and standby letters of credit transactions was included in lending. For the year ended
December 31, 2011
, the impact of the change was $438 million. In prior-year periods, it was reported in treasury services.
|
(d)
|
Represents the total revenue related to investment banking products sold to CB clients.
|
(e)
|
Corporate Client Banking was known as Mid-Corporate Banking prior to
January 1, 2011
.
|
98
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
99
|
Selected metrics
|
|
|
|
|
|
||||||
Year ended December 31,
(in millions, except headcount and ratios)
|
2011
|
|
2010
|
|
2009
|
||||||
Selected balance sheet data (period-end)
|
|
|
|
|
|
||||||
Total assets
|
$
|
158,040
|
|
|
$
|
142,646
|
|
|
$
|
130,280
|
|
Loans:
|
|
|
|
|
|
||||||
Loans retained
|
111,162
|
|
|
97,900
|
|
|
97,108
|
|
|||
Loans held-for-sale and loans at fair value
|
840
|
|
|
1,018
|
|
|
324
|
|
|||
Total loans
|
$
|
112,002
|
|
|
$
|
98,918
|
|
|
$
|
97,432
|
|
Equity
|
8,000
|
|
|
8,000
|
|
|
8,000
|
|
|||
|
|
|
|
|
|
||||||
Period-end loans by client segment
|
|
|
|
|
|
||||||
Middle Market Banking
|
$
|
44,437
|
|
|
$
|
37,942
|
|
|
$
|
34,170
|
|
Commercial Term Lending
|
38,583
|
|
|
37,928
|
|
|
36,201
|
|
|||
Corporate Client Banking
(a)
|
16,747
|
|
|
11,678
|
|
|
12,500
|
|
|||
Real Estate Banking
|
8,211
|
|
|
7,591
|
|
|
10,619
|
|
|||
Other
|
4,024
|
|
|
3,779
|
|
|
3,942
|
|
|||
Total Commercial Banking loans
|
$
|
112,002
|
|
|
$
|
98,918
|
|
|
$
|
97,432
|
|
|
|
|
|
|
|
||||||
Selected balance sheet data (average)
|
|
|
|
|
|
||||||
Total assets
|
$
|
146,230
|
|
|
$
|
133,654
|
|
|
$
|
135,408
|
|
Loans:
|
|
|
|
|
|
||||||
Loans retained
|
103,462
|
|
|
96,584
|
|
|
106,421
|
|
|||
Loans held-for-sale and loans at fair value
|
745
|
|
|
422
|
|
|
317
|
|
|||
Total loans
|
$
|
104,207
|
|
|
$
|
97,006
|
|
|
$
|
106,738
|
|
Liability balances
(b)
|
174,729
|
|
|
138,862
|
|
|
113,152
|
|
|||
Equity
|
8,000
|
|
|
8,000
|
|
|
8,000
|
|
|||
Average loans by client segment
|
|
|
|
|
|
||||||
Middle Market Banking
|
$
|
40,759
|
|
|
$
|
35,059
|
|
|
$
|
37,459
|
|
Commercial Term Lending
|
38,107
|
|
|
36,978
|
|
|
36,806
|
|
|||
Corporate Client Banking
(a)
|
13,993
|
|
|
11,926
|
|
|
15,951
|
|
|||
Real Estate Banking
|
7,619
|
|
|
9,344
|
|
|
12,066
|
|
|||
Other
|
3,729
|
|
|
3,699
|
|
|
4,456
|
|
|||
Total Commercial Banking loans
|
$
|
104,207
|
|
|
$
|
97,006
|
|
|
$
|
106,738
|
|
|
|
|
|
|
|
||||||
Headcount
|
5,520
|
|
|
4,881
|
|
|
4,151
|
|
Year ended December 31,
(in millions, except headcount and ratios)
|
2011
|
|
2010
|
|
2009
|
||||||
Credit data and quality statistics
|
|
|
|
|
|
||||||
Net charge-offs
|
$
|
187
|
|
|
$
|
909
|
|
|
$
|
1,089
|
|
Nonperforming assets
|
|
|
|
|
|
||||||
Nonaccrual loans:
|
|
|
|
|
|
||||||
Nonaccrual loans retained
(c)
|
1,036
|
|
|
1,964
|
|
|
2,764
|
|
|||
Nonaccrual loans held-for-sale and loans held at fair value
|
17
|
|
|
36
|
|
|
37
|
|
|||
Total nonaccrual loans
|
1,053
|
|
|
2,000
|
|
|
2,801
|
|
|||
Assets acquired in loan satisfactions
|
85
|
|
|
197
|
|
|
188
|
|
|||
Total nonperforming assets
|
1,138
|
|
|
2,197
|
|
|
2,989
|
|
|||
Allowance for credit losses:
|
|
|
|
|
|
||||||
Allowance for loan losses
|
2,603
|
|
|
2,552
|
|
|
3,025
|
|
|||
Allowance for lending-related commitments
|
189
|
|
|
209
|
|
|
349
|
|
|||
Total allowance for credit losses
|
2,792
|
|
|
2,761
|
|
|
3,374
|
|
|||
Net charge-off rate
(d)
|
0.18
|
%
|
|
0.94
|
%
|
|
1.02
|
%
|
|||
Allowance for loan losses to period-end loans
retained
|
2.34
|
|
|
2.61
|
|
|
3.12
|
|
|||
Allowance for loan losses to nonaccrual loans retained
(c)
|
251
|
|
|
130
|
|
|
109
|
|
|||
Nonaccrual loans to total period-end loans
|
0.94
|
|
|
2.02
|
|
|
2.87
|
|
(a)
|
Corporate Client Banking was known as Mid-Corporate Banking prior to
January 1, 2011
.
|
(b)
|
Liability balances include deposits, as well as deposits that are swept to on-balance sheet liabilities (e.g., commercial paper, federal funds purchased, time deposits and securities loaned or sold under repurchase agreements) as part of customer cash management programs.
|
(c)
|
Allowance for loan losses of $176 million, $340 million and $581 million was held against nonaccrual loans retained at
December 31, 2011
,
2010
and 2009, respectively.
|
(d)
|
Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off rate.
|
100
|
|
JPMorgan Chase & Co./2011 Annual Report
|
TREASURY & SECURITIES SERVICES
|
Treasury & Securities Services is a global leader in transaction, investment and information services. TSS is one of the world’s largest cash management providers and a leading global custodian. 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. TS partners with IB, CB, RFS and AM businesses to serve clients firmwide. Certain TS revenue is included in other segments’ results. Worldwide Securities Services holds, values, clears and services securities, cash and alternative investments for investors and broker-dealers, and manages depositary receipt programs globally.
|
Selected income statement data
|
|
|
|
|
|||||||
Year ended December 31,
(in millions, except ratio data) |
2011
|
|
2010
|
|
2009
|
||||||
Revenue
|
|
|
|
|
|
||||||
Lending- and deposit-related fees
|
$
|
1,240
|
|
|
$
|
1,256
|
|
|
$
|
1,285
|
|
Asset management, administration and commissions
|
2,748
|
|
|
2,697
|
|
|
2,631
|
|
|||
All other income
|
556
|
|
|
804
|
|
|
831
|
|
|||
Noninterest revenue
|
4,544
|
|
|
4,757
|
|
|
4,747
|
|
|||
Net interest income
|
3,158
|
|
|
2,624
|
|
|
2,597
|
|
|||
Total net revenue
|
7,702
|
|
|
7,381
|
|
|
7,344
|
|
|||
Provision for credit losses
|
1
|
|
|
(47
|
)
|
|
55
|
|
|||
|
|
|
|
|
|
||||||
Credit allocation income/(expense)
(a)
|
8
|
|
|
(121
|
)
|
|
(121
|
)
|
|||
|
|
|
|
|
|
||||||
Noninterest expense
|
|
|
|
|
|
||||||
Compensation expense
|
2,824
|
|
|
2,734
|
|
|
2,544
|
|
|||
Noncompensation expense
|
2,971
|
|
|
2,790
|
|
|
2,658
|
|
|||
Amortization of intangibles
|
68
|
|
|
80
|
|
|
76
|
|
|||
Total noninterest expense
|
5,863
|
|
|
5,604
|
|
|
5,278
|
|
|||
Income before income tax expense
|
1,846
|
|
|
1,703
|
|
|
1,890
|
|
|||
Income tax expense
|
642
|
|
|
624
|
|
|
664
|
|
|||
Net income
|
$
|
1,204
|
|
|
$
|
1,079
|
|
|
$
|
1,226
|
|
Financial ratios
|
|
|
|
|
|
||||||
Return on common equity
|
17
|
%
|
|
17
|
%
|
|
25
|
%
|
|||
Pretax margin ratio
|
24
|
|
|
23
|
|
|
26
|
|
|||
Overhead ratio
|
76
|
|
|
76
|
|
|
72
|
|
|||
Pre-provision profit ratio
(b)
|
24
|
|
|
24
|
|
|
28
|
|
(a)
|
IB manages traditional credit exposures related to GCB on behalf of IB and TSS. Effective
January 1, 2011
, IB and TSS share the economics related to the Firm’s GCB clients. Included within this allocation are net revenue, provision for credit losses and expenses. The prior years reflected a reimbursement to IB for a portion of the total costs of managing the credit portfolio. IB recognizes this credit allocation as a component of all other income.
|
(b)
|
Pre-provision profit ratio represents total net revenue less total noninterest expense divided by total net revenue. This reflects the operating performance before the impact of credit, and is another measure of performance for TSS against the performance of competitors.
|
Year ended December 31,
(in millions) |
2011
|
|
2010
|
|
2009
|
||||||
Revenue by business
|
|
|
|
|
|
||||||
Worldwide Securities Services (“WSS”)
|
|
|
|
|
|
||||||
Investor Services
|
$
|
3,019
|
|
|
$
|
2,869
|
|
|
$
|
2,836
|
|
Clearance, Collateral Management and Depositary Receipts
|
842
|
|
|
814
|
|
|
806
|
|
|||
Total WSS revenue
|
$
|
3,861
|
|
|
$
|
3,683
|
|
|
$
|
3,642
|
|
Treasury Services (“TS”)
|
|
|
|
|
|
||||||
Transaction Services
|
$
|
3,240
|
|
|
$
|
3,233
|
|
|
$
|
3,312
|
|
Trade Finance
|
601
|
|
|
465
|
|
|
390
|
|
|||
Total TS revenue
|
$
|
3,841
|
|
|
$
|
3,698
|
|
|
$
|
3,702
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
101
|
Selected metrics
|
|
|
|
|
|
||||||
Year ended December 31,
(in millions, except headcount data)
|
2011
|
|
2010
|
|
2009
|
||||||
Selected balance sheet data (period-end)
|
|
|
|
|
|
||||||
Total assets
|
$
|
68,665
|
|
|
$
|
45,481
|
|
|
$
|
38,054
|
|
Loans
(a)
|
42,992
|
|
|
27,168
|
|
|
18,972
|
|
|||
Equity
|
7,000
|
|
|
6,500
|
|
|
5,000
|
|
|||
Selected balance sheet data (average)
|
|
|
|
|
|
||||||
Total assets
|
$
|
56,151
|
|
|
$
|
42,494
|
|
|
$
|
35,963
|
|
Loans
(a)
|
34,268
|
|
|
23,271
|
|
|
18,397
|
|
|||
Liability balances
|
318,802
|
|
|
248,451
|
|
|
248,095
|
|
|||
Equity
|
7,000
|
|
|
6,500
|
|
|
5,000
|
|
|||
|
|
|
|
|
|
||||||
Headcount
|
27,825
|
|
|
29,073
|
|
|
26,609
|
|
Year ended December 31,
(in millions, except ratio data, and where otherwise noted) |
2011
|
|
2010
|
|
2009
|
||||||
Credit data and quality statistics
|
|
|
|
|
|
||||||
Net charge-offs
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
19
|
|
Nonaccrual loans
|
4
|
|
|
12
|
|
|
14
|
|
|||
Allowance for credit losses:
|
|
|
|
|
|
||||||
Allowance for loan losses
|
65
|
|
|
65
|
|
|
88
|
|
|||
Allowance for lending-related commitments
|
49
|
|
|
51
|
|
|
84
|
|
|||
Total allowance for credit losses
|
114
|
|
|
116
|
|
|
172
|
|
|||
Net charge-off rate
|
—
|
%
|
|
—
|
%
|
|
0.10
|
%
|
|||
Allowance for loan losses to period-end loans
|
0.15
|
|
|
0.24
|
|
|
0.46
|
|
|||
Allowance for loan losses to nonaccrual loans
|
NM
|
|
|
NM
|
|
|
NM
|
|
|||
Nonaccrual loans to period-end loans
|
0.01
|
|
|
0.04
|
|
|
0.07
|
|
|||
WSS business metrics
|
|
|
|
|
|
||||||
Assets under custody (“AUC”)
by assets class (period-end)(in billions)
|
|
|
|
|
|
||||||
Fixed income
|
$
|
10,926
|
|
|
$
|
10,364
|
|
|
$
|
10,073
|
|
Equity
|
4,878
|
|
|
4,850
|
|
|
4,090
|
|
|||
Other
(b)
|
1,066
|
|
|
906
|
|
|
722
|
|
|||
Total AUC
|
$
|
16,870
|
|
|
$
|
16,120
|
|
|
$
|
14,885
|
|
Liability balances (average)
|
100,660
|
|
|
79,457
|
|
|
86,936
|
|
|||
TS business metrics
|
|
|
|
|
|
||||||
TS liability balances (average)
|
218,142
|
|
|
168,994
|
|
|
161,159
|
|
|||
Trade finance loans (period-end)
|
36,696
|
|
|
21,156
|
|
|
10,227
|
|
(a)
|
Loan balances include trade finance loans, wholesale overdrafts and commercial card. Effective
January 1, 2011
, the commercial card loan business (of approximately
$1.2 billion
) that was previously in TSS was transferred to
Card
. There is no material impact on the financial data; the prior years were not revised.
|
(b)
|
Consists of mutual funds, unit investment trusts, currencies, annuities, insurance contracts, options and nonsecurities contracts.
|
102
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Selected metrics
|
|
|
|
|
|
||||||
Year ended December 31,
(in millions, except where otherwise noted) |
2011
|
|
2010
|
|
2009
|
||||||
International metrics
|
|
|
|
|
|
||||||
Net revenue by geographic region
(a)
|
|
|
|
|
|
||||||
Asia/Pacific
|
$
|
1,235
|
|
|
$
|
978
|
|
|
$
|
845
|
|
Latin America/Caribbean
|
329
|
|
|
257
|
|
|
221
|
|
|||
Europe/Middle East/Africa
|
2,658
|
|
|
2,389
|
|
|
2,462
|
|
|||
North America
|
3,480
|
|
|
3,757
|
|
|
3,816
|
|
|||
Total net revenue
|
$
|
7,702
|
|
|
$
|
7,381
|
|
|
$
|
7,344
|
|
Average liability balances
(a)
|
|
|
|
|
|
||||||
Asia/Pacific
|
$
|
43,524
|
|
|
$
|
32,862
|
|
|
$
|
28,501
|
|
Latin America/Caribbean
|
12,625
|
|
|
11,558
|
|
|
8,231
|
|
|||
Europe/Middle East/Africa
|
123,920
|
|
|
102,014
|
|
|
101,683
|
|
|||
North America
|
138,733
|
|
|
102,017
|
|
|
109,680
|
|
|||
Total average liability balances
|
$
|
318,802
|
|
|
$
|
248,451
|
|
|
$
|
248,095
|
|
Trade finance loans
(period-end)
(a)
|
|
|
|
|
|
||||||
Asia/Pacific
|
$
|
19,280
|
|
|
$
|
11,834
|
|
|
$
|
4,519
|
|
Latin America/Caribbean
|
6,254
|
|
|
3,628
|
|
|
2,458
|
|
|||
Europe/Middle East/Africa
|
9,726
|
|
|
4,874
|
|
|
2,171
|
|
|||
North America
|
1,436
|
|
|
820
|
|
|
1,079
|
|
|||
Total trade finance loans
|
$
|
36,696
|
|
|
$
|
21,156
|
|
|
$
|
10,227
|
|
AUC (period-end)
(in billions)
(a)
|
|
|
|
|
|
||||||
North America
|
$
|
9,735
|
|
|
$
|
9,836
|
|
|
$
|
9,391
|
|
All other regions
|
7,135
|
|
|
6,284
|
|
|
5,494
|
|
|||
Total AUC
|
$
|
16,870
|
|
|
$
|
16,120
|
|
|
$
|
14,885
|
|
TSS firmwide disclosures
(b)
|
|
|
|
|
|
||||||
TS revenue – reported
|
$
|
3,841
|
|
|
$
|
3,698
|
|
|
$
|
3,702
|
|
TS revenue reported in CB
(c)
|
2,270
|
|
|
2,632
|
|
|
2,642
|
|
|||
TS revenue reported in other lines of business
|
265
|
|
|
247
|
|
|
245
|
|
|||
TS firmwide revenue
(d)
|
6,376
|
|
|
6,577
|
|
|
6,589
|
|
|||
WSS revenue
|
3,861
|
|
|
3,683
|
|
|
3,642
|
|
|||
TSS firmwide revenue
(d)
|
$
|
10,237
|
|
|
$
|
10,260
|
|
|
$
|
10,231
|
|
TSS total foreign exchange (“FX”) revenue
(d)
|
658
|
|
|
636
|
|
|
661
|
|
|||
TS firmwide liability balances (average)
(e)
|
393,022
|
|
|
308,028
|
|
|
274,472
|
|
|||
TSS firmwide liability balances (average)
(e)
|
493,531
|
|
|
387,313
|
|
|
361,247
|
|
|||
Number of:
|
|
|
|
|
|
||||||
U.S.$ ACH transactions originated
|
3,906
|
|
|
3,892
|
|
|
3,896
|
|
|||
Total U.S.$ clearing volume
(in thousands)
|
129,417
|
|
|
122,123
|
|
|
113,476
|
|
|||
International electronic funds transfer volume (in thousands)
(f)
|
250,537
|
|
|
232,453
|
|
|
193,348
|
|
|||
Wholesale check volume
|
2,333
|
|
|
2,060
|
|
|
2,184
|
|
|||
Wholesale cards issued
(in thousands)
(g)
|
25,187
|
|
|
29,785
|
|
|
27,138
|
|
(a)
|
Total net revenue, average liability balances, trade finance loans and AUC are based on the domicile of the client.
|
(b)
|
TSS firmwide metrics include revenue recorded in CB, Consumer & Business Banking and AM lines of business and net TSS FX revenue (it excludes TSS FX revenue recorded in IB). In order to capture the firmwide impact of TS and TSS products and revenue, management reviews firmwide metrics in assessing financial performance of TSS.
|
(c)
|
Effective
January 1, 2011
, certain CB revenues were excluded in the TS firmwide metrics; they are instead directly captured within CB’s lending revenue by product. The impact of this change was
$438 million
for the year ended
December 31, 2011
. In previous years, these revenues were included in CB’s treasury services revenue by product.
|
(d)
|
IB executes FX transactions on behalf of TSS customers under revenue sharing agreements. FX revenue generated by TSS customers is recorded in TSS and IB. TSS Total FX revenue reported above is the gross (pre-split) FX revenue generated by TSS customers. However, TSS firmwide revenue includes only the FX revenue booked in TSS, i.e., it does not include the portion of TSS FX revenue recorded in IB.
|
(e)
|
Firmwide liability balances include liability balances recorded in CB.
|
(f)
|
International electronic funds transfer includes non-U.S. dollar Automated Clearing House (“ACH”) and clearing volume.
|
(g)
|
Wholesale cards issued and outstanding include commercial, stored value, prepaid and government electronic benefit card products. Effective
January 1, 2011
, the commercial card portfolio was transferred from TSS to Card.
|
Description of a business metric within TSS:
|
||||
Liability balances
include deposits, as well as deposits that are swept to on-balance sheet liabilities (e.g., commercial paper, federal funds purchased, time deposits and securities loaned or sold under repurchase agreements) as part of customer cash management programs.
|
||||
Description of selected products and services within TSS:
|
||||
Investor Services
includes primarily custody, fund accounting and administration, and securities lending products sold principally to asset managers, insurance companies and public and private investment funds.
|
||||
Clearance, Collateral Management & Depositary Receipts
primarily includes broker-dealer clearing and custody services, including tri-party repo transactions, collateral management products, and depositary bank services for American and global depositary receipt programs.
|
||||
Transaction Services
includes a broad range of products that enable clients to manage payments and receipts, as well as invest and manage funds. Products include U.S. dollar and multi-currency clearing, ACH, lockbox, disbursement and reconciliation services, check deposits, and currency related services.
|
||||
Trade Finance
enables the management of cross-border trade for bank and corporate clients. Products include loans directly tied to goods crossing borders, export/import loans, commercial letters of credit, standby letters of credit, and supply chain finance.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
103
|
ASSET MANAGEMENT
|
Asset Management, with assets under supervision of $1.9 trillion,
is a global leader in investment and wealth management. AM clients include institutions, retail investors and high-net-worth individuals in every major market throughout the world. AM offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity products, including money market instruments and bank deposits. AM also provides trust and estate, banking and brokerage 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.
|
Selected income statement data
|
|
|
|
|
|||||||
Year ended December 31,
(in millions, except ratios)
|
2011
|
|
2010
|
|
2009
|
||||||
Revenue
|
|
|
|
|
|
||||||
Asset management, administration and commissions
|
$
|
6,748
|
|
|
$
|
6,374
|
|
|
$
|
5,621
|
|
All other income
|
1,147
|
|
|
1,111
|
|
|
751
|
|
|||
Noninterest revenue
|
7,895
|
|
|
7,485
|
|
|
6,372
|
|
|||
Net interest income
|
1,648
|
|
|
1,499
|
|
|
1,593
|
|
|||
Total net revenue
|
9,543
|
|
|
8,984
|
|
|
7,965
|
|
|||
|
|
|
|
|
|
||||||
Provision for credit losses
|
67
|
|
|
86
|
|
|
188
|
|
|||
|
|
|
|
|
|
||||||
Noninterest expense
|
|
|
|
|
|
||||||
Compensation expense
|
4,152
|
|
|
3,763
|
|
|
3,375
|
|
|||
Noncompensation expense
|
2,752
|
|
|
2,277
|
|
|
2,021
|
|
|||
Amortization of intangibles
|
98
|
|
|
72
|
|
|
77
|
|
|||
Total noninterest expense
|
7,002
|
|
|
6,112
|
|
|
5,473
|
|
|||
Income before income tax expense
|
2,474
|
|
|
2,786
|
|
|
2,304
|
|
|||
Income tax expense
|
882
|
|
|
1,076
|
|
|
874
|
|
|||
Net income
|
$
|
1,592
|
|
|
$
|
1,710
|
|
|
$
|
1,430
|
|
Revenue by client segment
|
|
|
|
|
|
||||||
Private Banking
|
$
|
5,116
|
|
|
$
|
4,860
|
|
|
$
|
4,320
|
|
Institutional
|
2,273
|
|
|
2,180
|
|
|
2,065
|
|
|||
Retail
|
2,154
|
|
|
1,944
|
|
|
1,580
|
|
|||
Total net revenue
|
$
|
9,543
|
|
|
$
|
8,984
|
|
|
$
|
7,965
|
|
Financial ratios
|
|
|
|
|
|
||||||
Return on common equity
|
25
|
%
|
|
26
|
%
|
|
20
|
%
|
|||
Overhead ratio
|
73
|
|
|
68
|
|
|
69
|
|
|||
Pretax margin ratio
|
26
|
|
|
31
|
|
|
29
|
|
104
|
|
JPMorgan Chase & Co./2011 Annual Report
|
(a)
|
Effective
January 1, 2011
, the methodology used to determine client advisors was revised. Prior periods have been revised.
|
(b)
|
Derived from Morningstar for the U.S., the U.K., Luxembourg, France, Hong Kong and Taiwan; and Nomura for Japan.
|
(c)
|
Quartile ranking sourced from: Lipper for the U.S. and Taiwan; Morningstar for the U.K., Luxembourg, France and Hong Kong; and Nomura for Japan.
|
AM’s client segments comprise the following:
|
||||
Private Banking
offers investment advice and wealth management services to high- and ultra-high-net-worth individuals, families, money managers, business owners and small corporations worldwide, including investment management, capital markets and risk management, tax and estate planning, banking, capital raising and specialty-wealth advisory services.
|
||||
Institutional
brings comprehensive global investment services – including asset management, pension analytics, asset-liability management and active risk-budgeting strategies – to corporate and public institutions, endowments, foundations, not-for-profit organizations and governments worldwide.
|
||||
Retail
provides worldwide investment management services and retirement planning and administration, through third-party and direct distribution of a full range of investment vehicles.
|
J.P. Morgan Asset Management has two high-level measures of its overall fund performance.
|
||||
• Percentage of assets under management in funds rated 4- and 5-stars (three years). Mutual fund rating services rank funds based on their risk-adjusted performance over various periods. A 5-star rating is the best and represents the top 10% of industry wide ranked funds. A 4-star rating represents the next 22% of industry wide ranked funds. The worst rating is a 1-star rating.
|
||||
• Percentage of assets under management in first- or second- quartile funds (one, three and five years). Mutual fund rating services rank funds according to a peer-based performance system, which measures returns according to specific time and fund classification (small-, mid-, multi- and large-cap).
|
JPMorgan Chase & Co./2011 Annual Report
|
|
105
|
Assets under supervision
(a)
|
|
|
|
|
|||||||
As of or the year ended
December 31,
(in billions)
|
2011
|
|
|
2010
|
|
|
2009
|
||||
Assets by asset class
|
|
|
|
|
|
||||||
Liquidity
|
$
|
515
|
|
|
$
|
497
|
|
|
$
|
591
|
|
Fixed income
|
336
|
|
|
289
|
|
|
226
|
|
|||
Equity and multi-asset
|
372
|
|
|
404
|
|
|
339
|
|
|||
Alternatives
|
113
|
|
|
108
|
|
|
93
|
|
|||
Total assets under management
|
1,336
|
|
|
1,298
|
|
|
1,249
|
|
|||
Custody/brokerage/administration/deposits
|
585
|
|
|
542
|
|
|
452
|
|
|||
Total assets under supervision
|
$
|
1,921
|
|
|
$
|
1,840
|
|
|
$
|
1,701
|
|
Assets by client segment
|
|
|
|
|
|
||||||
Private Banking
|
$
|
291
|
|
|
$
|
284
|
|
|
$
|
270
|
|
Institutional
(b)
|
722
|
|
|
703
|
|
|
731
|
|
|||
Retail
(b)
|
323
|
|
|
311
|
|
|
248
|
|
|||
Total assets under management
|
$
|
1,336
|
|
|
$
|
1,298
|
|
|
$
|
1,249
|
|
Private Banking
|
$
|
781
|
|
|
$
|
731
|
|
|
$
|
636
|
|
Institutional
(b)
|
723
|
|
|
703
|
|
|
731
|
|
|||
Retail
(b)
|
417
|
|
|
406
|
|
|
334
|
|
|||
Total assets under supervision
|
$
|
1,921
|
|
|
$
|
1,840
|
|
|
$
|
1,701
|
|
Mutual fund assets by asset class
|
|
|
|
|
|
||||||
Liquidity
|
$
|
458
|
|
|
$
|
446
|
|
|
$
|
539
|
|
Fixed income
|
107
|
|
|
92
|
|
|
67
|
|
|||
Equity and multi-asset
|
147
|
|
|
169
|
|
|
143
|
|
|||
Alternatives
|
8
|
|
|
7
|
|
|
9
|
|
|||
Total mutual fund assets
|
$
|
720
|
|
|
$
|
714
|
|
|
$
|
758
|
|
(a)
|
Excludes assets under management of American Century Companies, Inc., in which the Firm sold its ownership interest on August 31, 2011. The Firm previously had an ownership interest of
41%
and 42% in American Century Companies, Inc., whose AUM is not included in the table above, at December 31,
2010
and
2009
, respectively.
|
(b)
|
In
2011
, the client hierarchy used to determine asset classification was revised, and the prior-year periods have been revised.
|
Year ended December 31,
(in billions)
|
|
2011
|
|
2010
|
|
2009
|
||||||
Assets under management rollforward
|
|
|
|
|
|
|
||||||
Beginning balance
|
|
$
|
1,298
|
|
|
$
|
1,249
|
|
|
$
|
1,133
|
|
Net asset flows:
|
|
|
|
|
|
|
||||||
Liquidity
|
|
18
|
|
|
(89
|
)
|
|
(23
|
)
|
|||
Fixed income
|
|
40
|
|
|
50
|
|
|
34
|
|
|||
Equity, multi-asset and alternatives
|
|
13
|
|
|
19
|
|
|
17
|
|
|||
Market/performance/other impacts
|
|
(33
|
)
|
|
69
|
|
|
88
|
|
|||
Ending balance, December 31
|
|
$
|
1,336
|
|
|
$
|
1,298
|
|
|
$
|
1,249
|
|
Assets under supervision rollforward
|
|
|
|
|
|
|
||||||
Beginning balance
|
|
$
|
1,840
|
|
|
$
|
1,701
|
|
|
$
|
1,496
|
|
Net asset flows
|
|
123
|
|
|
28
|
|
|
50
|
|
|||
Market/performance/other impacts
|
|
(42
|
)
|
|
111
|
|
|
155
|
|
|||
Ending balance, December 31
|
|
$
|
1,921
|
|
|
$
|
1,840
|
|
|
$
|
1,701
|
|
International metrics
|
|
|
||||||||||
Year ended December 31,
(in billions, except where otherwise noted)
|
|
2011
|
|
2010
|
|
2009
|
||||||
Total net revenue
(in millions)
(a)
|
|
|
|
|
|
|
||||||
Europe/Middle East/Africa
|
|
$
|
1,704
|
|
|
$
|
1,642
|
|
|
$
|
1,380
|
|
Asia/Pacific
|
|
971
|
|
|
925
|
|
|
752
|
|
|||
Latin America/Caribbean
|
|
808
|
|
|
541
|
|
|
426
|
|
|||
North America
|
|
6,060
|
|
|
5,876
|
|
|
5,407
|
|
|||
Total net revenue
|
|
$
|
9,543
|
|
|
$
|
8,984
|
|
|
$
|
7,965
|
|
Assets under management
|
|
|
|
|
|
|
||||||
Europe/Middle East/Africa
|
|
$
|
278
|
|
|
$
|
282
|
|
|
$
|
293
|
|
Asia/Pacific
|
|
105
|
|
|
111
|
|
|
99
|
|
|||
Latin America/Caribbean
|
|
34
|
|
|
35
|
|
|
19
|
|
|||
North America
|
|
919
|
|
|
870
|
|
|
838
|
|
|||
Total assets under management
|
|
$
|
1,336
|
|
|
$
|
1,298
|
|
|
$
|
1,249
|
|
Assets under supervision
|
|
|
|
|
|
|
||||||
Europe/Middle East/Africa
|
|
$
|
329
|
|
|
$
|
331
|
|
|
$
|
338
|
|
Asia/Pacific
|
|
139
|
|
|
147
|
|
|
125
|
|
|||
Latin America/Caribbean
|
|
89
|
|
|
84
|
|
|
55
|
|
|||
North America
|
|
1,364
|
|
|
1,278
|
|
|
1,183
|
|
|||
Total assets under supervision
|
|
$
|
1,921
|
|
|
$
|
1,840
|
|
|
$
|
1,701
|
|
(a)
|
Regional revenue is based on the domicile of the client.
|
106
|
|
JPMorgan Chase & Co./2011 Annual Report
|
CORPORATE/PRIVATE EQUITY
|
The Corporate/Private Equity sector comprises Private Equity, Treasury, the Chief Investment Office (“CIO”), corporate staff units and expense that is centrally managed. Treasury and CIO manage capital, liquidity and structural risks of the Firm. The corporate staff units include Central Technology and Operations, Internal Audit, Executive Office, Finance, Human Resources, Marketing & Communications, Legal & Compliance, Corporate Real Estate and General Services, Risk Management, Corporate Responsibility and Strategy & Development. Other centrally managed expense includes the Firm’s occupancy and pension-related expense, net of allocations to the business.
|
Selected income statement data
|
|
|
|
|
|||||||
Year ended December 31,
(in millions, except headcount)
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Revenue
|
|
|
|
|
|
||||||
Principal transactions
|
$
|
1,434
|
|
|
$
|
2,208
|
|
|
$
|
1,574
|
|
Securities gains
|
1,600
|
|
|
2,898
|
|
|
1,139
|
|
|||
All other income
|
604
|
|
|
253
|
|
|
58
|
|
|||
Noninterest revenue
|
3,638
|
|
|
5,359
|
|
|
2,771
|
|
|||
Net interest income
|
505
|
|
|
2,063
|
|
|
3,863
|
|
|||
Total net revenue
(a)
|
4,143
|
|
|
7,422
|
|
|
6,634
|
|
|||
|
|
|
|
|
|
||||||
Provision for credit losses
|
(36
|
)
|
|
14
|
|
|
80
|
|
|||
|
|
|
|
|
|
||||||
Noninterest expense
|
|
|
|
|
|
||||||
Compensation expense
|
2,425
|
|
|
2,357
|
|
|
2,811
|
|
|||
Noncompensation expense
(b)
|
6,884
|
|
|
8,788
|
|
|
3,597
|
|
|||
Merger costs
|
—
|
|
|
—
|
|
|
481
|
|
|||
Subtotal
|
9,309
|
|
|
11,145
|
|
|
6,889
|
|
|||
Net expense allocated to other businesses
|
(5,160
|
)
|
|
(4,790
|
)
|
|
(4,994
|
)
|
|||
Total noninterest expense
|
4,149
|
|
|
6,355
|
|
|
1,895
|
|
|||
Income before income tax expense/(benefit) and extraordinary gain
|
30
|
|
|
1,053
|
|
|
4,659
|
|
|||
Income tax expense/(benefit)
(c)
|
(772
|
)
|
|
(205
|
)
|
|
1,705
|
|
|||
Income before extraordinary gain
|
802
|
|
|
1,258
|
|
|
2,954
|
|
|||
Extraordinary gain
(d)
|
—
|
|
|
—
|
|
|
76
|
|
|||
Net income
|
$
|
802
|
|
|
$
|
1,258
|
|
|
$
|
3,030
|
|
Total net revenue
|
|
|
|
|
|
||||||
Private equity
|
$
|
836
|
|
|
$
|
1,239
|
|
|
$
|
18
|
|
Corporate
|
3,307
|
|
|
6,183
|
|
|
6,616
|
|
|||
Total net revenue
|
$
|
4,143
|
|
|
$
|
7,422
|
|
|
$
|
6,634
|
|
Net income
|
|
|
|
|
|
||||||
Private equity
|
$
|
391
|
|
|
$
|
588
|
|
|
$
|
(78
|
)
|
Corporate
(e)
|
411
|
|
|
670
|
|
|
3,108
|
|
|||
Total net income
|
$
|
802
|
|
|
$
|
1,258
|
|
|
$
|
3,030
|
|
Total assets (period-end)
|
$
|
693,153
|
|
|
$
|
526,588
|
|
|
$
|
595,877
|
|
Headcount
|
22,117
|
|
|
20,030
|
|
|
20,119
|
|
(a)
|
Total net revenue included tax-equivalent adjustments, predominantly due to tax-exempt income from municipal bond investments of
$298 million
, $
226 million
and
$151 million
for the years ended
December 31, 2011
,
2010
and
2009
, respectively.
|
(b)
|
Included litigation expense of
$3.2 billion
and $
5.7 billion
for the years ended
December 31, 2011
and
2010
, respectively, compared with net benefits of
$0.3 billion
for the year ended
December 31, 2009
.
|
(c)
|
Includes tax benefits recognized upon the resolution of tax audits.
|
(d)
|
On September 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual from the FDIC for
$1.9 billion
. The acquisition resulted in negative goodwill, and accordingly, the Firm recorded an extraordinary gain. A preliminary gain of
$1.9 billion
was recognized at December 31, 2008. As a result of the final refinement of the purchase price allocation in
2009
, the Firm recognized a
$76 million
increase in the extraordinary gain. The final total extraordinary gain that resulted from the Washington Mutual transaction was
$2.0 billion
.
|
(e)
|
2009
included merger costs and the extraordinary gain related to the Washington Mutual transaction, as well as items related to the Bear Stearns merger, including merger costs, asset management liquidation costs and JPMorgan Securities broker retention expense.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
107
|
(a)
|
Reflects repositioning of the Corporate investment securities portfolio.
|
(a)
|
Unrealized gains/(losses) contain reversals of unrealized gains and losses that were recognized in prior periods and have now been realized.
|
(b)
|
Included in principal transactions revenue in the Consolidated Statements of Income.
|
(c)
|
For more information on the Firm's policies regarding the valuation of the private equity portfolio, see Note 3 on pages 184–198 of this Annual Report.
|
(d)
|
Unfunded commitments to third-party private equity funds were
$789 million
,
$1.0 billion
and
$1.5 billion
at
December 31, 2011
,
2010
and
2009
, respectively.
|
108
|
|
JPMorgan Chase & Co./2011 Annual Report
|
INTERNATIONAL OPERATIONS
|
As of or for the year ended December 31,
|
EMEA
|
|
Asia/Pacific
|
|
Latin America/Caribbean
|
|||||||||||||||
(in millions, except headcount and where otherwise noted)
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
||||||||||||
Revenue
(a)
|
$
|
16,141
|
|
$
|
14,149
|
|
|
$
|
5,971
|
|
$
|
6,082
|
|
|
$
|
2,232
|
|
$
|
1,697
|
|
Countries of operation
|
33
|
|
33
|
|
|
16
|
|
16
|
|
|
9
|
|
8
|
|
||||||
New offices
|
3
|
|
6
|
|
|
2
|
|
7
|
|
|
4
|
|
2
|
|
||||||
Total headcount
(b)
|
16,178
|
|
16,122
|
|
|
20,172
|
|
19,153
|
|
|
1,378
|
|
1,201
|
|
||||||
Front-office headcount
|
5,993
|
|
5,872
|
|
|
4,253
|
|
4,168
|
|
|
569
|
|
486
|
|
||||||
Significant clients
(c)
|
920
|
|
881
|
|
|
480
|
|
448
|
|
|
154
|
|
139
|
|
||||||
Deposits (average)
(d)
|
$
|
168,882
|
|
$
|
142,859
|
|
|
$
|
57,684
|
|
$
|
53,268
|
|
|
$
|
5,318
|
|
$
|
6,263
|
|
Loans (period-end)
(e)
|
36,637
|
|
27,934
|
|
|
31,119
|
|
20,552
|
|
|
25,141
|
|
16,480
|
|
||||||
Assets under management (in billions)
|
278
|
|
282
|
|
|
105
|
|
111
|
|
|
34
|
|
35
|
|
||||||
Assets under supervision (in billions)
|
329
|
|
331
|
|
|
139
|
|
147
|
|
|
89
|
|
84
|
|
||||||
Assets under custody (in billions)
|
5,430
|
|
4,810
|
|
|
1,426
|
|
1,321
|
|
|
279
|
|
153
|
|
(a)
|
Revenue is based predominantly on the domicile of the client, the location from which the client relationship is managed or the location of the trading desk.
|
(b)
|
Total headcount includes all employees, including those in service centers, located in the region.
|
(c)
|
Significant clients are defined as companies with over
$1 million
in revenue over a trailing 12-month period in the region (excludes private banking clients).
|
(d)
|
Deposits are based on the location from which the client relationship is managed.
|
(e)
|
Loans outstanding are based predominantly on the domicile of the borrower and exclude loans held-for-sale and loans carried at fair value.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
109
|
BALANCE SHEET ANALYSIS
|
Selected Consolidated Balance Sheets data
|
|
|
|||||
December 31, (in millions)
|
2011
|
|
2010
|
||||
Assets
|
|
|
|
||||
Cash and due from banks
|
$
|
59,602
|
|
|
$
|
27,567
|
|
Deposits with banks
|
85,279
|
|
|
21,673
|
|
||
Federal funds sold and securities purchased under resale agreements
|
235,314
|
|
|
222,554
|
|
||
Securities borrowed
|
142,462
|
|
|
123,587
|
|
||
Trading assets:
|
|
|
|
||||
Debt and equity instruments
|
351,486
|
|
|
409,411
|
|
||
Derivative receivables
|
92,477
|
|
|
80,481
|
|
||
Securities
|
364,793
|
|
|
316,336
|
|
||
Loans
|
723,720
|
|
|
692,927
|
|
||
Allowance for loan losses
|
(27,609
|
)
|
|
(32,266
|
)
|
||
Loans, net of allowance for loan losses
|
696,111
|
|
|
660,661
|
|
||
Accrued interest and accounts receivable
|
61,478
|
|
|
70,147
|
|
||
Premises and equipment
|
14,041
|
|
|
13,355
|
|
||
Goodwill
|
48,188
|
|
|
48,854
|
|
||
Mortgage servicing rights
|
7,223
|
|
|
13,649
|
|
||
Other intangible assets
|
3,207
|
|
|
4,039
|
|
||
Other assets
|
104,131
|
|
|
105,291
|
|
||
Total assets
|
$
|
2,265,792
|
|
|
$
|
2,117,605
|
|
Liabilities
|
|
|
|
||||
Deposits
|
$
|
1,127,806
|
|
|
$
|
930,369
|
|
Federal funds purchased and securities loaned or sold under repurchase agreements
|
213,532
|
|
|
276,644
|
|
||
Commercial paper
|
51,631
|
|
|
35,363
|
|
||
Other borrowed funds
(a)
|
21,908
|
|
|
34,325
|
|
||
Trading liabilities:
|
|
|
|
||||
Debt and equity instruments
|
66,718
|
|
|
76,947
|
|
||
Derivative payables
|
74,977
|
|
|
69,219
|
|
||
Accounts payable and other liabilities
|
202,895
|
|
|
170,330
|
|
||
Beneficial interests issued by consolidated VIEs
|
65,977
|
|
|
77,649
|
|
||
Long-term debt
(a)
|
256,775
|
|
|
270,653
|
|
||
Total liabilities
|
2,082,219
|
|
|
1,941,499
|
|
||
Stockholders’ equity
|
183,573
|
|
|
176,106
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,265,792
|
|
|
$
|
2,117,605
|
|
(a)
|
Effective
January 1, 2011
,
$23.0 billion
of long-term advances from FHLBs were reclassified from other borrowed funds to long-term debt. The prior-year period has been revised to conform with the current presentation. For additional information, see Notes 3 and 21 on pages 184–198 and 273–275, respectively, of this Annual Report.
|
110
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
111
|
112
|
|
JPMorgan Chase & Co./2011 Annual Report
|
OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL CASH OBLIGATIONS
|
JPMorgan Chase & Co./2011 Annual Report
|
|
113
|
(a)
|
Excludes structured notes where the Firm is not obligated to return a stated amount of principal at the maturity of the notes, but is obligated to return an amount based on the performance of the structured notes.
|
(b)
|
Primarily includes deferred annuity contracts, pension and postretirement obligations and insurance liabilities.
|
(c)
|
For further information, refer to unsettled reverse repurchase and securities borrowing agreements in Note 29 on page 286 of this Annual Report.
|
(d)
|
Includes accrued interest and future contractual interest obligations. Excludes interest related to structured notes where the Firm’s payment obligation is based on the performance of certain benchmarks.
|
(e)
|
Includes noncancelable operating leases for premises and equipment used primarily for banking purposes and for energy-related tolling service agreements. Excludes the benefit of noncancelable sublease rentals of
$1.5 billion
and $
1.8 billion
at
December 31, 2011
and
2010
, respectively.
|
(f)
|
At
December 31, 2011
and
2010
, included unfunded commitments of
$789 million
and
$1.0 billion
, respectively, to third-party private equity funds that are generally valued as discussed in Note 3 on pages 184–198 of this
Annual Report
; and
$1.5 billion
and
$1.4 billion
of unfunded commitments, respectively, to other equity investments.
|
114
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
115
|
(i)
|
the level of outstanding unresolved repurchase demands,
|
(ii)
|
estimated probable future repurchase demands, considering information about file requests, delinquent and liquidated loans, resolved and unresolved mortgage insurance rescission notices and the Firm’s historical experience,
|
(iii)
|
the potential ability of the Firm to cure the defects identified in the repurchase demands (“cure rate”),
|
(iv)
|
the estimated severity of loss upon repurchase of the loan or collateral, make-whole settlement, or indemnification,
|
(v)
|
the Firm’s potential ability to recover its losses from third-party originators, and
|
(vi)
|
the terms of agreements with certain mortgage insurers and other parties.
|
(a)
|
Mortgage repurchase demands associated with pending or threatened litigation are not reported in this table because the Firm separately evaluates its exposure to such repurchase demands in establishing its litigation reserves.
|
(b)
|
The Firm’s outstanding repurchase demands are predominantly from the GSEs. Other represents repurchase demands received from parties other than the GSEs that have been presented in accordance with the terms of the underlying sale or securitization agreement.
|
(c)
|
Because the GSEs may make repurchase demands based on mortgage insurance rescission notices that remain unresolved, certain loans may be subject to both an unresolved mortgage insurance rescission notice and an outstanding repurchase demand.
|
116
|
|
JPMorgan Chase & Co./2011 Annual Report
|
(in millions)
|
December 31,
2011 |
|
September 30,
2011 |
|
June 30,
2011 |
|
March 31,
2011 |
|
December 31,
2010 |
||||||||||
Pre-2005
|
$
|
39
|
|
|
$
|
34
|
|
|
$
|
32
|
|
|
$
|
15
|
|
|
$
|
39
|
|
2005
|
55
|
|
|
200
|
|
|
57
|
|
|
45
|
|
|
73
|
|
|||||
2006
|
315
|
|
|
232
|
|
|
363
|
|
|
158
|
|
|
198
|
|
|||||
2007
|
804
|
|
|
602
|
|
|
510
|
|
|
381
|
|
|
539
|
|
|||||
2008
|
291
|
|
|
323
|
|
|
301
|
|
|
249
|
|
|
254
|
|
|||||
Post-2008
|
81
|
|
|
153
|
|
|
89
|
|
|
94
|
|
|
65
|
|
|||||
Total repurchase demands received
|
$
|
1,585
|
|
|
$
|
1,544
|
|
|
$
|
1,352
|
|
|
$
|
942
|
|
|
$
|
1,168
|
|
(in millions)
|
December 31,
2011 |
|
September 30,
2011 |
|
June 30,
2011 |
|
March 31,
2011 |
|
December 31,
2010 |
||||||||||
Pre-2005
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
3
|
|
2005
|
12
|
|
|
15
|
|
|
24
|
|
|
32
|
|
|
9
|
|
|||||
2006
|
19
|
|
|
31
|
|
|
39
|
|
|
65
|
|
|
53
|
|
|||||
2007
|
48
|
|
|
63
|
|
|
72
|
|
|
144
|
|
|
142
|
|
|||||
2008
|
26
|
|
|
30
|
|
|
31
|
|
|
49
|
|
|
50
|
|
|||||
Post-2008
|
2
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|||||
Total mortgage insurance rescissions received
(a)
|
$
|
111
|
|
|
$
|
143
|
|
|
$
|
170
|
|
|
$
|
296
|
|
|
$
|
258
|
|
(a)
|
Mortgage insurance rescissions typically result in a repurchase demand from the GSEs. This table includes mortgage insurance rescission notices for which the GSEs also have issued a repurchase demand.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
117
|
Year ended December 31,
(in millions)
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|||
Repurchase liability at beginning of period
|
$
|
3,285
|
|
|
$
|
1,705
|
|
|
$
|
1,093
|
|
|
Realized losses
(b)
|
(1,263
|
)
|
|
(1,423
|
)
|
|
(1,253
|
)
|
(d)
|
|||
Provision for repurchase losses
|
1,535
|
|
|
3,003
|
|
|
1,865
|
|
|
|||
Repurchase liability at end of period
|
$
|
3,557
|
|
(c)
|
$
|
3,285
|
|
|
1,705
|
|
|
(a)
|
Mortgage repurchase liabilities associated with pending or threatened litigation are not reported in this table because the Firm separately evaluates its exposure to such repurchases in establishing its litigation reserves.
|
(b)
|
Includes principal losses and accrued interest on repurchased loans, “make-whole” settlements, settlements with claimants, and certain related expense. For the years ended
2011
,
2010
and
2009
, make-whole settlements were
$640 million
,
$632 million
and
$277 million
, respectively.
|
(c)
|
Includes
$173 million
at
December 31, 2011
, related to future demands on loans sold by Washington Mutual to the GSEs.
|
(d)
|
Includes the Firm’s resolution with the GSEs of certain current and future repurchase demands for certain loans sold by Washington Mutual. The unpaid principal balance of loans related to this resolution is not included in the table below, which summarizes the unpaid principal balance of repurchased loans.
|
(a)
|
This table includes (i) repurchases of mortgage loans due to breaches of representations and warranties, and (ii) loans repurchased from Ginnie Mae loan pools as described in (b) below. This table does not include mortgage insurance rescissions; while the rescission of mortgage insurance typically results in a repurchase demand from the GSEs, the mortgage insurers themselves do not present repurchase demands to the Firm. This table also excludes mortgage loan repurchases associated with pending or threatened litigation because the Firm separately evaluates its exposure to such repurchases in establishing its litigation reserves.
|
(b)
|
In substantially all cases, these repurchases represent the Firm’s voluntary repurchase of certain delinquent loans from loan pools as permitted by Ginnie Mae guidelines (i.e., they do not result from repurchase demands due to breaches of representations and warranties). The Firm typically elects to repurchase these delinquent loans as it continues to service them and/or manage the foreclosure process in accordance with applicable requirements of Ginnie Mae, the Federal Housing Administration (“FHA”), Rural Housing Services (“RHS”) and/or the U.S. Department of Veterans Affairs (“VA”).
|
(c)
|
Predominantly all of the repurchases related to demands by GSEs.
|
(d)
|
Nonaccrual loans held-for-investment included
$477 million
,
$354 million
and
$218 million
at
December 31, 2011
,
2010
and
2009
, respectively, of loans repurchased as a result of breaches of representations and warranties.
|
118
|
|
JPMorgan Chase & Co./2011 Annual Report
|
CAPITAL MANAGEMENT
|
•
|
Cover all material risks underlying the Firm’s business activities;
|
•
|
Maintain “well-capitalized” status under regulatory requirements;
|
•
|
Maintain debt ratings, which will enable the Firm to optimize its funding mix and liquidity sources while minimizing costs;
|
•
|
Retain flexibility to take advantage of future investment opportunities; and
|
•
|
Build and invest in businesses, even in a highly stressed environment.
|
•
|
Regulatory capital
– The capital required according to standards stipulated by U.S. bank regulatory agencies.
|
•
|
Economic risk capital
– The capital required as a result of a bottom-up assessment of the underlying risks of the Firm’s business activities, utilizing internal risk-assessment methodologies.
|
•
|
Line of business equity
– The amount of equity the Firm believes each business segment would require if it were operating independently, which incorporates sufficient capital to address economic risk measures, regulatory capital requirements and capital levels for similarly rated peers.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
119
|
Risk-based capital components and assets
|
|
|
|||||
December 31, (in millions)
|
2011
|
|
|
2010
|
|
||
Total stockholders’ equity
|
$
|
183,573
|
|
|
$
|
176,106
|
|
Less: Preferred stock
|
7,800
|
|
|
7,800
|
|
||
Common stockholders’ equity
|
175,773
|
|
|
168,306
|
|
||
Effect of certain items in accumulated other comprehensive income/(loss) excluded from Tier 1 common
|
(970
|
)
|
|
(748
|
)
|
||
Less: Goodwill
(a)
|
45,873
|
|
|
46,915
|
|
||
Fair value DVA on derivative and structured note liabilities related to the Firm’s credit quality
|
2,150
|
|
|
1,261
|
|
||
Investments in certain subsidiaries and other
|
993
|
|
|
1,032
|
|
||
Other intangible assets
(a)
|
2,871
|
|
|
3,587
|
|
||
Tier 1 common
|
122,916
|
|
|
114,763
|
|
||
Preferred stock
|
7,800
|
|
|
7,800
|
|
||
Qualifying hybrid securities and noncontrolling interests
(b)
|
19,668
|
|
|
19,887
|
|
||
Total Tier 1 capital
|
150,384
|
|
|
142,450
|
|
||
Long-term debt and other instruments qualifying as Tier 2
|
22,275
|
|
|
25,018
|
|
||
Qualifying allowance for credit losses
|
15,504
|
|
|
14,959
|
|
||
Adjustment for investments in certain subsidiaries and other
|
(75
|
)
|
|
(211
|
)
|
||
Total Tier 2 capital
|
37,704
|
|
|
39,766
|
|
||
Total qualifying capital
|
$
|
188,088
|
|
|
$
|
182,216
|
|
Risk-weighted assets
|
$
|
1,221,198
|
|
|
$
|
1,174,978
|
|
Total adjusted average assets
|
$
|
2,202,087
|
|
|
$
|
2,024,515
|
|
(a)
|
Goodwill and other intangible assets are net of any associated deferred tax liabilities.
|
(b)
|
Primarily includes trust preferred capital debt securities of certain business trusts.
|
120
|
|
JPMorgan Chase & Co./2011 Annual Report
|
December 31, 2011
(in millions, except ratios)
|
|
||
Tier 1 common under Basel I rules
|
$
|
122,916
|
|
Adjustments related to AOCI for AFS securities and defined benefit pension and other postretirement employee benefit plans
|
919
|
|
|
Deduction for net defined benefit pension asset
|
(1,430
|
)
|
|
All other adjustments
|
(534
|
)
|
|
Estimated Tier 1 common under Basel III rules
|
$
|
121,871
|
|
Estimated risk-weighted assets under Basel III rules
(a)
|
$
|
1,545,801
|
|
Estimated Tier 1 common ratio under Basel III rules
(b)
|
7.9
|
%
|
(a)
|
Key differences in the calculation of risk-weighted assets between Basel I and Basel III include: (a) Basel III credit risk risk-weighted assets (“RWA”) is based on risk-sensitive approaches which largely rely on the use of internal credit models and parameters, whereas Basel I RWA is based on fixed supervisory risk weightings which vary only by counterparty type and asset class; (b) Basel III market risk RWA reflects the new capital requirements related to trading assets and securitizations, which include incremental capital requirements for stress VaR, correlation trading, and re-securitization positions; and (c) Basel III includes RWA for operational risk, whereas Basel I does not.
|
(b)
|
The Tier 1 common ratio is Tier 1 common divided by RWA.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
121
|
|
|
Yearly Average
|
||||||||||
Year ended December 31,
(in billions)
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Credit risk
|
|
$
|
48.2
|
|
|
$
|
49.7
|
|
|
$
|
51.3
|
|
Market risk
|
|
14.5
|
|
|
15.1
|
|
|
15.4
|
|
|||
Operational risk
|
|
8.5
|
|
|
7.4
|
|
|
8.5
|
|
|||
Private equity risk
|
|
6.9
|
|
|
6.2
|
|
|
4.7
|
|
|||
Economic risk capital
|
|
78.1
|
|
|
78.4
|
|
|
79.9
|
|
|||
Goodwill
|
|
48.6
|
|
|
48.6
|
|
|
48.3
|
|
|||
Other
(a)
|
|
46.6
|
|
|
34.5
|
|
|
17.7
|
|
|||
Total common stockholders
’
equity
|
|
$
|
173.3
|
|
|
$
|
161.5
|
|
|
$
|
145.9
|
|
(a)
|
Reflects additional capital required, in the Firm’s view, to meet its regulatory and debt rating objectives.
|
122
|
|
JPMorgan Chase & Co./2011 Annual Report
|
•
|
Integrate firmwide and line of business capital management activities;
|
•
|
Measure performance consistently across all lines of business; and
|
•
|
Provide comparability with peer firms for each of the lines of business
|
Line of business equity
|
|
|
||||||
December 31, (in billions)
|
|
2011
|
|
2010
|
||||
Investment Bank
|
|
$
|
40.0
|
|
|
$
|
40.0
|
|
Retail Financial Services
|
|
25.0
|
|
|
24.6
|
|
||
Card Services & Auto
|
|
16.0
|
|
|
18.4
|
|
||
Commercial Banking
|
|
8.0
|
|
|
8.0
|
|
||
Treasury & Securities Services
|
|
7.0
|
|
|
6.5
|
|
||
Asset Management
|
|
6.5
|
|
|
6.5
|
|
||
Corporate/Private Equity
|
|
73.3
|
|
|
64.3
|
|
||
Total common stockholders’ equity
|
|
$
|
175.8
|
|
|
$
|
168.3
|
|
Line of business equity
|
|
Yearly Average
|
||||||||||
Year ended December 31,
(in billions)
|
|
2011
|
|
|
2010
|
|
|
2009
|
||||
Investment Bank
|
|
$
|
40.0
|
|
|
$
|
40.0
|
|
|
$
|
33.0
|
|
Retail Financial Services
|
|
25.0
|
|
|
24.6
|
|
|
22.5
|
|
|||
Card Services & Auto
|
|
16.0
|
|
|
18.4
|
|
|
17.5
|
|
|||
Commercial Banking
|
|
8.0
|
|
|
8.0
|
|
|
8.0
|
|
|||
Treasury & Securities Services
|
|
7.0
|
|
|
6.5
|
|
|
5.0
|
|
|||
Asset Management
|
|
6.5
|
|
|
6.5
|
|
|
7.0
|
|
|||
Corporate/Private Equity
|
|
70.8
|
|
|
57.5
|
|
|
52.9
|
|
|||
Total common stockholders’ equity
|
|
$
|
173.3
|
|
|
$
|
161.5
|
|
|
$
|
145.9
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
123
|
Year ended December 31,
|
2011
|
|
|
2010
|
|
|
2009
|
|
Common dividend payout ratio
|
22
|
%
|
|
5
|
%
|
|
9
|
%
|
124
|
|
JPMorgan Chase & Co./2011 Annual Report
|
RISK MANAGEMENT
|
JPMorgan Chase & Co./2011 Annual Report
|
|
125
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Committee
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
(Chief Risk Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset-Liability Committee
|
|
|
Investment Committee
|
|
|
Risk Working Group
|
|
|
Markets Committee
|
|
|
Global Counterparty Committee
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Bank Risk Committee
|
|
Retail Financial Services Risk Committee
|
|
|
Card Services & Auto Risk Committee
|
|
|
Commercial Banking Risk Committee
|
|
|
Treasury & Securities Services Risk Committee
|
|
|
Asset Management Risk Committee
|
|
|
CIO Risk Committee
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury and Chief Investment Office
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
Risk Management
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
Legal and Compliance
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Risk identification: The Firm’s exposure to risk through its daily business dealings, including lending and capital markets activities, is identified and aggregated through the Firm’s risk management infrastructure. In addition, individuals who manage risk positions, particularly those that are complex, are responsible for identifying and estimating potential losses that could arise from specific or unusual events that may not be captured in other models, and for communicating those risks to senior management.
|
•
|
Risk measurement: The Firm measures risk using a variety of methodologies, including calculating probable loss, unexpected loss and value-at-risk, and by conducting stress tests and making comparisons to external benchmarks. Measurement models and related assumptions are routinely subject to internal model
|
126
|
|
JPMorgan Chase & Co./2011 Annual Report
|
•
|
Risk monitoring/control: The Firm’s risk management policies and procedures incorporate risk mitigation strategies and include approval limits by customer, product, industry, country and business. These limits are monitored on a daily, weekly and monthly basis, as appropriate.
|
•
|
Risk reporting: The Firm reports risk exposures on both a line of business and a consolidated basis. This information is reported to management on a daily, weekly and monthly basis, as appropriate. There are nine major risk types identified in the business activities of the Firm: liquidity risk, credit risk, market risk, interest rate risk, country risk, private equity risk, operational risk, legal and fiduciary risk, and reputation risk.
|
LIQUIDITY RISK MANAGEMENT
|
JPMorgan Chase & Co./2011 Annual Report
|
|
127
|
128
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
129
|
130
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
131
|
|
Short-term debt
|
|
Senior long-term debt
|
||||
|
Moody’s
|
S&P
|
Fitch
|
|
Moody’s
|
S&P
|
Fitch
|
JPMorgan Chase & Co.
|
P-1
|
A-1
|
F1+
|
|
Aa3
|
A
|
AA-
|
JPMorgan Chase Bank, N.A.
|
P-1
|
A-1
|
F1+
|
|
Aa1
|
A+
|
AA-
|
Chase Bank USA, N.A.
|
P-1
|
A-1
|
F1+
|
|
Aa1
|
A+
|
AA-
|
CREDIT RISK MANAGEMENT
|
132
|
|
JPMorgan Chase & Co./2011 Annual Report
|
•
|
Establishing a comprehensive credit risk policy framework
|
•
|
Monitoring and managing credit risk across all portfolio segments, including transaction and line approval
|
•
|
Assigning and managing credit authorities in connection with the approval of all credit exposure
|
•
|
Managing criticized exposures and delinquent loans
|
•
|
Determining the allowance for credit losses and ensuring appropriate credit risk-based capital management
|
•
|
Probable credit losses are based primarily upon statistical estimates of credit losses as a result of obligor or counterparty default. However, probable losses are not the sole indicators of risk.
|
•
|
Unexpected losses, reflected in the allocation of credit risk capital, represent the potential volatility of actual losses relative to the probable level of incurred losses.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
133
|
•
|
Loan syndications and participations
|
•
|
Loan sales and securitizations
|
•
|
Credit derivatives
|
•
|
Use of master netting agreements
|
•
|
Collateral and other risk-reduction techniques
|
•
|
Independently assessing and validating the changing risk grades assigned to exposures; and
|
•
|
Evaluating the effectiveness of business units’ risk ratings, including the accuracy and consistency of risk grades, the timeliness of risk grade changes and the justification of risk grades in credit memoranda
|
CREDIT PORTFOLIO
|
134
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Total credit portfolio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
As of or for the year ended December 31,
|
|
Credit exposure
|
|
Nonperforming
(c)(d)(e)
|
|
Net charge-offs
|
|
Average annual net charge-off rate
(f)
|
|
||||||||||||||||||
(in millions, except ratios)
|
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|
||||||||||||||
Loans retained
|
|
$
|
718,997
|
|
$
|
685,498
|
|
|
$
|
9,810
|
|
$
|
14,345
|
|
|
$
|
12,237
|
|
$
|
23,673
|
|
|
1.78
|
%
|
3.39
|
%
|
|
Loans held-for-sale
|
|
2,626
|
|
5,453
|
|
|
110
|
|
341
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
||||||
Loans at fair value
|
|
2,097
|
|
1,976
|
|
|
73
|
|
155
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
||||||
Total loans – reported
|
|
723,720
|
|
692,927
|
|
|
9,993
|
|
14,841
|
|
|
12,237
|
|
23,673
|
|
|
1.78
|
|
3.39
|
|
|
||||||
Derivative receivables
|
|
92,477
|
|
80,481
|
|
|
18
|
|
34
|
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
|
||||||
Receivables from customers and interests in purchased receivables
|
|
17,561
|
|
32,932
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
||||||
Total credit-related assets
|
|
833,758
|
|
806,340
|
|
|
10,011
|
|
14,875
|
|
|
12,237
|
|
23,673
|
|
|
1.78
|
|
3.39
|
|
|
||||||
Lending-related commitments
(a)
|
|
975,662
|
|
958,709
|
|
|
865
|
|
1,005
|
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
|
||||||
Assets acquired in loan satisfactions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Real estate owned
|
|
NA
|
|
NA
|
|
|
975
|
|
1,610
|
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
|
||||||
Other
|
|
NA
|
|
NA
|
|
|
50
|
|
72
|
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
|
||||||
Total
assets acquired in loan satisfactions
|
|
NA
|
|
NA
|
|
|
1,025
|
|
1,682
|
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
|
||||||
Total credit portfolio
|
|
$
|
1,809,420
|
|
$
|
1,765,049
|
|
|
$
|
11,901
|
|
$
|
17,562
|
|
|
$
|
12,237
|
|
$
|
23,673
|
|
|
1.78
|
%
|
3.39
|
%
|
|
Net credit derivative hedges notional
(b)
|
|
$
|
(26,240
|
)
|
$
|
(23,108
|
)
|
|
$
|
(38
|
)
|
$
|
(55
|
)
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
|
||
Liquid securities and other cash collateral held against derivatives
|
|
(21,807
|
)
|
(16,486
|
)
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
|
(a)
|
The amounts in nonperforming represent commitments that are risk rated as nonaccrual.
|
(b)
|
Represents the net notional amount of protection purchased and sold of single-name and portfolio credit derivatives used to manage both performing and nonperforming credit exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP. For additional information, see Credit derivatives on pages 143–144 and Note 6 on pages 202–210 of this Annual Report.
|
(c)
|
At
December 31, 2011
and
2010
, nonperforming assets excluded: (1) mortgage loans insured by U.S. government agencies of
$11.5 billion
and
$9.4 billion
, respectively, that are 90 or more days past due; (2) real estate owned insured by U.S. government agencies of
$954 million
and
$1.9 billion
, respectively; and (3) student loans insured by U.S. government agencies under the FFELP of
$551 million
and
$625 million
, respectively, that are 90 or more days past due. These amounts were excluded as reimbursement of insured amounts is proceeding normally. In addition, the Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance issued by the Federal Financial Institutions Examination Council (“FFIEC”). Credit card loans are charged-off by the end of the month in which the account becomes 180 days past due or within 60 days from receiving notification about a specified event (e.g., bankruptcy of the borrower), whichever is earlier.
|
(d)
|
Excludes PCI loans acquired as part of the Washington Mutual transaction, which are accounted for on a pool basis. Since each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, the past due status of the pools, or that of individual loans within the pools, is not meaningful. Because the Firm is recognizing interest income on each pool of loans, they are all considered to be performing.
|
(e)
|
At
December 31, 2011
and
2010
, total nonaccrual loans represented
1.38%
and
2.14%
of total loans .
|
(f)
|
For the years ended
December 31, 2011
and
2010
, net charge-off rates were calculated using average retained loans of
$688.2 billion
and
$698.2 billion
, respectively. These average retained loans include average PCI loans of
$69.0 billion
and
$77.0 billion
, respectively. Excluding these PCI loans, the Firm’s total charge-off rates would have been
1.98%
and
3.81%
, respectively.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
135
|
WHOLESALE CREDIT PORTFOLIO
|
Wholesale credit portfolio
|
|
|
|
||||||||||
December 31,
|
Credit exposure
|
|
Nonperforming
(d)
|
||||||||||
(in millions)
|
2011
|
2010
|
|
2011
|
2010
|
||||||||
Loans retained
|
$
|
278,395
|
|
$
|
222,510
|
|
|
$
|
2,398
|
|
$
|
5,510
|
|
Loans held-for-sale
|
2,524
|
|
3,147
|
|
|
110
|
|
341
|
|
||||
Loans at fair value
|
2,097
|
|
1,976
|
|
|
73
|
|
155
|
|
||||
Loans – reported
|
283,016
|
|
227,633
|
|
|
2,581
|
|
6,006
|
|
||||
Derivative receivables
|
92,477
|
|
80,481
|
|
|
18
|
|
34
|
|
||||
Receivables from customers and interests in purchased receivables
(a)
|
17,461
|
|
32,932
|
|
|
—
|
|
—
|
|
||||
Total wholesale credit-related assets
|
392,954
|
|
341,046
|
|
|
2,599
|
|
6,040
|
|
||||
Lending-related commitments
(b)
|
382,739
|
|
346,079
|
|
|
865
|
|
1,005
|
|
||||
Total wholesale credit exposure
|
$
|
775,693
|
|
$
|
687,125
|
|
|
$
|
3,464
|
|
$
|
7,045
|
|
Net credit derivative hedges notional
(c)
|
$
|
(26,240
|
)
|
$
|
(23,108
|
)
|
|
$
|
(38
|
)
|
$
|
(55
|
)
|
Liquid securities and other cash collateral held against derivatives
|
(21,807
|
)
|
(16,486
|
)
|
|
NA
|
|
NA
|
|
(a)
|
Receivables from customers primarily represent margin loans to prime and retail brokerage customers, which are included in accrued interest and accounts receivable on the Consolidated Balance Sheets. Interests in purchased receivables represents ownership interests in cash flows of a pool of receivables transferred by third-party sellers into bankruptcy-remote entities, generally trusts, which are included in other assets on the Consolidated Balance Sheets.
|
(b)
|
The amounts in nonperforming represent commitments that are risk-rated as nonaccrual.
|
(c)
|
Represents the net notional amount of protection purchased and sold of single-name and portfolio credit derivatives used to manage both performing and nonperforming credit exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP. For additional information, see Credit derivatives on pages 143–144, and Note 6 on pages 202–210 of this Annual Report.
|
(d)
|
Excludes assets acquired in loan satisfactions.
|
136
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
Maturity profile
(c)
|
|
Ratings profile
|
||||||||||||||||||||||
December 31, 2010
|
Due in
1 year
or less
|
Due after
1 year through
5 years
|
Due after
5 years
|
Total
|
|
Investment-grade
|
|
Noninvestment-grade
|
Total
|
Total %
of IG
|
|||||||||||||||
(in millions, except ratios)
|
|
AAA/Aaa to BBB-/Baa3
|
|
BB+/Ba1 & below
|
|||||||||||||||||||||
Loans retained
|
$
|
78,017
|
|
$
|
85,987
|
|
$
|
58,506
|
|
$
|
222,510
|
|
|
$
|
146,047
|
|
|
$
|
76,463
|
|
$
|
222,510
|
|
66
|
%
|
Derivative receivables
|
|
|
|
80,481
|
|
|
|
|
|
80,481
|
|
|
|||||||||||||
Less: Liquid securities and other cash collateral held against derivatives
|
|
|
|
(16,486
|
)
|
|
|
|
|
(16,486
|
)
|
|
|||||||||||||
Total derivative receivables, net of all collateral
|
11,499
|
|
24,415
|
|
28,081
|
|
63,995
|
|
|
47,557
|
|
|
16,438
|
|
63,995
|
|
74
|
|
|||||||
Lending-related commitments
|
126,389
|
|
209,299
|
|
10,391
|
|
346,079
|
|
|
276,298
|
|
|
69,781
|
|
346,079
|
|
80
|
|
|||||||
Subtotal
|
215,905
|
|
319,701
|
|
96,978
|
|
632,584
|
|
|
469,902
|
|
|
162,682
|
|
632,584
|
|
74
|
|
|||||||
Loans held-for-sale and loans at fair value
(a)
|
|
|
|
5,123
|
|
|
|
|
|
5,123
|
|
|
|||||||||||||
Receivables from customers and interests in purchased receivables
|
|
|
|
32,932
|
|
|
|
|
|
32,932
|
|
|
|||||||||||||
Total exposure – net of liquid securities and other cash collateral held against derivatives
|
|
|
|
$
|
670,639
|
|
|
|
|
|
$
|
670,639
|
|
|
|||||||||||
Net credit derivative hedges notional
(b)
|
$
|
(1,228
|
)
|
$
|
(16,415
|
)
|
$
|
(5,465
|
)
|
$
|
(23,108
|
)
|
|
$
|
(23,159
|
)
|
|
$
|
51
|
|
$
|
(23,108
|
)
|
100
|
%
|
(a)
|
Represents loans held-for-sale primarily related to syndicated loans and loans transferred from the retained portfolio, and loans at fair value.
|
(b)
|
Represents the net notional amounts of protection purchased and sold of single-name and portfolio credit derivatives used to manage the credit exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP.
|
(c)
|
The maturity profiles of retained loans and lending-related commitments are based on the remaining contractual maturity. The maturity profiles of derivative receivables are based on the maturity profile of average exposure. For further discussion of average exposure, see Derivative receivables on pages 141–144 of this Annual Report.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
137
|
|
|
|
30 days or more past due and accruing
loans |
Full year net charge-offs/
(recoveries)
|
Credit derivative hedges
(e)
|
Liquid securities
and other cash collateral held against derivative
receivables |
|||||||||||||||||||||
As of or for the year ended
|
|
Noninvestment-grade
|
|||||||||||||||||||||||||
December 31, 2011
|
Credit
exposure
(d)
|
Investment-
grade
|
Noncriticized
|
Criticized performing
|
Criticized
nonperforming
|
||||||||||||||||||||||
(in millions)
|
|||||||||||||||||||||||||||
Top 25 industries
(a)
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Banks and finance companies
|
$
|
71,440
|
|
$
|
59,115
|
|
$
|
11,742
|
|
$
|
560
|
|
$
|
23
|
|
$
|
20
|
|
$
|
(211
|
)
|
$
|
(3,053
|
)
|
$
|
(9,585
|
)
|
Real estate
|
67,594
|
|
40,921
|
|
21,541
|
|
4,246
|
|
886
|
|
411
|
|
256
|
|
(97
|
)
|
(359
|
)
|
|||||||||
Healthcare
|
42,247
|
|
35,147
|
|
6,817
|
|
247
|
|
36
|
|
166
|
|
—
|
|
(304
|
)
|
(320
|
)
|
|||||||||
State and municipal governments
(b)
|
41,930
|
|
40,565
|
|
1,124
|
|
225
|
|
16
|
|
23
|
|
—
|
|
(185
|
)
|
(147
|
)
|
|||||||||
Oil and gas
|
35,437
|
|
25,004
|
|
10,337
|
|
96
|
|
—
|
|
3
|
|
—
|
|
(119
|
)
|
(88
|
)
|
|||||||||
Asset managers
|
33,465
|
|
28,835
|
|
4,530
|
|
99
|
|
1
|
|
24
|
|
—
|
|
—
|
|
(4,807
|
)
|
|||||||||
Consumer products
|
29,637
|
|
19,728
|
|
9,439
|
|
447
|
|
23
|
|
3
|
|
13
|
|
(272
|
)
|
(50
|
)
|
|||||||||
Utilities
|
28,650
|
|
23,557
|
|
4,423
|
|
614
|
|
56
|
|
—
|
|
76
|
|
(105
|
)
|
(359
|
)
|
|||||||||
Retail and consumer services
|
22,891
|
|
14,568
|
|
7,796
|
|
464
|
|
63
|
|
15
|
|
1
|
|
(96
|
)
|
(1
|
)
|
|||||||||
Technology
|
17,898
|
|
12,494
|
|
5,085
|
|
319
|
|
—
|
|
—
|
|
4
|
|
(191
|
)
|
—
|
|
|||||||||
Central government
|
17,138
|
|
16,524
|
|
488
|
|
126
|
|
—
|
|
—
|
|
—
|
|
(9,796
|
)
|
(813
|
)
|
|||||||||
Machinery and equipment manufacturing
|
16,498
|
|
9,014
|
|
7,375
|
|
103
|
|
6
|
|
1
|
|
(1
|
)
|
(19
|
)
|
—
|
|
|||||||||
Transportation
|
16,305
|
|
12,061
|
|
4,070
|
|
149
|
|
25
|
|
6
|
|
17
|
|
(178
|
)
|
—
|
|
|||||||||
Metals/mining
|
15,254
|
|
8,716
|
|
6,388
|
|
150
|
|
—
|
|
6
|
|
(19
|
)
|
(423
|
)
|
—
|
|
|||||||||
Insurance
|
13,092
|
|
9,425
|
|
3,064
|
|
591
|
|
12
|
|
—
|
|
—
|
|
(552
|
)
|
(454
|
)
|
|||||||||
Business services
|
12,408
|
|
7,093
|
|
5,168
|
|
113
|
|
34
|
|
17
|
|
22
|
|
(20
|
)
|
(2
|
)
|
|||||||||
Securities firms and exchanges
|
12,394
|
|
10,799
|
|
1,564
|
|
30
|
|
1
|
|
10
|
|
73
|
|
(395
|
)
|
(3,738
|
)
|
|||||||||
Media
|
11,909
|
|
6,853
|
|
3,921
|
|
720
|
|
415
|
|
1
|
|
18
|
|
(188
|
)
|
—
|
|
|||||||||
Building materials/construction
|
11,770
|
|
5,175
|
|
5,674
|
|
917
|
|
4
|
|
6
|
|
(4
|
)
|
(213
|
)
|
—
|
|
|||||||||
Chemicals/plastics
|
11,728
|
|
7,867
|
|
3,720
|
|
140
|
|
1
|
|
—
|
|
—
|
|
(95
|
)
|
(20
|
)
|
|||||||||
Telecom services
|
11,552
|
|
8,502
|
|
2,235
|
|
814
|
|
1
|
|
2
|
|
5
|
|
(390
|
)
|
—
|
|
|||||||||
Automotive
|
9,910
|
|
5,699
|
|
4,188
|
|
23
|
|
—
|
|
9
|
|
(11
|
)
|
(819
|
)
|
—
|
|
|||||||||
Aerospace
|
8,560
|
|
7,646
|
|
848
|
|
66
|
|
—
|
|
7
|
|
—
|
|
(208
|
)
|
—
|
|
|||||||||
Agriculture/paper manufacturing
|
7,594
|
|
4,888
|
|
2,586
|
|
120
|
|
—
|
|
9
|
|
—
|
|
-
|
|
—
|
|
|||||||||
Leisure
|
5,650
|
|
3,051
|
|
1,752
|
|
629
|
|
218
|
|
1
|
|
1
|
|
(81
|
)
|
(26
|
)
|
|||||||||
All other
(c)
|
180,660
|
|
161,568
|
|
17,011
|
|
1,486
|
|
595
|
|
1,099
|
|
200
|
|
(8,441
|
)
|
(1,038
|
)
|
|||||||||
Subtotal
|
$
|
753,611
|
|
$
|
584,815
|
|
$
|
152,886
|
|
$
|
13,494
|
|
$
|
2,416
|
|
$
|
1,839
|
|
$
|
440
|
|
$
|
(26,240
|
)
|
$
|
(21,807
|
)
|
Loans held-for-sale and loans at fair value
|
4,621
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Receivables from customers and interests in purchased receivables
|
17,461
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total
|
$
|
775,693
|
|
|
|
|
|
|
|
|
|
•
|
Banks and finance companies:
Exposure to this industry increased by
$5.6 billion
or
8%
, and criticized exposure decreased
3%
, compared with
2010
. The portfolio increased from
2010
and the investment grade portion remained high in proportion to the overall industry increase. At
December 31, 2011
,
83%
of the portfolio continued to be rated investment-grade, unchanged from
2010
.
|
•
|
Real estate:
Exposure to this sector increased by
$3.2 billion
or
5%
, in 2011 to
$67.6 billion
. The increase was primarily driven by CB, partially offset by decreases in credit exposure in IB. The credit quality of this industry improved as the investment-grade portion of this industry increased by
19%
from
2010
, while the criticized portion declined by
45%
from
2010
, primarily as a result of repayments and loans sales. The ratio of nonaccrual loans to total loans decreased to
2%
from
5%
in line with the decrease in real estate criticized exposure. For further information on commercial real estate loans, see Note 14 on pages 231–252 of this Annual Report.
|
138
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
|
|
30 days or more past due and accruing
loans |
Full year net charge-offs/
(recoveries)
|
Credit derivative hedges
(e)
|
Liquid securities
and other cash collateral held against derivative
receivables |
|||||||||||||||||||||
As of or for the year ended
|
|
Noninvestment-grade
|
|||||||||||||||||||||||||
December 31, 2010
|
Credit
exposure
(d)
|
Investment-
grade
|
Noncriticized
|
Criticized performing
|
Criticized
nonperforming
|
||||||||||||||||||||||
(in millions)
|
|||||||||||||||||||||||||||
Top 25 industries
(a)
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Banks and finance companies
|
$
|
65,867
|
|
$
|
54,839
|
|
$
|
10,428
|
|
$
|
467
|
|
$
|
133
|
|
$
|
26
|
|
$
|
69
|
|
$
|
(3,456
|
)
|
$
|
(9,216
|
)
|
Real estate
|
64,351
|
|
34,440
|
|
20,569
|
|
6,404
|
|
2,938
|
|
399
|
|
862
|
|
(76
|
)
|
(57
|
)
|
|||||||||
Healthcare
|
41,093
|
|
33,752
|
|
7,019
|
|
291
|
|
31
|
|
85
|
|
4
|
|
(768
|
)
|
(161
|
)
|
|||||||||
State and municipal governments
(b)
|
35,808
|
|
34,641
|
|
912
|
|
231
|
|
24
|
|
34
|
|
3
|
|
(186
|
)
|
(233
|
)
|
|||||||||
Oil and gas
|
26,459
|
|
18,465
|
|
7,850
|
|
143
|
|
1
|
|
24
|
|
—
|
|
(87
|
)
|
(50
|
)
|
|||||||||
Asset managers
|
29,364
|
|
25,533
|
|
3,401
|
|
427
|
|
3
|
|
7
|
|
—
|
|
—
|
|
(2,948
|
)
|
|||||||||
Consumer products
|
27,508
|
|
16,747
|
|
10,379
|
|
371
|
|
11
|
|
217
|
|
1
|
|
(752
|
)
|
(2
|
)
|
|||||||||
Utilities
|
25,911
|
|
20,951
|
|
4,101
|
|
498
|
|
361
|
|
3
|
|
49
|
|
(355
|
)
|
(230
|
)
|
|||||||||
Retail and consumer services
|
20,882
|
|
12,021
|
|
8,316
|
|
338
|
|
207
|
|
8
|
|
23
|
|
(623
|
)
|
(3
|
)
|
|||||||||
Technology
|
14,348
|
|
9,355
|
|
4,534
|
|
399
|
|
60
|
|
47
|
|
50
|
|
(158
|
)
|
—
|
|
|||||||||
Central government
|
11,173
|
|
10,677
|
|
496
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(6,897
|
)
|
(42
|
)
|
|||||||||
Machinery and equipment manufacturing
|
13,311
|
|
7,690
|
|
5,372
|
|
244
|
|
5
|
|
8
|
|
2
|
|
(74
|
)
|
(2
|
)
|
|||||||||
Transportation
|
9,652
|
|
6,630
|
|
2,739
|
|
245
|
|
38
|
|
—
|
|
(16
|
)
|
(132
|
)
|
—
|
|
|||||||||
Metals/mining
|
11,426
|
|
5,260
|
|
5,748
|
|
362
|
|
56
|
|
7
|
|
35
|
|
(296
|
)
|
—
|
|
|||||||||
Insurance
|
10,918
|
|
7,908
|
|
2,690
|
|
320
|
|
—
|
|
—
|
|
(1
|
)
|
(805
|
)
|
(567
|
)
|
|||||||||
Business services
|
11,247
|
|
6,351
|
|
4,735
|
|
115
|
|
46
|
|
11
|
|
15
|
|
(5
|
)
|
—
|
|
|||||||||
Securities firms and exchanges
|
9,415
|
|
7,678
|
|
1,700
|
|
37
|
|
—
|
|
—
|
|
5
|
|
(38
|
)
|
(2,358
|
)
|
|||||||||
Media
|
10,967
|
|
5,808
|
|
3,945
|
|
672
|
|
542
|
|
2
|
|
92
|
|
(212
|
)
|
(3
|
)
|
|||||||||
Building materials/construction
|
12,808
|
|
6,557
|
|
5,065
|
|
1,129
|
|
57
|
|
9
|
|
6
|
|
(308
|
)
|
—
|
|
|||||||||
Chemicals/plastics
|
12,312
|
|
8,375
|
|
3,656
|
|
274
|
|
7
|
|
—
|
|
2
|
|
(70
|
)
|
—
|
|
|||||||||
Telecom services
|
10,709
|
|
7,582
|
|
2,295
|
|
821
|
|
11
|
|
3
|
|
(8
|
)
|
(820
|
)
|
—
|
|
|||||||||
Automotive
|
9,011
|
|
3,915
|
|
4,822
|
|
269
|
|
5
|
|
—
|
|
52
|
|
(758
|
)
|
—
|
|
|||||||||
Aerospace
|
5,732
|
|
4,903
|
|
732
|
|
97
|
|
—
|
|
—
|
|
—
|
|
(321
|
)
|
—
|
|
|||||||||
Agriculture/paper manufacturing
|
7,368
|
|
4,510
|
|
2,614
|
|
242
|
|
2
|
|
8
|
|
7
|
|
(44
|
)
|
(2
|
)
|
|||||||||
Leisure
|
5,405
|
|
2,895
|
|
1,367
|
|
941
|
|
202
|
|
—
|
|
90
|
|
(253
|
)
|
(21
|
)
|
|||||||||
All other
(c)
|
146,025
|
|
128,074
|
|
15,648
|
|
1,499
|
|
804
|
|
954
|
|
385
|
|
(5,614
|
)
|
(591
|
)
|
|||||||||
Subtotal
|
$
|
649,070
|
|
$
|
485,557
|
|
$
|
141,133
|
|
$
|
16,836
|
|
$
|
5,544
|
|
$
|
1,852
|
|
$
|
1,727
|
|
$
|
(23,108
|
)
|
$
|
(16,486
|
)
|
Loans held-for-sale and loans at fair value
|
5,123
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Receivables from customers and interests in purchased receivables
|
32,932
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total
|
$
|
687,125
|
|
|
|
|
|
|
|
|
|
(a)
|
All industry rankings are based on exposure at
December 31, 2011
. The industry rankings presented in the table as of
December 31, 2010
, are based on the industry rankings of the corresponding exposures at
December 31, 2011
, not actual rankings of such exposures at
December 31, 2010
.
|
(b)
|
In addition to the credit risk exposure to states and municipal governments at
December 31, 2011
and
2010
, noted above, the Firm held
$16.7 billion
and
$14.0 billion
, respectively, of trading securities and
$16.5 billion
and
$11.6 billion
, respectively, of AFS securities issued by U.S. state and municipal governments. For further information, see Note 3 and Note 12 on pages 184–198 and 225–230, respectively, of this Annual Report.
|
(c)
|
For further information on the All other category refer to the discussion in the following section on page 140 of this Annual Report. All other for credit derivative hedges includes credit default swap (“CDS”) index hedges of CVA.
|
(d)
|
Credit exposure is net of risk participations and excludes the benefit of credit derivative hedges and collateral held against derivative receivables or loans.
|
(e)
|
Represents the net notional amounts of protection purchased and sold of single-name and portfolio credit derivatives used to manage the credit exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
139
|
•
|
State and municipal governments:
Exposure to this segment increased by
$6.1 billion
or
17%
in
2011
to
$41.9 billion
. Lending-related commitments comprise approximately
67%
of exposure to this sector, generally in the form of bond and commercial paper liquidity and standby letter of credit commitments. Credit quality of the portfolio remains high as
97%
of the portfolio was rated investment-grade, unchanged from
2010
. Criticized exposure was less than
1%
of this industry’s exposure. The non-U.S. portion of this industry was less than
5%
of the total. The Firm continues to actively monitor and manage this exposure in light of the challenging environment faced by state and municipal governments. For further discussion of commitments for bond liquidity and standby letters of credit, see Note 29 on pages 283–289 of this Annual Report.
|
•
|
Media:
Exposure to this industry increased by
9%
to
$11.9 billion
in
2011
. Criticized exposure of
$1.1 billion
decreased by
7%
in
2011
from
$1.2 billion
, but remains elevated relative to total industry exposure due to
|
•
|
All other:
All other at
December 31, 2011
(excluding loans held-for-sale and loans at fair value), included
$180.7 billion
of credit exposure. Concentrations of exposures include: (1) Individuals, Private Education & Civic Organizations, which were
54%
of this category and (2) SPEs which were
35%
of this category. Each of these categories has high credit quality, and over 90% of each of these categories were rated investment-grade. SPEs provide secured financing (generally backed by receivables, loans or bonds with a diverse group of obligors); the lending in this category was all secured and well-structured. For further discussion of SPEs, see Note 1 on pages 182–183 and Note 16 on pages 256–267 of this Annual Report. The remaining exposure within this category is well-diversified, with no category being more than
6%
of its total.
|
|
Credit exposure
|
|
Nonperforming
|
Assets acquired in loan satisfactions
|
30 days or more past due and accruing loans
|
||||||||||||||||||||||||||
December 31, 2011
(in millions)
|
Loans
|
Lending-related commitments
|
Derivative receivables
|
Total credit exposure
|
|
Nonaccrual
loans
(a)
|
Derivatives
|
Lending-related commitments
|
Total non- performing credit exposure
|
||||||||||||||||||||||
Europe/Middle East/Africa
|
$
|
36,637
|
|
$
|
60,681
|
|
$
|
43,204
|
|
$
|
140,522
|
|
|
$
|
44
|
|
$
|
—
|
|
$
|
25
|
|
$
|
69
|
|
$
|
—
|
|
$
|
68
|
|
Asia/Pacific
|
31,119
|
|
17,194
|
|
10,943
|
|
59,256
|
|
|
1
|
|
13
|
|
—
|
|
14
|
|
—
|
|
6
|
|
||||||||||
Latin America/Caribbean
|
25,141
|
|
20,859
|
|
5,316
|
|
51,316
|
|
|
386
|
|
—
|
|
15
|
|
401
|
|
3
|
|
222
|
|
||||||||||
Other North America
|
2,267
|
|
6,680
|
|
1,488
|
|
10,435
|
|
|
3
|
|
—
|
|
1
|
|
4
|
|
—
|
|
—
|
|
||||||||||
Total non-U.S.
|
95,164
|
|
105,414
|
|
60,951
|
|
261,529
|
|
|
434
|
|
13
|
|
41
|
|
488
|
|
3
|
|
296
|
|
||||||||||
Total U.S.
|
183,231
|
|
277,325
|
|
31,526
|
|
492,082
|
|
|
1,964
|
|
5
|
|
824
|
|
2,793
|
|
176
|
|
1,543
|
|
||||||||||
Loans held-for-sale and loans at fair value
|
4,621
|
|
—
|
|
—
|
|
4,621
|
|
|
183
|
|
NA
|
|
—
|
|
183
|
|
NA
|
|
—
|
|
||||||||||
Receivables from customers and interests in purchased receivables
|
—
|
|
—
|
|
—
|
|
17,461
|
|
|
—
|
|
NA
|
|
NA
|
|
—
|
|
NA
|
|
—
|
|
||||||||||
Total
|
$
|
283,016
|
|
$
|
382,739
|
|
$
|
92,477
|
|
$
|
775,693
|
|
|
$
|
2,581
|
|
$
|
18
|
|
$
|
865
|
|
$
|
3,464
|
|
$
|
179
|
|
$
|
1,839
|
|
|
Credit exposure
|
|
Nonperforming
|
Assets acquired in loan satisfactions
|
30 days or more past due and Accruing loans
|
||||||||||||||||||||||||||
December 31, 2010
(in millions)
|
Loans
|
Lending-related commitments
|
Derivative receivables
|
Total credit exposure
|
|
Nonaccrual
loans
(a)
|
Derivatives
|
Lending-related commitments
|
Total non- performing credit exposure
|
||||||||||||||||||||||
Europe/Middle East/Africa
|
$
|
27,934
|
|
$
|
58,418
|
|
$
|
35,196
|
|
$
|
121,548
|
|
|
$
|
153
|
|
$
|
1
|
|
$
|
23
|
|
$
|
177
|
|
$
|
—
|
|
$
|
127
|
|
Asia/Pacific
|
20,552
|
|
15,002
|
|
10,991
|
|
46,545
|
|
|
579
|
|
21
|
|
—
|
|
600
|
|
—
|
|
74
|
|
||||||||||
Latin America/Caribbean
|
16,480
|
|
12,170
|
|
5,634
|
|
34,284
|
|
|
649
|
|
—
|
|
13
|
|
662
|
|
1
|
|
131
|
|
||||||||||
Other North America
|
1,185
|
|
6,149
|
|
2,039
|
|
9,373
|
|
|
6
|
|
—
|
|
5
|
|
11
|
|
—
|
|
—
|
|
||||||||||
Total non-U.S.
|
66,151
|
|
91,739
|
|
53,860
|
|
211,750
|
|
|
1,387
|
|
22
|
|
41
|
|
1,450
|
|
1
|
|
332
|
|
||||||||||
Total U.S.
|
156,359
|
|
254,340
|
|
26,621
|
|
437,320
|
|
|
4,123
|
|
12
|
|
964
|
|
5,099
|
|
320
|
|
1,520
|
|
||||||||||
Loans held-for-sale and loans at fair value
|
5,123
|
|
—
|
|
—
|
|
5,123
|
|
|
496
|
|
NA
|
|
—
|
|
496
|
|
NA
|
|
—
|
|
||||||||||
Receivables from customers and interests in purchased receivables
|
—
|
|
—
|
|
—
|
|
32,932
|
|
|
—
|
|
NA
|
|
NA
|
|
—
|
|
NA
|
|
—
|
|
||||||||||
Total
|
$
|
227,633
|
|
$
|
346,079
|
|
$
|
80,481
|
|
$
|
687,125
|
|
|
$
|
6,006
|
|
$
|
34
|
|
$
|
1,005
|
|
$
|
7,045
|
|
$
|
321
|
|
$
|
1,852
|
|
(a)
|
At
December 31, 2011
and
2010
, the Firm held an allowance for loan losses of
$496 million
and
$1.6 billion
, respectively, related to nonaccrual retained loans resulting in allowance coverage ratios of
21%
and
29%
, respectively. Wholesale nonaccrual loans represented
0.91%
and
2.64%
of total wholesale loans at
December 31, 2011
and
2010
, respectively.
|
140
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Wholesale net charge-offs
|
|
|||||
Year ended December 31,
(in millions, except ratios)
|
2011
|
2010
|
||||
Loans – reported
|
|
|
||||
Average loans retained
|
$
|
245,111
|
|
$
|
213,609
|
|
Net charge-offs/(recoveries)
|
440
|
|
1,727
|
|
||
Net charge-off/(recovery) rate
|
0.18
|
%
|
0.81
|
%
|
Derivative receivables
|
|
|
||||
December 31, (in millions)
|
Derivative receivables
|
|||||
2011
|
2010
|
|||||
Interest rate
|
$
|
46,369
|
|
$
|
32,555
|
|
Credit derivatives
|
6,684
|
|
7,725
|
|
||
Foreign exchange
|
17,890
|
|
25,858
|
|
||
Equity
|
6,793
|
|
4,204
|
|
||
Commodity
|
14,741
|
|
10,139
|
|
||
Total, net of cash collateral
|
92,477
|
|
80,481
|
|
||
Liquid securities and other cash collateral held against derivative receivables
|
(21,807
|
)
|
(16,486
|
)
|
||
Total, net of all collateral
|
$
|
70,670
|
|
$
|
63,995
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
141
|
142
|
|
JPMorgan Chase & Co./2011 Annual Report
|
(a)
|
Primarily consists of total return swaps and credit default swap options.
|
(b)
|
At
December 31, 2011
and
2010
, included
$2,803 billion
and
$2,662 billion
, respectively, of notional exposure where the Firm has sold protection on the identical underlying reference instruments.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
143
|
Use of single-name and portfolio credit derivatives
|
|||||||
|
Notional amount of protection
purchased and sold
|
||||||
December 31, (in millions)
|
2011
|
|
2010
|
||||
Credit derivatives used to manage:
|
|
|
|
||||
Loans and lending-related commitments
|
$
|
3,488
|
|
|
$
|
6,698
|
|
Derivative receivables
|
22,883
|
|
|
16,825
|
|
||
Total protection purchased
|
26,371
|
|
|
23,523
|
|
||
Total protection sold
|
131
|
|
|
415
|
|
||
Credit derivatives hedges notional, net
|
$
|
26,240
|
|
|
$
|
23,108
|
|
Net gains and losses on credit portfolio hedges
|
|||||||||||
Year ended December 31,
(in millions)
|
2011
|
|
2010
|
|
2009
|
||||||
Hedges of loans and lending-related commitments
|
$
|
(32
|
)
|
|
$
|
(279
|
)
|
|
$
|
(3,258
|
)
|
CVA and hedges of CVA
|
(769
|
)
|
|
(403
|
)
|
|
1,920
|
|
|||
Net gains/(losses)
|
$
|
(801
|
)
|
|
$
|
(682
|
)
|
|
$
|
(1,338
|
)
|
144
|
|
JPMorgan Chase & Co./2011 Annual Report
|
CONSUMER CREDIT PORTFOLIO
|
JPMorgan Chase & Co./2011 Annual Report
|
|
145
|
Consumer credit portfolio
|
|
|
|
|
|
|
|
||||||||||||||||||
As of or for the year ended December 31,
(in millions, except ratios)
|
Credit exposure
|
|
Nonaccrual loans
(g)(h)
|
|
Net charge-offs
|
|
Average annual net charge-off rate
(i)(j)
|
||||||||||||||||||
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|||||||||||||||
Consumer, excluding credit card
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Loans, excluding PCI loans and loans held-for-sale
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Home equity – senior lien
|
$
|
21,765
|
|
$
|
24,376
|
|
|
$
|
495
|
|
$
|
479
|
|
|
$
|
284
|
|
$
|
262
|
|
|
1.20
|
%
|
1.00
|
%
|
Home equity – junior lien
|
56,035
|
|
64,009
|
|
|
792
|
|
784
|
|
|
2,188
|
|
3,182
|
|
|
3.69
|
|
4.63
|
|
||||||
Prime mortgage, including option ARMs
|
76,196
|
|
74,539
|
|
|
3,462
|
|
4,320
|
|
|
708
|
|
1,627
|
|
|
0.95
|
|
2.15
|
|
||||||
Subprime mortgage
|
9,664
|
|
11,287
|
|
|
1,781
|
|
2,210
|
|
|
626
|
|
1,374
|
|
|
5.98
|
|
10.82
|
|
||||||
Auto
(a)
|
47,426
|
|
48,367
|
|
|
118
|
|
141
|
|
|
152
|
|
298
|
|
|
0.32
|
|
0.63
|
|
||||||
Business banking
|
17,652
|
|
16,812
|
|
|
694
|
|
832
|
|
|
494
|
|
707
|
|
|
2.89
|
|
4.23
|
|
||||||
Student and other
|
14,143
|
|
15,311
|
|
|
69
|
|
67
|
|
|
420
|
|
459
|
|
|
2.85
|
|
2.85
|
|
||||||
Total loans, excluding PCI loans and loans held-for-sale
|
242,881
|
|
254,701
|
|
|
7,411
|
|
8,833
|
|
|
4,872
|
|
7,909
|
|
|
1.97
|
|
3.00
|
|
||||||
Loans – PCI
(b)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Home equity
|
22,697
|
|
24,459
|
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
||||||
Prime mortgage
|
15,180
|
|
17,322
|
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
||||||
Subprime mortgage
|
4,976
|
|
5,398
|
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
||||||
Option ARMs
|
22,693
|
|
25,584
|
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
||||||
Total loans – PCI
|
65,546
|
|
72,763
|
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
|
NA
|
|
NA
|
|
||||||
Total loans – retained
|
308,427
|
|
327,464
|
|
|
7,411
|
|
8,833
|
|
|
4,872
|
|
7,909
|
|
|
1.54
|
|
2.32
|
|
||||||
Loans held-for-sale
(c)
|
—
|
|
154
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||||
Total consumer, excluding credit card loans
|
308,427
|
|
327,618
|
|
|
7,411
|
|
8,833
|
|
|
4,872
|
|
7,909
|
|
|
1.54
|
|
2.32
|
|
||||||
Lending-related commitments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Home equity – senior lien
(d)
|
16,542
|
|
17,662
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Home equity – junior lien
(d)
|
26,408
|
|
30,948
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Prime mortgage
|
1,500
|
|
1,266
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Subprime mortgage
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Auto
|
6,694
|
|
5,246
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Business banking
|
10,299
|
|
9,702
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Student and other
|
864
|
|
579
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total lending-related commitments
|
62,307
|
|
65,403
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Receivables from customers
(e)
|
100
|
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total consumer exposure, excluding credit card
|
370,834
|
|
393,021
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Credit Card
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Loans retained
(f)
|
132,175
|
|
135,524
|
|
|
1
|
|
2
|
|
|
6,925
|
|
14,037
|
|
|
5.44
|
|
9.73
|
|
||||||
Loans held-for-sale
|
102
|
|
2,152
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||||
Total credit card loans
|
132,277
|
|
137,676
|
|
|
1
|
|
2
|
|
|
6,925
|
|
14,037
|
|
|
5.44
|
|
9.73
|
|
||||||
Lending-related commitments
(d)
|
530,616
|
|
547,227
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total credit card exposure
|
662,893
|
|
684,903
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total consumer credit portfolio
|
$
|
1,033,727
|
|
$
|
1,077,924
|
|
|
$
|
7,412
|
|
$
|
8,835
|
|
|
$
|
11,797
|
|
$
|
21,946
|
|
|
2.66
|
%
|
4.53
|
%
|
Memo: Total consumer credit portfolio, excluding PCI
|
$
|
968,181
|
|
$
|
1,005,161
|
|
|
$
|
7,412
|
|
$
|
8,835
|
|
|
$
|
11,797
|
|
$
|
21,946
|
|
|
3.15
|
%
|
5.38
|
%
|
(a)
|
At
December 31, 2011
and
2010
, excluded operating lease–related assets of
$4.4 billion
and
$3.7 billion
, respectively.
|
(b)
|
Charge-offs are not recorded on PCI loans until actual losses exceed estimated losses that were recorded as purchase accounting adjustments at the time of acquisition. To date, no charge-offs have been recorded for these loans.
|
(c)
|
Represents prime mortgage loans held-for-sale.
|
(d)
|
Credit card and home equity lending–related commitments represent the total available lines of credit for these products. The Firm has not experienced, and does not anticipate, that all available lines of credit would be used at the same time. For credit card and home equity commitments (if certain conditions are met), the Firm can reduce or cancel these lines of credit by providing the borrower notice or, in some cases, without notice as permitted by law.
|
(e)
|
Receivables from customers primarily represent margin loans to retail brokerage customers, which are included in accrued interest and accounts receivable on the Consolidated Balance Sheets.
|
(f)
|
Includes billed finance charges and fees net of an allowance for uncollectible amounts.
|
(g)
|
At
December 31, 2011
and
2010
, nonaccrual loans excluded: (1) mortgage loans insured by U.S. government agencies of
$11.5 billion
and
$9.4 billion
,
|
146
|
|
JPMorgan Chase & Co./2011 Annual Report
|
(h)
|
Excludes PCI loans that were acquired as part of the Washington Mutual transaction, which are accounted for on a pool basis. Since each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, the past-due status of the pools, or that of individual loans within the pools, is not meaningful. Because the Firm is recognizing interest income on each pool of loans, they are all considered to be performing.
|
(i)
|
Average consumer loans held-for-sale were
$924 million
and
$1.5 billion
, respectively, for the years ended
December 31, 2011
and
2010
. These amounts were excluded when calculating net charge-off rates.
|
(j)
|
Net charge-off rates for
2010
reflect the impact of an aggregate
$632 million
adjustment related to the Firm’s estimate of the net realizable value of the collateral underlying the loans at the charge-off date. Absent this adjustment, net charge-off rates would have been
0.92%
,
4.57%
,
1.73%
and
8.87%
for home equity – senior lien; home equity – junior lien; prime mortgage, including option ARMs; and subprime mortgage, respectively. Total consumer, excluding credit card and PCI loans, and total consumer, excluding credit card, net charge-off rates would have been
2.76%
and
2.14%
, respectively, excluding this adjustment.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
147
|
148
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Summary of lifetime principal loss estimates
|
Lifetime loss estimates
(a)
|
|
LTD liquidation losses
(b)
|
||||||||||||||
December 31, (in billions)
|
2011
|
2010
|
|
2011
|
2010
|
||||||||||||
Home equity
|
$
|
14.9
|
|
|
$
|
14.7
|
|
|
|
$
|
10.4
|
|
|
$
|
8.8
|
|
|
Prime mortgage
|
4.6
|
|
|
4.9
|
|
|
|
2.3
|
|
|
1.5
|
|
|
||||
Subprime mortgage
|
3.8
|
|
|
3.7
|
|
|
|
1.7
|
|
|
1.2
|
|
|
||||
Option ARMs
|
11.5
|
|
|
11.6
|
|
|
|
6.6
|
|
|
4.9
|
|
|
||||
Total
|
$
|
34.8
|
|
|
$
|
34.9
|
|
|
|
$
|
21.0
|
|
|
$
|
16.4
|
|
|
(a)
|
Includes the original nonaccretable difference established in purchase accounting of
$30.5 billion
for principal losses only plus additional principal losses recognized subsequent to acquisition through the provision and allowance for loan losses. The remaining nonaccretable difference for principal losses only was
$9.4 billion
and
$14.1 billion
at
December 31, 2011
and
2010
, respectively.
|
(b)
|
Life-to-date (“LTD”) liquidation losses represent realization of loss upon loan resolution.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
149
|
(a)
|
Represents the aggregate unpaid principal balance of loans divided by the estimated current property value. Current property values are estimated at least quarterly based on home valuation models that utilize nationally recognized home price index valuation estimates; such models incorporate actual data to the extent available and forecasted data where actual data is not available.
|
(b)
|
Represents current estimated combined LTV for junior home equity liens, which considers all available lien positions related to the property. All other products are presented without consideration of subordinate liens on the property.
|
(c)
|
Net carrying value includes the effect of fair value adjustments that were applied to the consumer PCI portfolio at the date of acquisition and is also net of the allowance for loan losses at
December 31, 2011
and
2010
, of
$1.9 billion
and
$1.6 billion
for home equity, respectively,
$1.9 billion
and
$1.8 billion
for prime mortgage, respectively,
$1.5 billion
and
$1.5 billion
for option ARMs, respectively, and
$380 million
and
$98 million
for subprime mortgage, respectively. Prior-period amounts have been revised to conform to the current-period presentation.
|
150
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Modified residential real estate loans
|
2011
|
|
2010
|
||||||||||
December 31, (in millions)
|
On–balance
sheet loans
|
Nonaccrual on–balance sheet loans
(d)
|
|
On–balance
sheet loans
|
Nonaccrual on–balance sheet loans
(d)
|
||||||||
Modified residential real estate loans – excluding PCI loans
(a)(b)
|
|
|
|
|
|
||||||||
Home equity – senior lien
|
$
|
335
|
|
$
|
77
|
|
|
$
|
226
|
|
$
|
38
|
|
Home equity – junior lien
|
657
|
|
159
|
|
|
283
|
|
63
|
|
||||
Prime mortgage, including option ARMs
|
4,877
|
|
922
|
|
|
2,084
|
|
534
|
|
||||
Subprime mortgage
|
3,219
|
|
832
|
|
|
2,751
|
|
632
|
|
||||
Total modified residential real estate loans – excluding PCI loans
|
$
|
9,088
|
|
$
|
1,990
|
|
|
$
|
5,344
|
|
$
|
1,267
|
|
Modified PCI loans
(c)
|
|
|
|
|
|
||||||||
Home equity
|
$
|
1,044
|
|
NA
|
|
|
$
|
492
|
|
NA
|
|
||
Prime mortgage
|
5,418
|
|
NA
|
|
|
3,018
|
|
NA
|
|
||||
Subprime mortgage
|
3,982
|
|
NA
|
|
|
3,329
|
|
NA
|
|
||||
Option ARMs
|
13,568
|
|
NA
|
|
|
9,396
|
|
NA
|
|
||||
Total modified PCI loans
|
$
|
24,012
|
|
NA
|
|
|
$
|
16,235
|
|
NA
|
|
(a)
|
Amounts represent the carrying value of modified residential real estate loans.
|
(b)
|
At
December 31, 2011
and
2010
,
$4.3 billion
and
$3.0 billion
, respectively, of loans modified subsequent to repurchase from Ginnie Mae in accordance with the standards of the appropriate government agency (i.e., FHA, VA, RHS) were excluded from loans accounted for as TDRs. When such loans perform subsequent to modification in accordance with Ginnie Mae guidelines, they are generally sold back into Ginnie Mae loan pools. Modified loans that do not re-perform become subject to foreclosure. For additional information about sales of loans in securitization transactions with Ginnie Mae, see Note 16 on pages 256–267 of this Annual Report.
|
(c)
|
Amounts represent the unpaid principal balance of modified PCI loans.
|
(d)
|
Loans modified in a TDR that are on nonaccrual status may be returned to accrual status when repayment is reasonably assured and the borrower has made a minimum of six payments under the new terms. As of
December 31, 2011
and
2010
, nonaccrual loans included
$886 million
and
$580 million
, respectively, of TDRs for which the borrowers had not yet made six payments under the modified terms.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
151
|
Nonperforming assets
(a)
|
|
|
|
||||
December 31, (in millions)
|
2011
|
|
2010
|
||||
Nonaccrual loans
(b)(c)
|
|
|
|
||||
Home equity – senior lien
|
$
|
495
|
|
|
$
|
479
|
|
Home equity – junior lien
|
792
|
|
|
784
|
|
||
Prime mortgage, including option ARMs
|
3,462
|
|
|
4,320
|
|
||
Subprime mortgage
|
1,781
|
|
|
2,210
|
|
||
Auto
|
118
|
|
|
141
|
|
||
Business banking
|
694
|
|
|
832
|
|
||
Student and other
|
69
|
|
|
67
|
|
||
Total nonaccrual loans
|
7,411
|
|
|
8,833
|
|
||
Assets acquired in loan satisfactions
|
|
|
|
||||
Real estate owned
|
802
|
|
|
1,294
|
|
||
Other
|
44
|
|
|
67
|
|
||
Total assets acquired in loan satisfactions
|
846
|
|
|
1,361
|
|
||
Total nonperforming assets
|
$
|
8,257
|
|
|
$
|
10,194
|
|
(a)
|
At
December 31, 2011
and
2010
, nonperforming assets excluded: (1) mortgage loans insured by U.S. government agencies of
$11.5 billion
and
$9.4 billion
, respectively, that are 90 or more days past due; (2) real estate owned insured by U.S. government agencies of
$954 million
and
$1.9 billion
, respectively; and (3) student loans insured by U.S. government agencies under the FFELP of
$551 million
and
$625 million
, respectively, that are 90 or more days past due. These amounts were excluded as reimbursement of insured amounts is proceeding normally.
|
(b)
|
Excludes PCI loans that were acquired as part of the Washington Mutual transaction, which are accounted for on a pool basis. Since each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, the past-due status of the pools, or that of individual loans within the pools, is not meaningful. Because the Firm is recognizing interest income on each pool of loans, they are all considered to be performing.
|
(c)
|
At
December 31, 2011
and
2010
, consumer, excluding credit card nonaccrual loans represented
2.40%
and
2.70%
, respectively, of total consumer, excluding credit card loans.
|
152
|
|
JPMorgan Chase & Co./2011 Annual Report
|
•
|
Established an independent Compliance Committee which meets regularly and monitors progress against the Consent Orders.
|
•
|
Launched a new Customer Assistance Specialist organization for borrowers to facilitate the single point of contact initiative and ensure effective coordination and communication related to foreclosure, loss-mitigation and loan modification.
|
•
|
Enhanced its approach to oversight over third-party vendors for foreclosure or other related functions.
|
•
|
Standardized the processes for maintaining appropriate controls and oversight of the Firm’s activities with respect to the Mortgage Electronic Registration system (“MERS”) and compliance with MERSCORP’s membership rules, terms and conditions.
|
•
|
Strengthened its compliance program so as to ensure mortgage-servicing and foreclosure operations, including loss-mitigation and loan modification, comply with all applicable legal requirements.
|
•
|
Enhanced management information systems for loan modification, loss-mitigation and foreclosure activities.
|
•
|
Developed a comprehensive assessment of risks in servicing operations including, but not limited to, operational, transaction, legal and reputational risks.
|
•
|
Made technological enhancements to automate and streamline processes for the Firm’s document management, training, skills assessment and payment processing initiatives.
|
•
|
Deployed an internal validation process to monitor progress under the comprehensive action plans.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
153
|
154
|
|
JPMorgan Chase & Co./2011 Annual Report
|
COMMUNITY REINVESTMENT ACT EXPOSURE
|
ALLOWANCE FOR CREDIT LOSSES
|
JPMorgan Chase & Co./2011 Annual Report
|
|
155
|
Summary of changes in the allowance for credit losses
|
|||||||||||||||||||||||||
|
2011
|
|
2010
|
||||||||||||||||||||||
Year ended December 31,
|
Wholesale
|
Consumer, excluding
credit card
|
Credit card
|
Total
|
|
Wholesale
|
Consumer, excluding
credit card
|
Credit card
|
Total
|
||||||||||||||||
(in millions, except ratios)
|
|
||||||||||||||||||||||||
Allowance for loan losses
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Beginning balance at January 1,
|
$
|
4,761
|
|
$
|
16,471
|
|
$
|
11,034
|
|
$
|
32,266
|
|
|
$
|
7,145
|
|
$
|
14,785
|
|
$
|
9,672
|
|
$
|
31,602
|
|
Cumulative effect of change in accounting principles
(a)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
14
|
|
127
|
|
7,353
|
|
7,494
|
|
||||||||
Gross charge-offs
|
916
|
|
5,419
|
|
8,168
|
|
14,503
|
|
|
1,989
|
|
8,383
|
|
15,410
|
|
25,782
|
|
||||||||
Gross recoveries
|
(476
|
)
|
(547
|
)
|
(1,243
|
)
|
(2,266
|
)
|
|
(262
|
)
|
(474
|
)
|
(1,373
|
)
|
(2,109
|
)
|
||||||||
Net charge-offs
|
440
|
|
4,872
|
|
6,925
|
|
12,237
|
|
|
1,727
|
|
7,909
|
|
14,037
|
|
23,673
|
|
||||||||
Provision for loan losses
|
17
|
|
4,670
|
|
2,925
|
|
7,612
|
|
|
(673
|
)
|
9,458
|
|
8,037
|
|
16,822
|
|
||||||||
Other
|
(22
|
)
|
25
|
|
(35
|
)
|
(32
|
)
|
|
2
|
|
10
|
|
9
|
|
21
|
|
||||||||
Ending balance at December 31,
|
$
|
4,316
|
|
$
|
16,294
|
|
$
|
6,999
|
|
$
|
27,609
|
|
|
$
|
4,761
|
|
$
|
16,471
|
|
$
|
11,034
|
|
$
|
32,266
|
|
Impairment methodology
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Asset-specific
(b)
|
$
|
516
|
|
$
|
828
|
|
$
|
2,727
|
|
$
|
4,071
|
|
|
$
|
1,574
|
|
$
|
1,075
|
|
$
|
4,069
|
|
$
|
6,718
|
|
Formula-based
|
3,800
|
|
9,755
|
|
4,272
|
|
17,827
|
|
|
3,187
|
|
10,455
|
|
6,965
|
|
20,607
|
|
||||||||
PCI
|
—
|
|
5,711
|
|
—
|
|
5,711
|
|
|
—
|
|
4,941
|
|
—
|
|
4,941
|
|
||||||||
Total allowance for loan losses
|
$
|
4,316
|
|
$
|
16,294
|
|
$
|
6,999
|
|
$
|
27,609
|
|
|
$
|
4,761
|
|
$
|
16,471
|
|
$
|
11,034
|
|
$
|
32,266
|
|
Allowance for lending-related commitments
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Beginning balance at January 1,
|
$
|
711
|
|
$
|
6
|
|
$
|
—
|
|
$
|
717
|
|
|
$
|
927
|
|
$
|
12
|
|
$
|
—
|
|
$
|
939
|
|
Cumulative effect of change in accounting principles
(a)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(18
|
)
|
—
|
|
—
|
|
(18
|
)
|
||||||||
Provision for lending-related commitments
|
(40
|
)
|
2
|
|
—
|
|
(38
|
)
|
|
(177
|
)
|
(6
|
)
|
—
|
|
(183
|
)
|
||||||||
Other
|
(5
|
)
|
(1
|
)
|
—
|
|
(6
|
)
|
|
(21
|
)
|
—
|
|
—
|
|
(21
|
)
|
||||||||
Ending balance at December 31,
|
$
|
666
|
|
$
|
7
|
|
$
|
—
|
|
$
|
673
|
|
|
$
|
711
|
|
$
|
6
|
|
$
|
—
|
|
$
|
717
|
|
Impairment methodology
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Asset-specific
|
$
|
150
|
|
$
|
—
|
|
$
|
—
|
|
$
|
150
|
|
|
$
|
180
|
|
$
|
—
|
|
$
|
—
|
|
$
|
180
|
|
Formula-based
|
516
|
|
7
|
|
—
|
|
523
|
|
|
531
|
|
6
|
|
—
|
|
537
|
|
||||||||
Total allowance for lending-related commitments
|
$
|
666
|
|
$
|
7
|
|
$
|
—
|
|
$
|
673
|
|
|
$
|
711
|
|
$
|
6
|
|
$
|
—
|
|
$
|
717
|
|
Total allowance for credit losses
|
$
|
4,982
|
|
$
|
16,301
|
|
$
|
6,999
|
|
$
|
28,282
|
|
|
$
|
5,472
|
|
$
|
16,477
|
|
$
|
11,034
|
|
$
|
32,983
|
|
Memo:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Retained loans, end of period
|
$
|
278,395
|
|
$
|
308,427
|
|
$
|
132,175
|
|
$
|
718,997
|
|
|
$
|
222,510
|
|
$
|
327,464
|
|
$
|
135,524
|
|
$
|
685,498
|
|
Retained loans, average
|
245,111
|
|
315,736
|
|
127,334
|
|
688,181
|
|
|
213,609
|
|
340,334
|
|
144,219
|
|
698,162
|
|
||||||||
PCI loans, end of period
|
21
|
|
65,546
|
|
—
|
|
65,567
|
|
|
44
|
|
72,763
|
|
—
|
|
72,807
|
|
||||||||
Credit ratios
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Allowance for loan losses to retained loans
|
1.55
|
%
|
5.28
|
%
|
5.30
|
%
|
3.84
|
%
|
|
2.14
|
%
|
5.03
|
%
|
8.14
|
%
|
4.71
|
%
|
||||||||
Allowance for loan losses to retained nonaccrual loans
(c)
|
180
|
|
220
|
|
NM
|
|
281
|
|
|
86
|
|
186
|
|
NM
|
|
225
|
|
||||||||
Allowance for loan losses to retained nonaccrual loans excluding credit card
|
180
|
|
220
|
|
NM
|
|
210
|
|
|
86
|
|
186
|
|
NM
|
|
148
|
|
||||||||
Net charge-off rates
(d)
|
0.18
|
|
1.54
|
|
5.44
|
|
1.78
|
|
|
0.81
|
|
2.32
|
|
9.73
|
|
3.39
|
|
||||||||
Credit ratios, excluding residential real estate PCI loans
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Allowance for loan losses to
retained loans
(e)
|
1.55
|
|
4.36
|
|
5.30
|
|
3.35
|
|
|
2.14
|
|
4.53
|
|
8.14
|
|
4.46
|
|
||||||||
Allowance for loan losses to
retained nonaccrual loans
(c)(e)
|
180
|
|
143
|
|
NM
|
|
223
|
|
|
86
|
|
131
|
|
NM
|
|
190
|
|
||||||||
Allowance for loan losses to
retained nonaccrual loans excluding credit card
(c)(e)
|
180
|
|
143
|
|
NM
|
|
152
|
|
|
86
|
|
131
|
|
NM
|
|
114
|
|
||||||||
Net charge-off rates
(d)
|
0.18
|
%
|
1.97
|
%
|
5.44
|
%
|
1.98
|
%
|
|
0.81
|
%
|
3.00
|
%
|
9.73
|
%
|
3.81
|
%
|
(a)
|
Effective January 1, 2010, the Firm adopted accounting guidance related to VIEs. Upon adoption of the guidance, the Firm consolidated its Firm-sponsored credit card securitization trusts, its Firm-administered multi-seller conduits and certain other consumer loan securitization entities, primarily mortgage-related. As a result,
$7.4 billion
,
|
156
|
|
JPMorgan Chase & Co./2011 Annual Report
|
(b)
|
Includes risk-rated loans that have been placed on nonaccrual status and loans that have been modified in a TDR.
|
(c)
|
The Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance. Under the guidance issued by the FFIEC, credit card loans are charged off by the end of the month in which the account becomes 180 days past due or within 60 days from receiving notification about a specified event (e.g., bankruptcy of the borrower), whichever is earlier.
|
(d)
|
Charge-offs are not recorded on PCI loans until actual losses exceed estimated losses recorded as purchase accounting adjustments at the time of acquisition.
|
(e)
|
Excludes the impact of PCI loans acquired as part of the Washington Mutual transaction.
|
Year ended December 31,
|
Provision for loan losses
|
|
Provision for lending-related commitments
|
|
Total provision for credit losses
|
|
||||||||||||||||||||||||
(in millions)
|
2011
|
|
2010
|
|
2009
|
|
|
2011
|
|
2010
|
|
2009
|
|
|
2011
|
|
2010
|
|
2009
|
|
|
|||||||||
Wholesale
|
$
|
17
|
|
$
|
(673
|
)
|
$
|
3,684
|
|
|
$
|
(40
|
)
|
$
|
(177
|
)
|
$
|
290
|
|
|
$
|
(23
|
)
|
$
|
(850
|
)
|
$
|
3,974
|
|
|
Consumer, excluding credit card
|
4,670
|
|
9,458
|
|
16,032
|
|
|
2
|
|
(6
|
)
|
(10
|
)
|
|
4,672
|
|
9,452
|
|
16,022
|
|
|
|||||||||
Credit card – reported
(a)
|
2,925
|
|
8,037
|
|
12,019
|
|
|
—
|
|
—
|
|
—
|
|
|
2,925
|
|
8,037
|
|
12,019
|
|
|
|||||||||
Total provision for credit losses – reported
|
7,612
|
|
16,822
|
|
31,735
|
|
|
(38
|
)
|
(183
|
)
|
280
|
|
|
7,574
|
|
16,639
|
|
32,015
|
|
|
|||||||||
Credit card – securitized
(a)(b)
|
NA
|
|
NA
|
|
6,443
|
|
|
NA
|
|
NA
|
|
—
|
|
|
NA
|
|
NA
|
|
6,443
|
|
|
|||||||||
Total provision for credit losses – managed
|
$
|
7,612
|
|
$
|
16,822
|
|
$
|
38,178
|
|
|
$
|
(38
|
)
|
$
|
(183
|
)
|
$
|
280
|
|
|
$
|
7,574
|
|
$
|
16,639
|
|
$
|
38,458
|
|
|
(a)
|
Effective January 1, 2010, the Firm adopted accounting guidance related to VIEs. As a result of the consolidation of the credit card securitization trusts, reported and managed basis relating to credit card securitizations are equivalent for periods beginning after January 1, 2010. For further discussion regarding the Firm’s application and the impact of the new guidance, see Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures on pages 76–78 of this Annual Report.
|
(b)
|
Loans securitized are defined as loans that were sold to unconsolidated securitization trusts and were not included in reported loans. For further discussion of credit card securitizations, see Note 16 on pages 256–267 of this Annual Report.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
157
|
MARKET RISK MANAGEMENT
|
•
|
Establishing a market risk policy framework
|
•
|
Independent measurement, monitoring and control of line-of-business market risk
|
•
|
Definition, approval and monitoring of limits
|
•
|
Performance of stress testing and qualitative risk assessments
|
•
|
Value-at-risk
|
•
|
Economic-value stress testing
|
•
|
Nonstatistical risk measures
|
•
|
Loss advisories
|
•
|
Revenue drawdowns
|
•
|
Risk identification for large exposures (“RIFLEs”)
|
•
|
Nontrading interest rate-sensitive revenue-at-risk stress testing
|
158
|
|
JPMorgan Chase & Co./2011 Annual Report
|
(a)
|
Average VaR and period-end VaR were less than the sum of the VaR of the components described above, which is due to portfolio diversification. The diversification effect reflects the fact that the risks were not perfectly correlated. The risk of a portfolio of positions is therefore usually less than the sum of the risks of the positions themselves.
|
(b)
|
Designated as not meaningful (“NM”), because the minimum and maximum may occur on different days for different risk components, and hence it is not meaningful to compute a portfolio-diversification effect.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
159
|
160
|
|
JPMorgan Chase & Co./2011 Annual Report
|
•
|
Differences in the timing among the maturity or repricing of assets, liabilities and off—balance sheet instruments. For example, if liabilities reprice more quickly than assets and funding interest rates are declining, earnings will increase initially.
|
•
|
Differences in the amounts of assets, liabilities and off-balance sheet instruments that are repricing at the same time. For example, if more deposit liabilities are repricing than assets when general interest rates are declining, earnings will increase initially.
|
•
|
Differences in the amounts by which short-term and long-term market interest rates change (for example, changes in the slope of the yield curve) because the Firm has the ability to lend at long-term fixed rates and borrow at variable or short-term fixed rates. Based on these scenarios, the Firm’s earnings would be affected negatively by a sudden and unanticipated increase in short-term rates paid on its liabilities (e.g., deposits) without a corresponding increase in long-term rates received on its assets (e.g., loans). Conversely, higher long-term rates received on assets generally are beneficial to earnings, particularly when the increase is not accompanied by rising short-term rates paid on liabilities.
|
•
|
The impact of changes in the maturity of various assets, liabilities or off-balance sheet instruments as interest rates change. For example, if more borrowers than forecasted pay down higher-rate loan balances when general interest rates are declining, earnings may decrease initially.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
161
|
(a)
|
Downward 100- and 200-basis-point parallel shocks result in a Federal Funds target rate of zero and negative three- and six-month treasury rates. The earnings-at-risk results of such a low-probability scenario are not meaningful.
|
162
|
|
JPMorgan Chase & Co./2011 Annual Report
|
COUNTRY RISK MANAGEMENT
|
•
|
Developing guidelines and policies consistent with a comprehensive country risk framework
|
•
|
Assigning sovereign ratings and assessing country risks
|
•
|
Measuring and monitoring country risk exposure across the Firm
|
•
|
Managing country limits and reporting utilization to senior management
|
•
|
Developing surveillance tools for early identification of potential country risk concerns
|
•
|
Providing country risk scenario analysis
|
•
|
Lending exposures are measured at the total committed amount (funded and unfunded), net of the allowance for credit losses and cash and marketable securities collateral received
|
•
|
AFS securities are measured at par value
|
•
|
Securities financing exposures are measured at their receivable balance, net of collateral received
|
•
|
Debt and equity securities in market-making and investing activities are measured at the fair value of all positions, both long and short positions
|
•
|
Counterparty exposure on derivative receivables, including credit derivative receivables, is measured at the derivative’s fair value, net of the fair value of the related collateral
|
•
|
Credit derivatives protection purchased and sold are reported based on the underlying reference entity and is measured at the notional amount of protection purchased or sold, net of the fair value of the recognized derivative receivable or payable. Credit derivatives protection purchased and sold in the Firm's market-making activities are presented on a net basis, as such activities often result in selling and purchasing protection related to the same underlying reference entity, and which reflects the manner in which the Firm manages these exposures
|
JPMorgan Chase & Co./2011 Annual Report
|
|
163
|
164
|
|
JPMorgan Chase & Co./2011 Annual Report
|
December 31, 2011
(in billions)
|
Lending
(a)
|
AFS securities
(b)
|
Trading
(c)
|
Derivative collateral
(d)
|
Portfolio hedging
(e)
|
Total exposure
|
||||||||||||
Spain
|
|
|
|
|
|
|
||||||||||||
Sovereign
|
$
|
—
|
|
$
|
2.0
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(0.1
|
)
|
$
|
1.9
|
|
Non-sovereign
|
3.3
|
|
0.2
|
|
4.4
|
|
(2.3
|
)
|
(0.3
|
)
|
5.3
|
|
||||||
Total Spain exposure
|
$
|
3.3
|
|
$
|
2.2
|
|
$
|
4.4
|
|
$
|
(2.3
|
)
|
$
|
(0.4
|
)
|
$
|
7.2
|
|
|
|
|
|
|
|
|
||||||||||||
Italy
|
|
|
|
|
|
|
||||||||||||
Sovereign
|
$
|
—
|
|
$
|
—
|
|
$
|
6.4
|
|
$
|
(1.1
|
)
|
$
|
(2.8
|
)
|
$
|
2.5
|
|
Non-sovereign
|
3.1
|
|
0.1
|
|
2.9
|
|
(1.5
|
)
|
(0.5
|
)
|
4.1
|
|
||||||
Total Italy exposure
|
$
|
3.1
|
|
$
|
0.1
|
|
$
|
9.3
|
|
$
|
(2.6
|
)
|
$
|
(3.3
|
)
|
$
|
6.6
|
|
|
|
|
|
|
|
|
||||||||||||
Other (Ireland, Portugal and Greece)
|
|
|
|
|
|
|
||||||||||||
Sovereign
|
$
|
—
|
|
$
|
1.0
|
|
$
|
0.1
|
|
$
|
—
|
|
$
|
(0.9
|
)
|
$
|
0.2
|
|
Non-sovereign
|
1.4
|
|
—
|
|
2.1
|
|
(1.4
|
)
|
(0.1
|
)
|
2.0
|
|
||||||
Total other exposure
|
$
|
1.4
|
|
$
|
1.0
|
|
$
|
2.2
|
|
$
|
(1.4
|
)
|
$
|
(1.0
|
)
|
$
|
2.2
|
|
|
|
|
|
|
|
|
||||||||||||
Total exposure
|
$
|
7.8
|
|
$
|
3.3
|
|
$
|
15.9
|
|
$
|
(6.3
|
)
|
$
|
(4.7
|
)
|
$
|
16.0
|
|
(a)
|
Lending includes loans and accrued interest receivable, net of the allowance for loan losses, deposits with banks, acceptances, other monetary assets, issued letters of credit net of participations, and undrawn commitments to extend credit. Includes
$2.2 billion
of unfunded lending exposure at
December 31, 2011
. These exposures consist typically of committed, but unused corporate credit agreements, with market-based lending terms and covenants.
|
(b)
|
The fair value of AFS securities was
$3.1 billion
at
December 31, 2011
.
|
(c)
|
Includes: (1)
$1.2 billion
of issuer exposure on debt and equity securities held in trading, as well as market-making CDS exposure and (2)
$14.5 billion
of derivative and securities financing counterparty exposure. As of
December 31, 2011
, there were approximately
$18.4 billion
of securities financing receivables, which were collateralized with approximately
$21.5 billion
of marketable securities.
|
(d)
|
Includes cash and marketable securities pledged to the Firm, of which approximately
98%
of the collateral was cash as of
December 31, 2011
,
|
(e)
|
Reflects net CDS protection purchased through the Firm’s credit portfolio management activities, which are managed separately from its market-making activities.
|
•
|
99%
is purchased under contracts that require posting of cash collateral;
|
•
|
83%
is purchased from investment-grade counterparties domiciled outside of the select European countries;
|
•
|
75%
of the protection purchased offsets protection sold on the identical reference entity, with the identical counterparty subject to master netting agreements.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
165
|
PRIVATE EQUITY RISK MANAGEMENT
|
OPERATIONAL RISK MANAGEMENT
|
•
|
Client service and selection
|
•
|
Business practices
|
•
|
Fraud, theft and malice
|
•
|
Execution, delivery and process management
|
•
|
Employee disputes
|
•
|
Disasters and public safety
|
•
|
Technology and infrastructure failures, including cybersecurity breaches
|
166
|
|
JPMorgan Chase & Co./2011 Annual Report
|
REPUTATION AND FIDUCIARY RISK MANAGEMENT
|
JPMorgan Chase & Co./2011 Annual Report
|
|
167
|
CRITICAL ACCOUNTING ESTIMATES USED BY THE FIRM
|
168
|
|
JPMorgan Chase & Co./2011 Annual Report
|
•
|
A one-notch downgrade in the Firm’s internal risk ratings for its entire wholesale loan portfolio could imply an increase in the Firm’s modeled loss estimates of approximately
$1.9 billion
.
|
•
|
An adverse national home price scenario (reflecting an additional 8% decline in housing prices when geographically weighted for the PCI portfolio), could result in an increase in credit loss estimates for PCI loans of approximately
$1.5 billion
.
|
•
|
The same adverse scenario, weighted for the residential real estate portfolio, excluding PCI loans, could result in an increase to modeled annual loss estimates of approximately
$600 million
.
|
•
|
A
50
basis point deterioration in forecasted credit card loss rates could imply an increase to modeled annualized credit card loan loss estimates of approximately
$800 million
.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
169
|
|
2011
|
|||||||
December 31,
(in billions, except ratio data)
|
Total assets at fair value
|
Total level 3 assets
|
||||||
Trading debt and equity instruments
|
$
|
351.5
|
|
|
$
|
33.0
|
|
|
Derivative receivables – gross
|
1,884.5
|
|
|
35.0
|
|
|
||
Netting adjustment
|
(1,792.0
|
)
|
|
—
|
|
|
||
Derivative receivables – net
|
92.5
|
|
|
35.0
|
|
|
||
AFS securities
|
364.8
|
|
|
25.5
|
|
|
||
Loans
|
2.1
|
|
|
1.6
|
|
|
||
MSRs
|
7.2
|
|
|
7.2
|
|
|
||
Private equity investments
|
7.6
|
|
|
6.8
|
|
|
||
Other
|
49.1
|
|
|
4.4
|
|
|
||
Total assets measured
at fair value on a recurring basis
|
874.8
|
|
|
113.5
|
|
|
||
Total assets measured at fair value on a nonrecurring basis
|
5.3
|
|
|
4.9
|
|
|
||
Total assets measured
at fair value
|
$
|
880.1
|
|
|
$
|
118.4
|
|
(a)
|
Total Firm assets
|
$
|
2,265.8
|
|
|
|
|
||
Level 3 assets as a percentage of total Firm assets
|
|
|
5.2%
|
|
|
|||
Level 3 assets as a percentage of total Firm assets at fair value
|
|
|
13.5%
|
|
|
170
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
171
|
172
|
|
JPMorgan Chase & Co./2011 Annual Report
|
ACCOUNTING AND REPORTING DEVELOPMENTS
|
JPMorgan Chase & Co./2011 Annual Report
|
|
173
|
NONEXCHANGE TRADED COMMODITY DERIVATIVE CONTRACTS AT FAIR VALUE
|
Year ended December 31, 2011
(in millions) |
Asset position
|
|
Liability position
|
||||
Net fair value of contracts outstanding at January 1, 2011
|
$
|
8,166
|
|
|
$
|
7,184
|
|
Effect of legally enforceable master netting agreements
|
41,284
|
|
|
41,919
|
|
||
Gross fair value of contracts outstanding at January 1, 2011
|
49,450
|
|
|
49,103
|
|
||
Contracts realized or otherwise settled
|
(22,855
|
)
|
|
(20,826
|
)
|
||
Fair value of new contracts
|
21,517
|
|
|
23,195
|
|
||
Changes in fair values attributable to changes in valuation techniques and assumptions
|
—
|
|
|
—
|
|
||
Other changes in fair value
|
(1,495
|
)
|
|
(2,260
|
)
|
||
Gross fair value of contracts outstanding at December 31, 2011
|
46,617
|
|
|
49,212
|
|
||
Effect of legally enforceable master netting agreements
|
(33,495
|
)
|
|
(35,695
|
)
|
||
Net fair value of contracts outstanding at December 31, 2011
|
$
|
13,122
|
|
|
$
|
13,517
|
|
December 31, 2011 (in millions)
|
Asset position
|
|
Liability position
|
||||
Maturity less than 1 year
|
$
|
20,876
|
|
|
$
|
18,993
|
|
Maturity 1–3 years
|
16,564
|
|
|
16,949
|
|
||
Maturity 4–5 years
|
7,745
|
|
|
7,593
|
|
||
Maturity in excess of 5 years
|
1,432
|
|
|
5,677
|
|
||
Gross fair value of contracts outstanding at December 31, 2011
|
46,617
|
|
|
49,212
|
|
||
Effect of legally enforceable master netting agreements
|
(33,495
|
)
|
|
(35,695
|
)
|
||
Net fair value of contracts outstanding at December 31, 2011
|
$
|
13,122
|
|
|
$
|
13,517
|
|
174
|
|
JPMorgan Chase & Co./2011 Annual Report
|
FORWARD-LOOKING STATEMENTS
|
•
|
Local, regional and international business, economic and political conditions and geopolitical events;
|
•
|
Changes in laws and regulatory requirements, including as a result of recent financial services legislation;
|
•
|
Changes in trade, monetary and fiscal policies and laws;
|
•
|
Securities and capital markets behavior, including changes in market liquidity and volatility;
|
•
|
Changes in investor sentiment or consumer spending or savings behavior;
|
•
|
Ability of the Firm to manage effectively its liquidity;
|
•
|
Changes in credit ratings assigned to the Firm or its subsidiaries;
|
•
|
Damage to the Firm’s reputation;
|
•
|
Ability of the Firm to deal effectively with an economic slowdown or other economic or market disruption;
|
•
|
Technology changes instituted by the Firm, its counterparties or competitors;
|
•
|
Mergers and acquisitions, including the Firm’s ability to integrate acquisitions;
|
•
|
Ability of the Firm to develop new products and services, and the extent to which products or services previously sold by the Firm (including but not limited to mortgages and asset-backed securities) require the Firm to incur liabilities or absorb losses not contemplated at their initiation or origination;
|
•
|
Ability of the Firm to address enhanced regulatory requirements affecting its mortgage business;
|
•
|
Acceptance of the Firm’s new and existing products and services by the marketplace and the ability of the Firm to increase market share;
|
•
|
Ability of the Firm to attract and retain employees;
|
•
|
Ability of the Firm to control expense;
|
•
|
Competitive pressures;
|
•
|
Changes in the credit quality of the Firm’s customers and counterparties;
|
•
|
Adequacy of the Firm’s risk management framework;
|
•
|
Adverse judicial or regulatory proceedings;
|
•
|
Changes in applicable accounting policies;
|
•
|
Ability of the Firm to determine accurate values of certain assets and liabilities;
|
•
|
Occurrence of natural or man-made disasters or calamities or conflicts, including any effect of any such disasters, calamities or conflicts on the Firm’s power generation facilities and the Firm’s other commodity-related activities;
|
•
|
Ability of the Firm to maintain the security of its financial, accounting, technology, data processing and other operating systems and facilities;
|
•
|
The other risks and uncertainties detailed in Part I, Item 1A: Risk Factors in the Firm’s Annual Report on Form 10-K for the year ended
December 31, 2011
.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
175
|
176
|
|
JPMorgan Chase & Co./2011 Annual Report
|
PricewaterhouseCoopers LLP
300 Madison Avenue
New York, NY 10017
|
JPMorgan Chase & Co./2011 Annual Report
|
|
177
|
Year ended December 31, (in millions, except per share data)
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Revenue
|
|
|
|
|
|
|
||||||
Investment banking fees
|
|
$
|
5,911
|
|
|
$
|
6,190
|
|
|
$
|
7,087
|
|
Principal transactions
|
|
10,005
|
|
|
10,894
|
|
|
9,796
|
|
|||
Lending- and deposit-related fees
|
|
6,458
|
|
|
6,340
|
|
|
7,045
|
|
|||
Asset management, administration and commissions
|
|
14,094
|
|
|
13,499
|
|
|
12,540
|
|
|||
Securities gains
(a)
|
|
1,593
|
|
|
2,965
|
|
|
1,110
|
|
|||
Mortgage fees and related income
|
|
2,721
|
|
|
3,870
|
|
|
3,678
|
|
|||
Credit card income
|
|
6,158
|
|
|
5,891
|
|
|
7,110
|
|
|||
Other income
|
|
2,605
|
|
|
2,044
|
|
|
916
|
|
|||
Noninterest revenue
|
|
49,545
|
|
|
51,693
|
|
|
49,282
|
|
|||
Interest income
|
|
61,293
|
|
|
63,782
|
|
|
66,350
|
|
|||
Interest expense
|
|
13,604
|
|
|
12,781
|
|
|
15,198
|
|
|||
Net interest income
|
|
47,689
|
|
|
51,001
|
|
|
51,152
|
|
|||
Total net revenue
|
|
97,234
|
|
|
102,694
|
|
|
100,434
|
|
|||
|
|
|
|
|
|
|
||||||
Provision for credit losses
|
|
7,574
|
|
|
16,639
|
|
|
32,015
|
|
|||
|
|
|
|
|
|
|
||||||
Noninterest expense
|
|
|
|
|
|
|
||||||
Compensation expense
|
|
29,037
|
|
|
28,124
|
|
|
26,928
|
|
|||
Occupancy expense
|
|
3,895
|
|
|
3,681
|
|
|
3,666
|
|
|||
Technology, communications and equipment expense
|
|
4,947
|
|
|
4,684
|
|
|
4,624
|
|
|||
Professional and outside services
|
|
7,482
|
|
|
6,767
|
|
|
6,232
|
|
|||
Marketing
|
|
3,143
|
|
|
2,446
|
|
|
1,777
|
|
|||
Other expense
|
|
13,559
|
|
|
14,558
|
|
|
7,594
|
|
|||
Amortization of intangibles
|
|
848
|
|
|
936
|
|
|
1,050
|
|
|||
Merger costs
|
|
—
|
|
|
—
|
|
|
481
|
|
|||
Total noninterest expense
|
|
62,911
|
|
|
61,196
|
|
|
52,352
|
|
|||
Income before income tax expense and extraordinary gain
|
|
26,749
|
|
|
24,859
|
|
|
16,067
|
|
|||
Income tax expense
|
|
7,773
|
|
|
7,489
|
|
|
4,415
|
|
|||
Income before extraordinary gain
|
|
18,976
|
|
|
17,370
|
|
|
11,652
|
|
|||
Extraordinary gain
|
|
—
|
|
|
—
|
|
|
76
|
|
|||
Net income
|
|
$
|
18,976
|
|
|
$
|
17,370
|
|
|
$
|
11,728
|
|
Net income applicable to common stockholders
|
|
$
|
17,568
|
|
|
$
|
15,764
|
|
|
$
|
8,774
|
|
Per common share data
|
|
|
|
|
|
|
||||||
Basic earnings per share
|
|
|
|
|
|
|
||||||
Income before extraordinary gain
|
|
$
|
4.50
|
|
|
$
|
3.98
|
|
|
$
|
2.25
|
|
Net income
|
|
4.50
|
|
|
3.98
|
|
|
2.27
|
|
|||
|
|
|
|
|
|
|
||||||
Diluted earnings per share
|
|
|
|
|
|
|
||||||
Income before extraordinary gain
|
|
4.48
|
|
|
3.96
|
|
|
2.24
|
|
|||
Net income
|
|
4.48
|
|
|
3.96
|
|
|
2.26
|
|
|||
|
|
|
|
|
|
|
||||||
Weighted-average basic shares
|
|
3,900.4
|
|
|
3,956.3
|
|
|
3,862.8
|
|
|||
Weighted-average diluted shares
|
|
3,920.3
|
|
|
3,976.9
|
|
|
3,879.7
|
|
|||
Cash dividends declared per common share
|
|
$
|
1.00
|
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
(a)
|
The following other-than-temporary impairment losses are included in securities gains for the periods presented
.
|
Year ended December 31, (in millions)
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Total other-than-temporary impairment losses
|
|
$
|
(27
|
)
|
|
$
|
(94
|
)
|
|
$
|
(946
|
)
|
Losses recorded in/(reclassified from) other comprehensive income
|
|
(49
|
)
|
|
(6
|
)
|
|
368
|
|
|||
Total credit losses recognized in income
|
|
$
|
(76
|
)
|
|
$
|
(100
|
)
|
|
$
|
(578
|
)
|
178
|
|
JPMorgan Chase & Co./2011 Annual Report
|
December 31, (in millions, except share data)
|
2011
|
|
2010
|
||||
Assets
|
|
|
|
||||
Cash and due from banks
|
$
|
59,602
|
|
|
$
|
27,567
|
|
Deposits with banks
|
85,279
|
|
|
21,673
|
|
||
Federal funds sold and securities purchased under resale agreements (included
$24,891
and $20,299 at fair value)
|
235,314
|
|
|
222,554
|
|
||
Securities borrowed (included
$15,308
and $13,961 at fair value)
|
142,462
|
|
|
123,587
|
|
||
Trading assets (included assets pledged of
$89,856
and $73,056)
|
443,963
|
|
|
489,892
|
|
||
Securities (included
$364,781
and $316,318 at fair value and assets pledged of
$94,691
and $86,891)
|
364,793
|
|
|
316,336
|
|
||
Loans (included
$2,097
and $1,976 at fair value)
|
723,720
|
|
|
692,927
|
|
||
Allowance for loan losses
|
(27,609
|
)
|
|
(32,266
|
)
|
||
Loans, net of allowance for loan losses
|
696,111
|
|
|
660,661
|
|
||
Accrued interest and accounts receivable
|
61,478
|
|
|
70,147
|
|
||
Premises and equipment
|
14,041
|
|
|
13,355
|
|
||
Goodwill
|
48,188
|
|
|
48,854
|
|
||
Mortgage servicing rights
|
7,223
|
|
|
13,649
|
|
||
Other intangible assets
|
3,207
|
|
|
4,039
|
|
||
Other assets (included
$16,499
and $18,201 at fair value and assets pledged of
$1,316
and $1,485)
|
104,131
|
|
|
105,291
|
|
||
Total assets
(a)
|
$
|
2,265,792
|
|
|
$
|
2,117,605
|
|
Liabilities
|
|
|
|
||||
Deposits (included
$4,933
and $4,369 at fair value)
|
$
|
1,127,806
|
|
|
$
|
930,369
|
|
Federal funds purchased and securities loaned or sold under repurchase agreements (included
$9,517
and $4,060 at fair value)
|
213,532
|
|
|
276,644
|
|
||
Commercial paper
|
51,631
|
|
|
35,363
|
|
||
Other borrowed funds (included
$9,576
and $9,931 at fair value)
|
21,908
|
|
|
34,325
|
|
||
Trading liabilities
|
141,695
|
|
|
146,166
|
|
||
Accounts payable and other liabilities (included
$51
and $236 at fair value)
|
202,895
|
|
|
170,330
|
|
||
Beneficial interests issued by consolidated variable interest entities (included
$1,250
and $1,495 at fair value)
|
65,977
|
|
|
77,649
|
|
||
Long-term debt (included
$34,720
and $38,839 at fair value)
|
256,775
|
|
|
270,653
|
|
||
Total liabilities
(a)
|
2,082,219
|
|
|
1,941,499
|
|
||
Commitments and contingencies (see Notes 29, 30 and 31 of this Annual Report)
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
||||
Preferred stock ($1 par value; authorized 200,000,000 shares: issued
780,000
shares)
|
7,800
|
|
|
7,800
|
|
||
Common stock ($1 par value; authorized 9,000,000,000 shares; issued
4,104,933,895
shares)
|
4,105
|
|
|
4,105
|
|
||
Capital surplus
|
95,602
|
|
|
97,415
|
|
||
Retained earnings
|
88,315
|
|
|
73,998
|
|
||
Accumulated other comprehensive income/(loss)
|
944
|
|
|
1,001
|
|
||
Shares held in RSU Trust, at cost (
852,906
and 1,192,712 shares)
|
(38
|
)
|
|
(53
|
)
|
||
Treasury stock, at cost (
332,243,180
and 194,639,785 shares)
|
(13,155
|
)
|
|
(8,160
|
)
|
||
Total stockholders’ equity
|
183,573
|
|
|
176,106
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,265,792
|
|
|
$
|
2,117,605
|
|
(a)
|
The following table presents information on assets and liabilities related to VIEs that are consolidated by the Firm at December 31, 2011 and
2010
. The difference between total VIE assets and liabilities represents the Firm’s interests in those entities, which were eliminated in consolidation.
|
December 31, (in millions)
|
2011
|
|
2010
|
||||
Assets
|
|
|
|
||||
Trading assets
|
$
|
12,079
|
|
|
$
|
9,837
|
|
Loans
|
86,754
|
|
|
95,587
|
|
||
All other assets
|
2,638
|
|
|
3,494
|
|
||
Total assets
|
$
|
101,471
|
|
|
$
|
108,918
|
|
Liabilities
|
|
|
|
||||
Beneficial interests issued by consolidated variable interest entities
|
$
|
65,977
|
|
|
$
|
77,649
|
|
All other liabilities
|
1,487
|
|
|
1,922
|
|
||
Total liabilities
|
$
|
67,464
|
|
|
$
|
79,571
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
179
|
Year ended December 31, (in millions, except per share data)
|
|
2011
|
|
2010
|
|
2009
|
||||||
Preferred stock
|
|
|
|
|
|
|
||||||
Balance at January 1
|
|
$
|
7,800
|
|
|
$
|
8,152
|
|
|
$
|
31,939
|
|
Accretion of preferred stock discount on issuance to the U.S. Treasury
|
|
—
|
|
|
—
|
|
|
1,213
|
|
|||
Redemption of preferred stock issued to the U.S. Treasury
|
|
—
|
|
|
—
|
|
|
(25,000
|
)
|
|||
Redemption of other preferred stock
|
|
—
|
|
|
(352
|
)
|
|
—
|
|
|||
Balance at December 31
|
|
7,800
|
|
|
7,800
|
|
|
8,152
|
|
|||
Common stock
|
|
|
|
|
|
|
||||||
Balance at January 1
|
|
4,105
|
|
|
4,105
|
|
|
3,942
|
|
|||
Issuance of common stock
|
|
—
|
|
|
—
|
|
|
163
|
|
|||
Balance at December 31
|
|
4,105
|
|
|
4,105
|
|
|
4,105
|
|
|||
Capital surplus
|
|
|
|
|
|
|
||||||
Balance at January 1
|
|
97,415
|
|
|
97,982
|
|
|
92,143
|
|
|||
Issuance of common stock
|
|
—
|
|
|
—
|
|
|
5,593
|
|
|||
Shares issued and commitments to issue common stock for employee stock-based compensation awards, and related tax effects
|
|
(1,688
|
)
|
|
706
|
|
|
474
|
|
|||
Other
|
|
(125
|
)
|
|
(1,273
|
)
|
|
(228
|
)
|
|||
Balance at December 31
|
|
95,602
|
|
|
97,415
|
|
|
97,982
|
|
|||
Retained earnings
|
|
|
|
|
|
|
||||||
Balance at January 1
|
|
73,998
|
|
|
62,481
|
|
|
54,013
|
|
|||
Cumulative effect of changes in accounting principles
|
|
—
|
|
|
(4,376
|
)
|
|
—
|
|
|||
Net income
|
|
18,976
|
|
|
17,370
|
|
|
11,728
|
|
|||
Dividends declared:
|
|
|
|
|
|
|
||||||
Preferred stock
|
|
(629
|
)
|
|
(642
|
)
|
|
(1,328
|
)
|
|||
Accelerated amortization from redemption of preferred stock issued to the U.S. Treasury
|
|
—
|
|
|
—
|
|
|
(1,112
|
)
|
|||
Common stock (
$1.00
, $0.20 and $0.20 per share for 2011, 2010 and 2009, respectively)
|
|
(4,030
|
)
|
|
(835
|
)
|
|
(820
|
)
|
|||
Balance at December 31
|
|
88,315
|
|
|
73,998
|
|
|
62,481
|
|
|||
Accumulated other comprehensive income/(loss)
|
|
|
|
|
|
|
||||||
Balance at January 1
|
|
1,001
|
|
|
(91
|
)
|
|
(5,687
|
)
|
|||
Cumulative effect of changes in accounting principles
|
|
—
|
|
|
(144
|
)
|
|
—
|
|
|||
Other comprehensive (loss)/income
|
|
(57
|
)
|
|
1,236
|
|
|
5,596
|
|
|||
Balance at December 31
|
|
944
|
|
|
1,001
|
|
|
(91
|
)
|
|||
Shares held in RSU Trust, at cost
|
|
|
|
|
|
|
||||||
Balance at January 1
|
|
(53
|
)
|
|
(68
|
)
|
|
(217
|
)
|
|||
Reissuance from RSU Trust
|
|
15
|
|
|
15
|
|
|
149
|
|
|||
Balance at December 31
|
|
(38
|
)
|
|
(53
|
)
|
|
(68
|
)
|
|||
Treasury stock, at cost
|
|
|
|
|
|
|
||||||
Balance at January 1
|
|
(8,160
|
)
|
|
(7,196
|
)
|
|
(9,249
|
)
|
|||
Purchase of treasury stock
|
|
(8,741
|
)
|
|
(2,999
|
)
|
|
—
|
|
|||
Reissuance from treasury stock
|
|
3,750
|
|
|
2,040
|
|
|
2,079
|
|
|||
Share repurchases related to employee stock-based compensation awards
|
|
(4
|
)
|
|
(5
|
)
|
|
(26
|
)
|
|||
Balance at December 31
|
|
(13,155
|
)
|
|
(8,160
|
)
|
|
(7,196
|
)
|
|||
Total stockholders
’
equity
|
|
$
|
183,573
|
|
|
$
|
176,106
|
|
|
$
|
165,365
|
|
Comprehensive income
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
18,976
|
|
|
$
|
17,370
|
|
|
$
|
11,728
|
|
Other comprehensive (loss)/income
|
|
(57
|
)
|
|
1,236
|
|
|
5,596
|
|
|||
Comprehensive income
|
|
$
|
18,919
|
|
|
$
|
18,606
|
|
|
$
|
17,324
|
|
180
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Year ended December 31, (in millions)
|
2011
|
|
2010
|
|
2009
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
18,976
|
|
|
$
|
17,370
|
|
|
$
|
11,728
|
|
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
|
|
|
|
|
|
||||||
Provision for credit losses
|
7,574
|
|
|
16,639
|
|
|
32,015
|
|
|||
Depreciation and amortization
|
4,257
|
|
|
4,029
|
|
|
3,308
|
|
|||
Amortization of intangibles
|
848
|
|
|
936
|
|
|
1,050
|
|
|||
Deferred tax expense/(benefit)
|
1,693
|
|
|
(968
|
)
|
|
(3,622
|
)
|
|||
Investment securities gains
|
(1,593
|
)
|
|
(2,965
|
)
|
|
(1,110
|
)
|
|||
Stock-based compensation
|
2,675
|
|
|
3,251
|
|
|
3,355
|
|
|||
Originations and purchases of loans held-for-sale
|
(52,561
|
)
|
|
(37,085
|
)
|
|
(22,417
|
)
|
|||
Proceeds from sales, securitizations and paydowns of loans held-for-sale
|
54,092
|
|
|
40,155
|
|
|
33,902
|
|
|||
Net change in:
|
|
|
|
|
|
||||||
Trading assets
|
36,443
|
|
|
(72,082
|
)
|
|
133,488
|
|
|||
Securities borrowed
|
(18,936
|
)
|
|
(3,926
|
)
|
|
4,452
|
|
|||
Accrued interest and accounts receivable
|
8,655
|
|
|
443
|
|
|
(6,312
|
)
|
|||
Other assets
|
(15,456
|
)
|
|
(12,452
|
)
|
|
32,557
|
|
|||
Trading liabilities
|
7,905
|
|
|
19,344
|
|
|
(79,314
|
)
|
|||
Accounts payable and other liabilities
|
35,203
|
|
|
17,325
|
|
|
(26,450
|
)
|
|||
Other operating adjustments
|
6,157
|
|
|
6,234
|
|
|
6,167
|
|
|||
Net cash provided by/(used in) operating activities
|
95,932
|
|
|
(3,752
|
)
|
|
122,797
|
|
|||
Investing activities
|
|
|
|
|
|
||||||
Net change in:
|
|
|
|
|
|
||||||
Deposits with banks
|
(63,592
|
)
|
|
41,625
|
|
|
74,829
|
|
|||
Federal funds sold and securities purchased under resale agreements
|
(12,490
|
)
|
|
(26,957
|
)
|
|
7,082
|
|
|||
Held-to-maturity securities:
|
|
|
|
|
|
||||||
Proceeds
|
6
|
|
|
7
|
|
|
9
|
|
|||
Available-for-sale securities:
|
|
|
|
|
|
||||||
Proceeds from maturities
|
86,850
|
|
|
92,740
|
|
|
87,712
|
|
|||
Proceeds from sales
|
68,631
|
|
|
118,600
|
|
|
114,041
|
|
|||
Purchases
|
(202,309
|
)
|
|
(179,487
|
)
|
|
(346,372
|
)
|
|||
Proceeds from sales and securitizations of loans held-for-investment
|
10,478
|
|
|
9,476
|
|
|
31,034
|
|
|||
Other changes in loans, net
|
(58,365
|
)
|
|
3,022
|
|
|
50,651
|
|
|||
Net cash received from/(used in) business acquisitions or dispositions
|
102
|
|
|
(4,910
|
)
|
|
(97
|
)
|
|||
Net maturities of asset-backed commercial paper guaranteed by the FRBB
|
—
|
|
|
—
|
|
|
11,228
|
|
|||
All other investing activities, net
|
(63
|
)
|
|
(114
|
)
|
|
(762
|
)
|
|||
Net cash (used in)/provided by investing activities
|
(170,752
|
)
|
|
54,002
|
|
|
29,355
|
|
|||
Financing activities
|
|
|
|
|
|
||||||
Net change in:
|
|
|
|
|
|
||||||
Deposits
|
203,420
|
|
|
(9,637
|
)
|
|
(107,700
|
)
|
|||
Federal funds purchased and securities loaned or sold under repurchase agreements
|
(63,116
|
)
|
|
15,202
|
|
|
67,785
|
|
|||
Commercial paper and other borrowed funds
|
7,230
|
|
|
(6,869
|
)
|
|
(67,198
|
)
|
|||
Beneficial interests issued by consolidated variable interest entities
|
1,165
|
|
|
2,426
|
|
|
(4,076
|
)
|
|||
Proceeds from long-term borrowings and trust preferred capital debt securities
|
54,844
|
|
|
55,181
|
|
|
51,324
|
|
|||
Payments of long-term borrowings and trust preferred capital debt securities
|
(82,078
|
)
|
|
(99,043
|
)
|
|
(68,441
|
)
|
|||
Excess tax benefits related to stock-based compensation
|
867
|
|
|
26
|
|
|
17
|
|
|||
Redemption of preferred stock issued to the U.S. Treasury
|
—
|
|
|
—
|
|
|
(25,000
|
)
|
|||
Redemption of other preferred stock
|
—
|
|
|
(352
|
)
|
|
—
|
|
|||
Proceeds from issuance of common stock
|
—
|
|
|
—
|
|
|
5,756
|
|
|||
Treasury stock and warrants repurchased
|
(8,863
|
)
|
|
(2,999
|
)
|
|
—
|
|
|||
Dividends paid
|
(3,895
|
)
|
|
(1,486
|
)
|
|
(3,422
|
)
|
|||
All other financing activities, net
|
(1,868
|
)
|
|
(1,666
|
)
|
|
(2,124
|
)
|
|||
Net cash provided by/(used in) financing activities
|
107,706
|
|
|
(49,217
|
)
|
|
(153,079
|
)
|
|||
Effect of exchange rate changes on cash and due from banks
|
(851
|
)
|
|
328
|
|
|
238
|
|
|||
Net increase/(decrease) in cash and due from banks
|
32,035
|
|
|
1,361
|
|
|
(689
|
)
|
|||
Cash and due from banks at the beginning of the period
|
27,567
|
|
|
26,206
|
|
|
26,895
|
|
|||
Cash and due from banks at the end of the period
|
$
|
59,602
|
|
|
$
|
27,567
|
|
|
$
|
26,206
|
|
Cash interest paid
|
$
|
13,725
|
|
|
$
|
12,404
|
|
|
$
|
16,875
|
|
Cash income taxes paid, net
|
8,153
|
|
|
9,747
|
|
|
5,434
|
|
Note:
|
Effective January 1, 2010, the Firm adopted accounting guidance related to VIEs. Upon adoption of the guidance, the Firm consolidated noncash assets and liabilities of
$87.7 billion
and
$92.2 billion
, respectively.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
181
|
182
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Business changes and developments
|
Note 2
|
|
Page 183
|
Fair value measurement
|
Note 3
|
|
Page 184
|
Fair value option
|
Note 4
|
|
Page 198
|
Derivative instruments
|
Note 6
|
|
Page 202
|
Noninterest revenue
|
Note 7
|
|
Page 211
|
Interest income and interest expense
|
Note 8
|
|
Page 212
|
Pension and other postretirement employee benefit plans
|
Note 9
|
|
Page 213
|
Employee stock-based incentives
|
Note 10
|
|
Page 222
|
Securities
|
Note 12
|
|
Page 225
|
Securities financing activities
|
Note 13
|
|
Page 231
|
Loans
|
Note 14
|
|
Page 231
|
Allowance for credit losses
|
Note 15
|
|
Page 252
|
Variable interest entities
|
Note 16
|
|
Page 256
|
Goodwill and other intangible assets
|
Note 17
|
|
Page 267
|
Premises and equipment
|
Note 18
|
|
Page 272
|
Long-term debt
|
Note 21
|
|
Page 273
|
Income taxes
|
Note 26
|
|
Page 279
|
Off–balance sheet lending-related financial instruments, guarantees and other commitments
|
Note 29
|
|
Page 283
|
Litigation
|
Note 31
|
|
Page 290
|
JPMorgan Chase & Co./2011 Annual Report
|
|
183
|
184
|
|
JPMorgan Chase & Co./2011 Annual Report
|
•
|
Credit valuation adjustments (“CVA”) are necessary when the market price (or parameter) is not indicative of the credit quality of the counterparty. As few classes of derivative contracts are listed on an exchange, derivative positions are predominantly valued using internally developed models that use as their basis observable market parameters. An adjustment is necessary to reflect the credit quality of each derivative counterparty to arrive at fair value. The adjustment also takes into account contractual factors designed to reduce the Firm’s credit exposure to each counterparty, such as collateral and legal rights of offset.
|
•
|
Debit valuation adjustments (“DVA”) are taken to reflect the credit quality of the Firm in the valuation of liabilities measured at fair value. The methodology to determine the adjustment is consistent with CVA and incorporates JPMorgan Chase’s credit spread as observed through the credit default swap market.
|
•
|
Liquidity valuation adjustments are necessary when the Firm may not be able to observe a recent market price for a financial instrument that trades in inactive (or less active) markets or to reflect the cost of exiting larger-than-normal market-size risk positions (liquidity adjustments are not taken for positions classified within level 1 of the fair value hierarchy; see below). The Firm estimates the amount of uncertainty in the initial valuation based on the degree of liquidity in the market in which the financial instrument trades and makes liquidity adjustments to the carrying value of the financial instrument. The Firm measures the liquidity adjustment based on the following factors: (1) the amount of time since the last relevant pricing point; (2) whether there was an actual trade or relevant external quote; and (3) the volatility of the principal risk component of the financial instrument. Costs to exit larger-than-normal market-size risk positions are determined based on the size of the adverse market move that is likely to occur during the period required to bring a position down to a nonconcentrated level.
|
•
|
Unobservable parameter valuation adjustments are necessary when positions are valued using internally developed models that use as their basis unobservable parameters – that is, parameters that must be estimated and are, therefore, subject to management judgment. Unobservable parameter valuation adjustments are applied to mitigate the possibility of error and revision in the estimate of the market price provided by the model.
|
•
|
Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
•
|
Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
•
|
Level 3 – one or more inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
185
|
186
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Product/instrument
|
Valuation methodology, inputs and assumptions
|
Classifications in the valuation hierarchy
|
Securities
|
Quoted market prices are used where available.
|
Level 1
|
|
In the absence of quoted market prices, securities are valued based on:
|
Level 2 or 3
|
|
• Observed market prices for similar securities
|
|
|
•
Relevant broker quotes
|
|
|
•
Discounted cash flows
|
|
|
(see specific product discussion below)
|
|
|
Mortgage- and asset-backed securities specific inputs:
|
|
|
•
Collateral characteristics
|
|
|
• Deal-specific payment and loss allocations
|
|
|
• Current market assumptions related to discount rate, prepayments, defaults and recoveries
|
|
|
Collateralized debt obligations (“CDOs”), including collateralized loan obligations (“CLOs”), specific inputs:
|
|
|
•
Collateral characteristics
|
|
|
•
Deal-specific payment and loss allocations
|
|
|
•
Expected prepayment, default, recovery, default correlation and liquidity spread assumptions
|
|
|
•
Credit spreads
|
|
|
• Credit rating data
|
|
Physical commodities
|
Valued using observable market prices or data
|
Level 1 or 2
|
Derivatives
|
Exchange-traded derivatives are valued using market observable prices.
|
Level 1
|
|
Derivatives that are not exchange-traded, which include plain vanilla options and interest rate and credit default swaps, are valued using internally developed models and/or a series of techniques such as the Black-Scholes option pricing model, simulation models, or a combination of models, which are consistently applied. Inputs include:
|
Level 2 or 3
|
|
|
|
|
||
|
|
|
|
•
Contractual terms including period to maturity
|
|
|
•
Readily observable parameters including interest rates and volatility
|
|
|
•
Credit quality of the counterparty and of the Firm
|
|
|
•
Correlation levels
|
|
|
Derivatives that are valued based on models with significant unobservable inputs include:
|
|
|
Structured credit derivatives specific inputs:
|
|
|
•
CDS spreads and recovery rates
|
|
|
•
Correlation between the underlying debt instruments (levels are modeled on a transaction basis and calibrated to liquid benchmark tranche indices)
|
|
|
|
|
|
|
|
|
•
Actual transactions, where available, are used to regularly recalibrate unobservable parameters
|
|
|
|
|
|
Certain long-dated equity option specific inputs:
|
|
|
•
Long-dated equity volatilities
|
|
|
Callable interest rate FX exotic options specific inputs:
|
|
|
•
Correlation between interest rates and FX rates
|
|
|
•
Parameters describing the evolution of underlying interest rates
|
|
Mortgage servicing rights (“MSRs”)
|
See Mortgage servicing rights on pages 268–270 of Note 17 of this Annual Report.
|
Level 3
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
187
|
Product/instrument
|
Valuation methodology, inputs and assumptions
|
Classification in the valuation hierarchy
|
Private equity investments
|
Private equity investments held in the Private Equity portfolio
|
Level 3
|
|
Fair value is estimated using all available information and considering the range of potential inputs, including:
|
|
|
•
Transaction prices
|
|
|
•
Trading multiples of comparable public companies
|
|
|
• Operating performance of the underlying portfolio company
|
|
|
•
Additional available inputs relevant to the investment
|
|
|
•
Adjustments are required since comparable public companies are not identical to the company being valued, and for company-specific issues and lack of liquidity
|
|
|
Public investments held in the Private Equity portfolio
|
Level 1 or 2
|
|
•
Valued using observable market prices less adjustments for relevant restrictions, where applicable
|
|
|
|
|
Fund investments (i.e., mutual/collective investment funds, private equity funds, hedge funds, and real estate funds)
|
Net Asset Value (“NAV”)
|
|
•
NAV is validated by sufficient level of observable activity (i.e., purchases and sales)
|
Level 1
|
|
|
||
•
Adjustments to the NAV are required for restrictions on redemption (e.g., lock up periods or withdrawal limitations) or where observable activity is limited
|
Level 2 or 3
|
|
|
|
|
Beneficial interests issued by consolidated VIE
|
Valued using observable market information, where available
|
Level 2 or 3
|
In the absence of observable market information, valuations are based on the fair value of the underlying assets held by the VIE
|
|
|
Long-term debt, not carried at fair value
|
Valuations are based on discounted cash flows, which consider:
|
Long-term debt, excluding structured notes, is not carried at fair value and is not classified within the fair value hierarchy
|
•
Market rates for respective maturity
|
||
|
•
Credit quality of the Firm (DVA)
|
|
Structured notes (included in Deposits, Other borrowed funds and Long-term debt)
|
Valuations are based on discounted cash flows, which consider:
|
Level 2 or 3
|
•
Credit quality of the Firm (DVA)
|
||
•
Consideration of derivative features
|
188
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
189
|
|
Fair value hierarchy
|
|
|
||||||||||||
December 31, 2010 (in millions)
|
Level 1
(h)
|
Level 2
(h)
|
Level 3
(h)
|
Netting adjustments
|
Total fair value
|
||||||||||
Federal funds sold and securities purchased under resale agreements
|
$
|
—
|
|
$
|
20,299
|
|
$
|
—
|
|
$
|
—
|
|
$
|
20,299
|
|
Securities borrowed
|
—
|
|
13,961
|
|
—
|
|
—
|
|
13,961
|
|
|||||
Trading assets:
|
|
|
|
|
|
||||||||||
Debt instruments:
|
|
|
|
|
|
||||||||||
Mortgage-backed securities:
|
|
|
|
|
|
||||||||||
U.S. government agencies
(a)
|
36,813
|
|
10,738
|
|
174
|
|
—
|
|
47,725
|
|
|||||
Residential – nonagency
|
—
|
|
2,807
|
|
687
|
|
—
|
|
3,494
|
|
|||||
Commercial – nonagency
|
—
|
|
1,093
|
|
2,069
|
|
—
|
|
3,162
|
|
|||||
Total mortgage-backed securities
|
36,813
|
|
14,638
|
|
2,930
|
|
—
|
|
54,381
|
|
|||||
U.S. Treasury and government agencies
(a)
|
12,863
|
|
9,026
|
|
—
|
|
—
|
|
21,889
|
|
|||||
Obligations of U.S. states and municipalities
|
—
|
|
11,715
|
|
2,257
|
|
—
|
|
13,972
|
|
|||||
Certificates of deposit, bankers’ acceptances and commercial paper
|
—
|
|
3,248
|
|
—
|
|
—
|
|
3,248
|
|
|||||
Non-U.S. government debt securities
|
31,127
|
|
38,482
|
|
202
|
|
—
|
|
69,811
|
|
|||||
Corporate debt securities
|
—
|
|
42,280
|
|
4,946
|
|
—
|
|
47,226
|
|
|||||
Loans
(b)
|
—
|
|
21,736
|
|
13,144
|
|
—
|
|
34,880
|
|
|||||
Asset-backed securities
|
—
|
|
2,743
|
|
8,460
|
|
—
|
|
11,203
|
|
|||||
Total debt instruments
|
80,803
|
|
143,868
|
|
31,939
|
|
—
|
|
256,610
|
|
|||||
Equity securities
|
124,400
|
|
3,153
|
|
1,685
|
|
—
|
|
129,238
|
|
|||||
Physical commodities
(c)
|
18,327
|
|
2,708
|
|
—
|
|
—
|
|
21,035
|
|
|||||
Other
|
—
|
|
1,598
|
|
930
|
|
—
|
|
2,528
|
|
|||||
Total debt and equity instruments
(d)
|
223,530
|
|
151,327
|
|
34,554
|
|
—
|
|
409,411
|
|
|||||
Derivative receivables:
|
|
|
|
|
|
||||||||||
Interest rate
|
2,278
|
|
1,120,282
|
|
5,422
|
|
(1,095,427
|
)
|
32,555
|
|
|||||
Credit
|
—
|
|
111,827
|
|
17,902
|
|
(122,004
|
)
|
7,725
|
|
|||||
Foreign exchange
|
1,121
|
|
163,114
|
|
4,236
|
|
(142,613
|
)
|
25,858
|
|
|||||
Equity
|
30
|
|
38,718
|
|
4,885
|
|
(39,429
|
)
|
4,204
|
|
|||||
Commodity
|
1,324
|
|
56,076
|
|
2,197
|
|
(49,458
|
)
|
10,139
|
|
|||||
Total derivative receivables
(e)
|
4,753
|
|
1,490,017
|
|
34,642
|
|
(1,448,931
|
)
|
80,481
|
|
|||||
Total trading assets
|
228,283
|
|
1,641,344
|
|
69,196
|
|
(1,448,931
|
)
|
489,892
|
|
|||||
Available-for-sale securities:
|
|
|
|
|
|
||||||||||
Mortgage-backed securities:
|
|
|
|
|
|
||||||||||
U.S. government agencies
(a)
|
104,736
|
|
15,490
|
|
—
|
|
—
|
|
120,226
|
|
|||||
Residential – nonagency
|
1
|
|
48,969
|
|
5
|
|
—
|
|
48,975
|
|
|||||
Commercial – nonagency
|
—
|
|
5,403
|
|
251
|
|
—
|
|
5,654
|
|
|||||
Total mortgage-backed securities
|
104,737
|
|
69,862
|
|
256
|
|
—
|
|
174,855
|
|
|||||
U.S. Treasury and government agencies
(a)
|
522
|
|
10,826
|
|
—
|
|
—
|
|
11,348
|
|
|||||
Obligations of U.S. states and municipalities
|
31
|
|
11,272
|
|
256
|
|
—
|
|
11,559
|
|
|||||
Certificates of deposit
|
6
|
|
3,641
|
|
—
|
|
—
|
|
3,647
|
|
|||||
Non-U.S. government debt securities
|
13,107
|
|
7,670
|
|
—
|
|
—
|
|
20,777
|
|
|||||
Corporate debt securities
|
—
|
|
61,793
|
|
—
|
|
—
|
|
61,793
|
|
|||||
Asset-backed securities:
|
|
|
|
|
|
||||||||||
Credit card receivables
|
—
|
|
7,608
|
|
—
|
|
—
|
|
7,608
|
|
|||||
Collateralized loan obligations
|
—
|
|
128
|
|
13,470
|
|
—
|
|
13,598
|
|
|||||
Other
|
—
|
|
8,777
|
|
305
|
|
—
|
|
9,082
|
|
|||||
Equity securities
|
1,998
|
|
53
|
|
—
|
|
—
|
|
2,051
|
|
|||||
Total available-for-sale securities
|
120,401
|
|
181,630
|
|
14,287
|
|
—
|
|
316,318
|
|
|||||
Loans
|
—
|
|
510
|
|
1,466
|
|
—
|
|
1,976
|
|
|||||
Mortgage servicing rights
|
—
|
|
—
|
|
13,649
|
|
—
|
|
13,649
|
|
|||||
Other assets:
|
|
|
|
|
|
||||||||||
Private equity investments
(f)
|
49
|
|
826
|
|
7,862
|
|
—
|
|
8,737
|
|
|||||
All other
|
5,093
|
|
192
|
|
4,179
|
|
—
|
|
9,464
|
|
|||||
Total other assets
|
5,142
|
|
1,018
|
|
12,041
|
|
—
|
|
18,201
|
|
|||||
Total assets measured at fair value on a recurring basis
(g)
|
$
|
353,826
|
|
$
|
1,858,762
|
|
$
|
110,639
|
|
$
|
(1,448,931
|
)
|
$
|
874,296
|
|
Deposits
|
$
|
—
|
|
$
|
3,596
|
|
$
|
773
|
|
$
|
—
|
|
$
|
4,369
|
|
Federal funds purchased and securities loaned or sold under repurchase agreements
|
—
|
|
4,060
|
|
—
|
|
—
|
|
4,060
|
|
|||||
Other borrowed funds
|
—
|
|
8,547
|
|
1,384
|
|
—
|
|
9,931
|
|
|||||
Trading liabilities:
|
|
|
|
|
|
||||||||||
Debt and equity instruments
(d)
|
58,468
|
|
18,425
|
|
54
|
|
—
|
|
76,947
|
|
|||||
Derivative payables:
|
|
|
|
|
|
||||||||||
Interest rate
|
2,625
|
|
1,085,233
|
|
2,586
|
|
(1,070,057
|
)
|
20,387
|
|
|||||
Credit
|
—
|
|
112,545
|
|
12,516
|
|
(119,923
|
)
|
5,138
|
|
|||||
Foreign exchange
|
972
|
|
158,908
|
|
4,850
|
|
(139,715
|
)
|
25,015
|
|
|||||
Equity
|
22
|
|
39,046
|
|
7,331
|
|
(35,949
|
)
|
10,450
|
|
|||||
Commodity
|
862
|
|
54,611
|
|
3,002
|
|
(50,246
|
)
|
8,229
|
|
|||||
Total derivative payables
(e)
|
4,481
|
|
1,450,343
|
|
30,285
|
|
(1,415,890
|
)
|
69,219
|
|
|||||
Total trading liabilities
|
62,949
|
|
1,468,768
|
|
30,339
|
|
(1,415,890
|
)
|
146,166
|
|
|||||
Accounts payable and other liabilities
|
—
|
|
—
|
|
236
|
|
—
|
|
236
|
|
|||||
Beneficial interests issued by consolidated VIEs
|
—
|
|
622
|
|
873
|
|
—
|
|
1,495
|
|
|||||
Long-term debt
|
—
|
|
25,795
|
|
13,044
|
|
—
|
|
38,839
|
|
|||||
Total liabilities measured at fair value on a recurring basis
|
$
|
62,949
|
|
$
|
1,511,388
|
|
$
|
46,649
|
|
$
|
(1,415,890
|
)
|
$
|
205,096
|
|
(a)
|
At
December 31, 2011
and
2010
, included total U.S. government-sponsored enterprise obligations of
$122.4 billion
and
$137.3 billion
respectively, which were predominantly mortgage-related.
|
(b)
|
At
December 31, 2011
and
2010
, included within trading loans were
$20.1 billion
and
$22.7 billion
, respectively, of residential first-lien mortgages, and
$2.0 billion
and
$2.6 billion
, respectively, of commercial first-lien mortgages. Residential mortgage loans include conforming mortgage loans originated with the intent to sell to U.S. government agencies of
$11.0 billion
and
$13.1 billion
, respectively, and reverse mortgages of
$4.0 billion
and
$4.0 billion
, respectively.
|
(c)
|
Physical commodities inventories are generally accounted for at the lower of cost or fair value.
|
190
|
|
JPMorgan Chase & Co./2011 Annual Report
|
(d)
|
Balances reflect the reduction of securities owned (long positions) by the amount of securities sold but not yet purchased (short positions) when the long and short positions have identical Committee on Uniform Security Identification Procedures numbers (“CUSIPs”).
|
(e)
|
As permitted under U.S. GAAP, the Firm has elected to net derivative receivables and derivative payables and the related cash collateral received and paid when a legally enforceable master netting agreement exists. For purposes of the tables above, the Firm does not reduce derivative receivables and derivative payables balances for this netting adjustment, either within or across the levels of the fair value hierarchy, as such netting is not relevant to a presentation based on the transparency of inputs to the valuation of an asset or liability. Therefore, the balances reported in the fair value hierarchy table are gross of any counterparty netting adjustments. However, if the Firm were to net such balances within level 3, the reduction in the level 3 derivative receivable and payable balances would be
$11.7 billion
and
$12.7 billion
at
December 31, 2011
and
2010
, respectively; this is exclusive of the netting benefit associated with cash collateral, which would further reduce the level 3 balances.
|
(f)
|
Private equity instruments represent investments within the Corporate/Private Equity line of business. The cost basis of the private equity investment portfolio totaled
$9.5 billion
and
$10.0 billion
at
December 31, 2011
and
2010
, respectively.
|
(g)
|
At
December 31, 2011
and
2010
, balances included investments valued at net asset values of
$10.8 billion
and
$12.1 billion
, respectively, of which
$5.3 billion
and
$5.9 billion
, respectively, were classified in level 1,
$1.2 billion
and
$2.0 billion
, respectively, in level 2, and
$4.3 billion
and
$4.2 billion
, respectively, in level 3.
|
(h)
|
For the years ended
December 31, 2011
and
2010
, there were no significant transfers between levels 1 and 2. For the year ended
December 31, 2011
, transfers from level 3 into level 2 included
$2.6 billion
of long-term debt due to a decrease in valuation uncertainty of certain structured notes. For the year ended
December 31, 2010
, transfers from level 3 into level 2 included
$1.2 billion
of trading loans due to increased price transparency. There were no significant transfers into level 3 for the years ended
December 31, 2011
and
2010
. All transfers are assumed to occur at the beginning of the reporting period.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
191
|
|
Fair value measurements using significant unobservable inputs
|
|
|
||||||||||||||||||||||||||||
Year ended
December 31, 2011
(in millions)
|
Fair value at January 1, 2011
|
Total realized/unrealized gains/(losses)
|
|
|
|
|
Transfers into and/or out of level 3
(g)
|
Fair value at
Dec. 31, 2011
|
Change in unrealized gains/(losses) related to financial instruments held at Dec. 31, 2011
|
||||||||||||||||||||||
Purchases
(f)
|
Sales
|
Issuances
|
Settlements
|
||||||||||||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Trading assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Debt instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
U.S. government agencies
|
$
|
174
|
|
$
|
24
|
|
|
$
|
28
|
|
$
|
(39
|
)
|
$
|
—
|
|
$
|
(43
|
)
|
$
|
(58
|
)
|
|
$
|
86
|
|
|
$
|
(51
|
)
|
|
Residential – nonagency
|
687
|
|
109
|
|
|
708
|
|
(432
|
)
|
—
|
|
(221
|
)
|
(55
|
)
|
|
796
|
|
|
(9
|
)
|
|
|||||||||
Commercial – nonagency
|
2,069
|
|
37
|
|
|
796
|
|
(973
|
)
|
—
|
|
(171
|
)
|
—
|
|
|
1,758
|
|
|
33
|
|
|
|||||||||
Total mortgage-backed securities
|
2,930
|
|
170
|
|
|
1,532
|
|
(1,444
|
)
|
—
|
|
(435
|
)
|
(113
|
)
|
|
2,640
|
|
|
(27
|
)
|
|
|||||||||
Obligations of U.S. states and municipalities
|
2,257
|
|
9
|
|
|
807
|
|
(1,465
|
)
|
—
|
|
(1
|
)
|
12
|
|
|
1,619
|
|
|
(11
|
)
|
|
|||||||||
Non-U.S. government debt securities
|
202
|
|
35
|
|
|
552
|
|
(531
|
)
|
—
|
|
(80
|
)
|
(74
|
)
|
|
104
|
|
|
38
|
|
|
|||||||||
Corporate debt securities
|
4,946
|
|
32
|
|
|
8,080
|
|
(5,939
|
)
|
—
|
|
(1,005
|
)
|
259
|
|
|
6,373
|
|
|
26
|
|
|
|||||||||
Loans
|
13,144
|
|
329
|
|
|
5,532
|
|
(3,873
|
)
|
—
|
|
(2,691
|
)
|
(232
|
)
|
|
12,209
|
|
|
142
|
|
|
|||||||||
Asset-backed securities
|
8,460
|
|
90
|
|
|
4,185
|
|
(4,368
|
)
|
—
|
|
(424
|
)
|
22
|
|
|
7,965
|
|
|
(217
|
)
|
|
|||||||||
Total debt instruments
|
31,939
|
|
665
|
|
|
20,688
|
|
(17,620
|
)
|
—
|
|
(4,636
|
)
|
(126
|
)
|
|
30,910
|
|
|
(49
|
)
|
|
|||||||||
Equity securities
|
1,685
|
|
267
|
|
|
180
|
|
(541
|
)
|
—
|
|
(352
|
)
|
(62
|
)
|
|
1,177
|
|
|
278
|
|
|
|||||||||
Other
|
930
|
|
48
|
|
|
36
|
|
(39
|
)
|
—
|
|
(95
|
)
|
—
|
|
|
880
|
|
|
79
|
|
|
|||||||||
Total trading assets – debt and equity instruments
|
34,554
|
|
980
|
|
(b)
|
20,904
|
|
(18,200
|
)
|
—
|
|
(5,083
|
)
|
(188
|
)
|
|
32,967
|
|
|
308
|
|
(b)
|
|||||||||
Net derivative receivables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Interest rate
|
2,836
|
|
5,205
|
|
|
511
|
|
(219
|
)
|
—
|
|
(4,534
|
)
|
(238
|
)
|
|
3,561
|
|
|
1,497
|
|
|
|||||||||
Credit
|
5,386
|
|
2,240
|
|
|
22
|
|
(13
|
)
|
—
|
|
116
|
|
(19
|
)
|
|
7,732
|
|
|
2,744
|
|
|
|||||||||
Foreign exchange
|
(614
|
)
|
(1,913
|
)
|
|
191
|
|
(20
|
)
|
—
|
|
886
|
|
207
|
|
|
(1,263
|
)
|
|
(1,878
|
)
|
|
|||||||||
Equity
|
(2,446
|
)
|
(60
|
)
|
|
715
|
|
(1,449
|
)
|
—
|
|
37
|
|
98
|
|
|
(3,105
|
)
|
|
(132
|
)
|
|
|||||||||
Commodity
|
(805
|
)
|
596
|
|
|
328
|
|
(350
|
)
|
—
|
|
(294
|
)
|
(162
|
)
|
|
(687
|
)
|
|
208
|
|
|
|||||||||
Total net derivative receivables
|
4,357
|
|
6,068
|
|
(b)
|
1,767
|
|
(2,051
|
)
|
—
|
|
(3,789
|
)
|
(114
|
)
|
|
6,238
|
|
|
2,439
|
|
(b)
|
|||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Asset-backed securities
|
13,775
|
|
(95
|
)
|
|
15,268
|
|
(1,461
|
)
|
—
|
|
(2,529
|
)
|
—
|
|
|
24,958
|
|
|
(106
|
)
|
|
|||||||||
Other
|
512
|
|
—
|
|
|
57
|
|
(15
|
)
|
—
|
|
(26
|
)
|
—
|
|
|
528
|
|
|
8
|
|
|
|||||||||
Total available-for-sale securities
|
14,287
|
|
(95
|
)
|
(c)
|
15,325
|
|
(1,476
|
)
|
—
|
|
(2,555
|
)
|
—
|
|
|
25,486
|
|
|
(98
|
)
|
(c)
|
|||||||||
Loans
|
1,466
|
|
504
|
|
(b)
|
326
|
|
(9
|
)
|
—
|
|
(639
|
)
|
(1
|
)
|
|
1,647
|
|
|
484
|
|
(b)
|
|||||||||
Mortgage servicing rights
|
13,649
|
|
(7,119
|
)
|
(d)
|
2,603
|
|
—
|
|
—
|
|
(1,910
|
)
|
—
|
|
|
7,223
|
|
|
(7,119
|
)
|
(d)
|
|||||||||
Other assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Private equity investments
|
7,862
|
|
943
|
|
(b)
|
1,452
|
|
(2,746
|
)
|
—
|
|
(594
|
)
|
(166
|
)
|
|
6,751
|
|
|
(242
|
)
|
(b)
|
|||||||||
All other
|
4,179
|
|
(54
|
)
|
(e)
|
938
|
|
(139
|
)
|
—
|
|
(521
|
)
|
(29
|
)
|
|
4,374
|
|
|
(83
|
)
|
(e)
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Fair value measurements using significant unobservable inputs
|
|
|
||||||||||||||||||||||||||||
Year ended
December 31, 2011
(in millions)
|
Fair value at January 1, 2011
|
Total realized/unrealized (gains)/losses
|
|
|
|
|
Transfers into and/or out of level 3
(g)
|
Fair value at
Dec. 31, 2011
|
Change in unrealized (gains)/losses related to financial instruments held at Dec. 31, 2011
|
||||||||||||||||||||||
Purchases
(f)
|
Sales
|
Issuances
|
Settlements
|
||||||||||||||||||||||||||||
Liabilities:
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Deposits
|
$
|
773
|
|
$
|
15
|
|
(b)
|
$
|
—
|
|
$
|
—
|
|
$
|
433
|
|
$
|
(386
|
)
|
$
|
583
|
|
|
$
|
1,418
|
|
|
$
|
4
|
|
(b)
|
Other borrowed funds
|
1,384
|
|
(244
|
)
|
(b)
|
—
|
|
—
|
|
1,597
|
|
(834
|
)
|
(396
|
)
|
|
1,507
|
|
|
(85
|
)
|
(b)
|
|||||||||
Trading liabilities – debt and equity instruments
|
54
|
|
17
|
|
(b)
|
(533
|
)
|
778
|
|
—
|
|
(109
|
)
|
4
|
|
|
211
|
|
|
(7
|
)
|
(b)
|
|||||||||
Accounts payable and other liabilities
|
236
|
|
(61
|
)
|
(e)
|
—
|
|
—
|
|
—
|
|
(124
|
)
|
—
|
|
|
51
|
|
|
5
|
|
(e)
|
|||||||||
Beneficial interests issued by consolidated VIEs
|
873
|
|
17
|
|
(b)
|
—
|
|
—
|
|
580
|
|
(679
|
)
|
—
|
|
|
791
|
|
|
(15
|
)
|
(b)
|
|||||||||
Long-term debt
|
13,044
|
|
60
|
|
(b)
|
—
|
|
—
|
|
2,564
|
|
(3,218
|
)
|
(2,140
|
)
|
|
10,310
|
|
|
288
|
|
(b)
|
192
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
Fair value measurements using significant unobservable inputs
|
|
|||||||||||||||||||
Year ended
December 31, 2010
(in millions)
|
Fair value at January 1, 2010
|
Total realized/ unrealized gains/(losses)
|
Purchases, issuances, settlements, net
|
Transfers into and/or out of level 3
(g)
|
Fair value at Dec. 31, 2010
|
Change in unrealized gains/(losses) related to financial instruments held at Dec. 31, 2010
|
|||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|||||||||||||
Trading assets:
|
|
|
|
|
|
|
|
|
|||||||||||||
Debt instruments:
|
|
|
|
|
|
|
|
|
|||||||||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. government agencies
|
$
|
260
|
|
$
|
24
|
|
|
$
|
(107
|
)
|
$
|
(3
|
)
|
$
|
174
|
|
$
|
(31
|
)
|
|
|
Residential – nonagency
|
1,115
|
|
178
|
|
|
(564
|
)
|
(42
|
)
|
687
|
|
110
|
|
|
|||||||
Commercial – nonagency
|
1,770
|
|
230
|
|
|
(33
|
)
|
102
|
|
2,069
|
|
130
|
|
|
|||||||
Total mortgage-backed securities
|
3,145
|
|
432
|
|
|
(704
|
)
|
57
|
|
2,930
|
|
209
|
|
|
|||||||
Obligations of U.S. states and municipalities
|
1,971
|
|
2
|
|
|
142
|
|
142
|
|
2,257
|
|
(30
|
)
|
|
|||||||
Non-U.S. government debt securities
|
89
|
|
(36
|
)
|
|
194
|
|
(45
|
)
|
202
|
|
(8
|
)
|
|
|||||||
Corporate debt securities
|
5,241
|
|
(325
|
)
|
|
115
|
|
(85
|
)
|
4,946
|
|
28
|
|
|
|||||||
Loans
|
13,218
|
|
(40
|
)
|
|
1,296
|
|
(1,330
|
)
|
13,144
|
|
(385
|
)
|
|
|||||||
Asset-backed securities
|
8,620
|
|
237
|
|
|
(408
|
)
|
11
|
|
8,460
|
|
195
|
|
|
|||||||
Total debt instruments
|
32,284
|
|
270
|
|
|
635
|
|
(1,250
|
)
|
31,939
|
|
9
|
|
|
|||||||
Equity securities
|
1,956
|
|
133
|
|
|
(351
|
)
|
(53
|
)
|
1,685
|
|
199
|
|
|
|||||||
Other
|
1,441
|
|
211
|
|
|
(801
|
)
|
79
|
|
930
|
|
299
|
|
|
|||||||
Total trading assets – debt and equity instruments
|
35,681
|
|
614
|
|
(b)
|
(517
|
)
|
(1,224
|
)
|
34,554
|
|
507
|
|
(b)
|
|||||||
Net derivative receivables:
|
|
|
|
|
|
|
|
|
|||||||||||||
Interest rate
|
2,040
|
|
3,057
|
|
|
(2,520
|
)
|
259
|
|
2,836
|
|
487
|
|
|
|||||||
Credit
|
10,350
|
|
(1,757
|
)
|
|
(3,102
|
)
|
(105
|
)
|
5,386
|
|
(1,048
|
)
|
|
|||||||
Foreign exchange
|
1,082
|
|
(913
|
)
|
|
(434
|
)
|
(349
|
)
|
(614
|
)
|
(464
|
)
|
|
|||||||
Equity
|
(2,306
|
)
|
(194
|
)
|
|
(82
|
)
|
136
|
|
(2,446
|
)
|
(212
|
)
|
|
|||||||
Commodity
|
(329
|
)
|
(700
|
)
|
|
134
|
|
90
|
|
(805
|
)
|
(76
|
)
|
|
|||||||
Total net derivative receivables
|
10,837
|
|
(507
|
)
|
(b)
|
(6,004
|
)
|
31
|
|
4,357
|
|
(1,313
|
)
|
(b)
|
|||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|||||||||||||
Asset-backed securities
|
12,732
|
|
(146
|
)
|
|
1,189
|
|
—
|
|
13,775
|
|
(129
|
)
|
|
|||||||
Other
|
461
|
|
(49
|
)
|
|
37
|
|
63
|
|
512
|
|
18
|
|
|
|||||||
Total available-for-sale securities
|
13,193
|
|
(195
|
)
|
(c)
|
1,226
|
|
63
|
|
14,287
|
|
(111
|
)
|
(c)
|
|||||||
Loans
|
990
|
|
145
|
|
(b)
|
323
|
|
8
|
|
1,466
|
|
37
|
|
(b)
|
|||||||
Mortgage servicing rights
|
15,531
|
|
(2,268
|
)
|
(d)
|
386
|
|
—
|
|
13,649
|
|
(2,268
|
)
|
(d)
|
|||||||
Other assets:
|
|
|
|
|
|
|
|
|
|
||||||||||||
Private equity investments
|
6,563
|
|
1,038
|
|
(b)
|
715
|
|
(454
|
)
|
7,862
|
|
688
|
|
(b)
|
|||||||
All other
|
9,521
|
|
(113
|
)
|
(e)
|
(5,132
|
)
|
(97
|
)
|
4,179
|
|
37
|
|
(e)
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Fair value measurements using significant unobservable inputs
|
|
|||||||||||||||||||
Year ended
December 31, 2010
(in millions)
|
Fair value at January 1, 2010
|
Total realized/ unrealized (gains)/losses
|
Purchases, issuances, settlements, net
|
Transfers into and/or out of level 3
(g)
|
Fair value at Dec. 31, 2010
|
Change in unrealized (gains)/losses related to financial instruments held at Dec. 31, 2010
|
|||||||||||||||
Liabilities:
(a)
|
|
|
|
|
|
|
|
|
|||||||||||||
Deposits
|
$
|
476
|
|
$
|
54
|
|
(b)
|
$
|
(86
|
)
|
$
|
329
|
|
$
|
773
|
|
$
|
(77
|
)
|
(b)
|
|
Other borrowed funds
|
542
|
|
(242
|
)
|
(b)
|
1,326
|
|
(242
|
)
|
1,384
|
|
445
|
|
(b)
|
|||||||
Trading liabilities – debt and equity instruments
|
10
|
|
2
|
|
(b)
|
19
|
|
23
|
|
54
|
|
—
|
|
|
|||||||
Accounts payable and other liabilities
|
355
|
|
(138
|
)
|
(e)
|
19
|
|
—
|
|
236
|
|
37
|
|
(e)
|
|||||||
Beneficial interests issued by consolidated VIEs
|
625
|
|
(7
|
)
|
(b)
|
87
|
|
168
|
|
873
|
|
(76
|
)
|
(b)
|
|||||||
Long-term debt
|
18,287
|
|
(532
|
)
|
(b)
|
(4,796
|
)
|
85
|
|
13,044
|
|
662
|
|
(b)
|
JPMorgan Chase & Co./2011 Annual Report
|
|
193
|
|
Fair value measurements using significant unobservable inputs
|
|
|
||||||||||||||||||
Year ended
December 31, 2009
(in millions)
|
Fair Value at January 1, 2009
|
Total realized/unrealized gains/(losses)
|
Purchases, issuances settlements, net
|
Transfers into and/or out of level 3
(g)
|
Fair value at Dec. 31,2009
|
Change in unrealized gains/(losses) related to financial instruments held at Dec. 31, 2009
|
|||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|||||||||||||
Trading assets:
|
|
|
|
|
|
|
|
|
|||||||||||||
Debt instruments:
|
|
|
|
|
|
|
|
|
|||||||||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. government agencies
|
$
|
163
|
|
$
|
(38
|
)
|
|
$
|
62
|
|
$
|
73
|
|
$
|
260
|
|
$
|
(38
|
)
|
|
|
Residential – nonagency
|
3,339
|
|
(782
|
)
|
|
(245
|
)
|
(1,197
|
)
|
1,115
|
|
(871
|
)
|
|
|||||||
Commercial – nonagency
|
2,487
|
|
(242
|
)
|
|
(325
|
)
|
(150
|
)
|
1,770
|
|
(313
|
)
|
|
|||||||
Total mortgage-backed securities
|
5,989
|
|
(1,062
|
)
|
|
(508
|
)
|
(1,274
|
)
|
3,145
|
|
(1,222
|
)
|
|
|||||||
Obligations of U.S. states and municipalities
|
2,641
|
|
(22
|
)
|
|
(648
|
)
|
—
|
|
1,971
|
|
(123
|
)
|
|
|||||||
Non-U.S. government debt securities
|
11
|
|
36
|
|
|
(22
|
)
|
64
|
|
89
|
|
32
|
|
|
|||||||
Corporate debt securities
|
5,280
|
|
38
|
|
|
(3,416
|
)
|
3,339
|
|
5,241
|
|
(72
|
)
|
|
|||||||
Loans
|
17,091
|
|
(871
|
)
|
|
(3,497
|
)
|
495
|
|
13,218
|
|
(1,167
|
)
|
|
|||||||
Asset-backed securities
|
7,802
|
|
1,438
|
|
|
(431
|
)
|
(189
|
)
|
8,620
|
|
736
|
|
|
|||||||
Total debt instruments
|
38,814
|
|
(443
|
)
|
|
(8,522
|
)
|
2,435
|
|
32,284
|
|
(1,816
|
)
|
|
|||||||
Equity securities
|
1,380
|
|
(149
|
)
|
|
(512
|
)
|
1,237
|
|
1,956
|
|
(51
|
)
|
|
|||||||
Other
|
1,694
|
|
(12
|
)
|
|
(273
|
)
|
32
|
|
1,441
|
|
(52
|
)
|
|
|||||||
Total trading assets – debt and equity instruments
|
41,888
|
|
(604
|
)
|
(b)
|
(9,307
|
)
|
3,704
|
|
35,681
|
|
(1,919
|
)
|
(b)
|
|||||||
Total net derivative receivables
|
9,039
|
|
(11,473
|
)
|
(b)
|
(3,428
|
)
|
16,699
|
|
10,837
|
|
(10,902
|
)
|
(b)
|
|||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|||||||||||||
Asset-backed securities
|
11,447
|
|
(2
|
)
|
|
1,112
|
|
175
|
|
12,732
|
|
(48
|
)
|
|
|||||||
Other
|
944
|
|
(269
|
)
|
|
302
|
|
(516
|
)
|
461
|
|
43
|
|
|
|||||||
Total available-for-sale securities
|
12,391
|
|
(271
|
)
|
(c)
|
1,414
|
|
(341
|
)
|
13,193
|
|
(5
|
)
|
(c)
|
|||||||
Loans
|
2,667
|
|
(448
|
)
|
(b)
|
(1,906
|
)
|
677
|
|
990
|
|
(488
|
)
|
(b)
|
|||||||
Mortgage servicing rights
|
9,403
|
|
5,807
|
|
(d)
|
321
|
|
—
|
|
15,531
|
|
5,807
|
|
(d)
|
|||||||
Other assets:
|
|
|
|
|
|
|
|
|
|||||||||||||
Private equity investments
|
6,369
|
|
(407
|
)
|
(b)
|
582
|
|
19
|
|
6,563
|
|
(369
|
)
|
(b)
|
|||||||
All other
|
8,114
|
|
(676
|
)
|
(e)
|
2,439
|
|
(356
|
)
|
9,521
|
|
(612
|
)
|
(e)
|
|
Fair value measurements using significant unobservable inputs
|
|
|
||||||||||||||||||
Year ended
December 31, 2009
(in millions)
|
Fair value at January 1, 2009
|
Total realized/unrealized (gains)/losses
|
Purchases, issuances settlements, net
|
Transfers into and/or out of level 3
(e)
|
Fair value at Dec.31, 2009
|
Change in unrealized (gains)/losses related to financial instruments held at Dec. 31, 2009
|
|||||||||||||||
Liabilities:
(a)
|
|
|
|
|
|
|
|
|
|||||||||||||
Deposits
|
$
|
1,235
|
|
$
|
47
|
|
(b)
|
$
|
(870
|
)
|
$
|
64
|
|
$
|
476
|
|
$
|
(36
|
)
|
(b)
|
|
Other borrowed funds
|
101
|
|
(73
|
)
|
(b)
|
621
|
|
(107
|
)
|
542
|
|
9
|
|
(b)
|
|||||||
Trading liabilities:
|
|
|
|
|
|
|
|
|
|||||||||||||
Debt and equity instruments
|
288
|
|
64
|
|
(b)
|
(339
|
)
|
(3
|
)
|
10
|
|
12
|
|
(b)
|
|||||||
Accounts payable and other liabilities
|
—
|
|
(55
|
)
|
(b)
|
410
|
|
—
|
|
355
|
|
(29
|
)
|
(b)
|
|||||||
Beneficial interests issued by consolidated VIEs
|
—
|
|
344
|
|
(b)
|
(598
|
)
|
879
|
|
625
|
|
327
|
|
(b)
|
|||||||
Long-term debt
|
16,548
|
|
1,367
|
|
(b)
|
(2,738
|
)
|
3,110
|
|
18,287
|
|
1,728
|
|
(b)
|
(a)
|
Level 3 liabilities as a percentage of total Firm liabilities accounted for at fair value (including liabilities measured at fair value on a nonrecurring basis) were
21%
,
23%
and
29%
at
December 31, 2011
,
2010
and
2009
, respectively.
|
(b)
|
Predominantly reported in principal transactions revenue, except for changes in fair value for Retail Financial Services (“RFS”) mortgage loans and lending-related commitments originated with the intent to sell, which are reported in mortgage fees and related income.
|
(c)
|
Realized gains/(losses) on available-for-sale (“AFS”) securities, as well as other-than-temporary impairment losses that are recorded in earnings, are reported in securities gains. Unrealized gains/(losses) are reported in OCI. Realized gains/(losses) and foreign exchange remeasurement adjustments recorded in income on AFS securities were
$(240) million
,
$(66) million
, and
$(345) million
for the years ended
December 31, 2011
,
2010
and
2009
, respectively. Unrealized gains/(losses) recorded on AFS securities in OCI were
$145 million
,
$(129) million
and
$74 million
for the years ended
December 31, 2011
,
2010
and
2009
, respectively.
|
(d)
|
Changes in fair value for RFS mortgage servicing rights are reported in mortgage fees and related income.
|
(e)
|
Largely reported in other income.
|
(f)
|
Loan originations are included in purchases.
|
(g)
|
All transfers into and/or out of level 3 are assumed to occur at the beginning of the reporting period.
|
194
|
|
JPMorgan Chase & Co./2011 Annual Report
|
•
|
Derivative receivables included
$35.0 billion
related to interest rate, credit, foreign exchange, equity and commodity contracts. Credit derivative receivables of
$17.1 billion
included
$12.1 billion
of structured credit derivatives with corporate debt underlying and
$3.4 billion
of CDS largely on commercial mortgages where the risks are partially mitigated by similar and offsetting derivative payables. Interest rate derivative receivables of
$6.7 billion
include long-dated structured interest rate derivatives which are dependent on the correlation between different interest rate curves. Foreign exchange derivative receivables of
$4.6 billion
included long-dated foreign exchange derivatives which are dependent on the correlation between foreign exchange and interest rates. Equity derivative receivables of
$4.1 billion
principally included long-dated contracts where the volatility levels are unobservable. Commodity derivative receivables of
$2.5 billion
largely included long-dated oil contracts
.
|
•
|
CLOs totaling
$30.9 billion
are securities backed by
|
•
|
Trading loans totaling
$12.2 billion
included
$6.0 billion
of residential mortgage whole loans and commercial mortgage loans for which there is limited price transparency; and
$4.0 billion
of reverse mortgages for which the principal risk sensitivities are mortality risk and home prices. The fair value of the commercial and residential mortgage loans is estimated by projecting expected cash flows, considering relevant borrower-specific and market factors, and discounting those cash flows at a rate reflecting current market liquidity. Loans are partially hedged by level 2 instruments, including credit default swaps and interest rate derivatives, for which valuation inputs are observable and liquid.
|
•
|
MSRs represent the fair value of future cash flows for performing specified mortgage servicing activities for others (predominantly with respect to residential mortgage loans). For a further discussion of the MSR asset, the interest rate risk management and valuation methodology used for MSRs, including valuation assumptions and sensitivities, and a summary of the changes in the MSR asset, see Note 17 on pages 267–271 of this Annual Report.
|
•
|
$11.2 billion
increase in asset-backed AFS securities, predominantly driven by purchases of CLOs;
|
•
|
$6.4 billion
decrease in MSRs. For further discussion of the change, refer to Note 17 on pages 267–271 of this Annual Report;
|
•
|
$2.3 billion
decrease in nonrecurring loans held-for-sale, predominantly driven by sales in the loan portfolios;
|
•
|
$2.2 billion
decrease in nonrecurring retained loans predominantly due to portfolio runoff;
|
•
|
$1.6 billion
decrease in trading assets – debt and equity instruments, largely driven by sales and settlements of certain securities, partially offset by purchases of corporate debt; and
|
JPMorgan Chase & Co./2011 Annual Report
|
|
195
|
•
|
$1.1 billion
decrease in private equity investments, predominantly driven by sales of investments, partially offset by new investments.
|
•
|
$7.1 billion
of losses on MSRs. For further discussion of the change, refer to Note 17 on pages 267–271 of this Annual Report; and
|
•
|
$6.1 billion
of net gains on derivatives, related to declining interest rates and tightening of credit spreads, partially offset by losses due to fluctuation in foreign exchange rates.
|
•
|
$2.3 billion
of losses on MSRs; and
|
•
|
$1.0 billion
gain in private equity largely driven by gains on investments in the portfolio.
|
•
|
$11.5 billion
of net losses on derivatives, primarily related to the tightening of credit spreads;
|
•
|
Net losses on trading – debt and equity instruments of
$604 million
, consisting of
$2.1 billion
of losses, primarily related to residential and commercial loans and mortgage-backed securities (“MBS”), principally driven by markdowns and sales, partially offset by gains of
$1.4 billion
, reflecting increases in the fair value of other asset-backed securities (“ABS”);
|
•
|
$5.8 billion
of gains on MSRs; and
|
•
|
$1.4 billion
of losses related to structured note liabilities, predominantly due to volatility in the equity markets.
|
December 31, (in millions)
|
2011
|
2010
|
||||
Derivative receivables balance (net of derivatives CVA)
|
$
|
92,477
|
|
$
|
80,481
|
|
Derivatives CVA
(a)
|
(6,936
|
)
|
(4,362
|
)
|
||
Derivative payables balance (net of derivatives DVA)
|
74,977
|
|
69,219
|
|
||
Derivatives DVA
|
(1,420
|
)
|
(882
|
)
|
||
Structured notes balance (net of structured notes DVA)
(b)(c)
|
49,229
|
|
53,139
|
|
||
Structured notes DVA
|
(2,052
|
)
|
(1,153
|
)
|
(a)
|
Derivatives CVA, gross of hedges, includes results managed by the Credit Portfolio and other lines of business within the Investment Bank (“IB”).
|
(b)
|
Structured notes are recorded within long-term debt, other borrowed funds or deposits on the Consolidated Balance Sheets, depending upon the tenor and legal form of the note.
|
(c)
|
Structured notes are measured at fair value based on the Firm’s election under the fair value option. For further information on these elections, see Note 4 on pages 198–200 of this Annual Report.
|
Year ended December 31,
(in millions)
|
|
2011
|
|
2010
|
|
2009
|
||||||
Credit adjustments:
|
|
|
|
|
|
|
||||||
Derivative CVA
(a)
|
|
$
|
(2,574
|
)
|
|
$
|
(665
|
)
|
|
$
|
5,869
|
|
Derivative DVA
|
|
538
|
|
|
41
|
|
|
(548
|
)
|
|||
Structured note DVA
(b)
|
|
899
|
|
|
468
|
|
|
(1,748
|
)
|
(a)
|
Derivatives CVA, gross of hedges, includes results managed by the Credit Portfolio and other lines of business within IB.
|
(b)
|
Structured notes are measured at fair value based on the Firm’s election under the fair value option. For further information on these elections, see Note 4 on pages 198–200 of this Annual Report.
|
196
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
2011
|
|
2010
|
||||||||||
December 31, (in billions)
|
Carrying value
|
Estimated fair value
|
|
Carrying value
|
Estimated fair value
|
||||||||
Financial assets
|
|
|
|
|
|
||||||||
Assets for which fair value approximates carrying value
|
$
|
144.9
|
|
$
|
144.9
|
|
|
$
|
49.2
|
|
$
|
49.2
|
|
Accrued interest and accounts receivable
|
61.5
|
|
61.5
|
|
|
70.1
|
|
70.1
|
|
||||
Federal funds sold and securities purchased under resale agreements (included
$24.9
and $20.3 at fair value)
|
235.3
|
|
235.3
|
|
|
222.6
|
|
222.6
|
|
||||
Securities borrowed (included
$15.3
and $14.0 at fair value)
|
142.5
|
|
142.5
|
|
|
123.6
|
|
123.6
|
|
||||
Trading assets
|
444.0
|
|
444.0
|
|
|
489.9
|
|
489.9
|
|
||||
Securities (included
$364.8
and $316.3 at fair value)
|
364.8
|
|
364.8
|
|
|
316.3
|
|
316.3
|
|
||||
Loans (included
$2.1
and $2.0 at fair value)
(a)
|
696.1
|
|
695.8
|
|
|
660.7
|
|
663.5
|
|
||||
Mortgage servicing rights at fair value
|
7.2
|
|
7.2
|
|
|
13.6
|
|
13.6
|
|
||||
Other (included
$16.5
and $18.2 at fair value)
|
66.3
|
|
66.8
|
|
|
64.9
|
|
65.0
|
|
||||
Financial liabilities
|
|
|
|
|
|
||||||||
Deposits (included
$4.9
and $4.4 at fair value)
|
$
|
1,127.8
|
|
$
|
1,128.3
|
|
|
$
|
930.4
|
|
$
|
931.5
|
|
Federal funds purchased and securities loaned or sold under repurchase agreements (included
$9.5
and $4.1 at fair value)
|
213.5
|
|
213.5
|
|
|
276.6
|
|
276.6
|
|
||||
Commercial paper
|
51.6
|
|
51.6
|
|
|
35.4
|
|
35.4
|
|
||||
Other borrowed funds (included
$9.6
and $9.9 at fair value)
(b)
|
21.9
|
|
21.9
|
|
|
34.3
|
|
34.3
|
|
||||
Trading liabilities
|
141.7
|
|
141.7
|
|
|
146.2
|
|
146.2
|
|
||||
Accounts payable and other liabilities (included
$0.1
and $0.2 at fair value)
|
167.0
|
|
166.9
|
|
|
138.2
|
|
138.2
|
|
||||
Beneficial interests issued by consolidated VIEs (included
$1.3
and $1.5 at fair value)
|
66.0
|
|
66.2
|
|
|
77.6
|
|
77.9
|
|
||||
Long-term debt and junior subordinated deferrable interest debentures (included
$34.7
and $38.8 at fair value)
(b)
|
256.8
|
|
254.2
|
|
|
270.7
|
|
271.9
|
|
(a)
|
Fair value is typically estimated using a discounted cash flow model that incorporates the characteristics of the underlying loans (including principal, contractual interest rate and contractual fees) and other key inputs, including expected lifetime credit losses, interest rates, prepayment rates, and primary origination or secondary market spreads. For certain loans, the fair value is measured based on the value of the underlying collateral. The difference between the estimated fair value and carrying value of a financial asset or liability is the result of the different methodologies used to determine fair value as compared with carrying value. For example, credit losses are estimated for a financial asset’s remaining life in a fair value calculation but are estimated for a loss emergence period in a loan loss reserve calculation; future loan income (interest and fees) is incorporated in a fair value calculation but is generally not considered in a loan loss reserve calculation. For a further discussion of the Firm’s methodologies for estimating the fair value of loans and lending-related commitments, see pages 186–188 of this Note.
|
(b)
|
Effective
January 1, 2011
,
$23.0 billion
of long-term advances from FHLBs were reclassified from other borrowed funds to long-term debt. The prior-year period has been revised to conform with the current presentation.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
197
|
|
2011
|
|
2010
|
||||||||||
December 31, (in billions)
|
Carrying value
(a)
|
Estimated fair value
|
|
Carrying value
(a)
|
Estimated fair value
|
||||||||
Wholesale lending-related commitments
|
$
|
0.7
|
|
$
|
3.4
|
|
|
$
|
0.7
|
|
$
|
0.9
|
|
(a)
|
Represents the allowance for wholesale lending-related commitments. Excludes the current carrying values of the guarantee liability and the offsetting asset, each of which are recognized at fair value at the inception of guarantees.
|
Year ended December 31, (in millions)
|
|
2011
|
|
2010
|
|
2009
|
||||||
Trading assets – debt and equity instruments
(a)
|
|
$
|
393,890
|
|
|
$
|
354,441
|
|
|
$
|
318,063
|
|
Trading assets – derivative receivables
|
|
90,003
|
|
|
84,676
|
|
|
110,457
|
|
|||
Trading liabilities – debt and equity instruments
(a)(b)
|
|
81,916
|
|
|
78,159
|
|
|
60,224
|
|
|||
Trading liabilities – derivative payables
|
|
71,539
|
|
|
65,714
|
|
|
77,901
|
|
(a)
|
Balances reflect the reduction of securities owned (long positions) by the amount of securities sold, but not yet purchased (short positions) when the long and short positions have identical CUSIP numbers.
|
(b)
|
Primarily represent securities sold, not yet purchased.
|
•
|
Mitigate income statement volatility caused by the differences in the measurement basis of elected instruments (for example, certain instruments elected were previously accounted for on an accrual basis) while the associated risk management arrangements are accounted for on a fair value basis;
|
•
|
Eliminate the complexities of applying certain accounting models (e.g., hedge accounting or bifurcation accounting for hybrid instruments); and/or
|
•
|
Better reflect those instruments that are managed on a fair value basis.
|
•
|
Loans purchased or originated as part of securitization warehousing activity, subject to bifurcation accounting, or managed on a fair value basis.
|
•
|
Securities financing arrangements with an embedded derivative and/or a maturity of greater than one year.
|
•
|
Owned beneficial interests in securitized financial assets that contain embedded credit derivatives, which would otherwise be required to be separately accounted for as a derivative instrument.
|
•
|
Certain investments that receive tax credits and other equity investments acquired as part of the Washington Mutual transaction.
|
•
|
Structured notes issued as part of IB’s client-driven activities. (Structured notes are financial instruments that contain embedded derivatives.)
|
•
|
Long-term beneficial interests issued by IB’s consolidated securitization trusts where the underlying assets are carried at fair value.
|
198
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
2011
|
|
2010
|
|
2009
|
|||||||||||||||||||||||||||
December 31, (in millions)
|
Principal transactions
|
Other income
|
Total changes in fair value recorded
|
|
Principal transactions
|
Other income
|
Total changes in fair value recorded
|
|
Principal transactions
|
Other income
|
Total changes in fair value recorded
|
|||||||||||||||||||||
Federal funds sold and securities purchased under resale agreements
|
$
|
270
|
|
$
|
—
|
|
|
$
|
270
|
|
|
$
|
173
|
|
$
|
—
|
|
|
$
|
173
|
|
|
$
|
(553
|
)
|
$
|
—
|
|
|
$
|
(553
|
)
|
Securities borrowed
|
(61
|
)
|
—
|
|
|
(61
|
)
|
|
31
|
|
—
|
|
|
31
|
|
|
82
|
|
—
|
|
|
82
|
|
|||||||||
Trading assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Debt and equity instruments, excluding loans
|
53
|
|
(6
|
)
|
(c)
|
47
|
|
|
556
|
|
(2
|
)
|
(c)
|
554
|
|
|
619
|
|
25
|
|
(c)
|
644
|
|
|||||||||
Loans reported as trading assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Changes in instrument-specific credit risk
|
934
|
|
(174
|
)
|
(c)
|
760
|
|
|
1,279
|
|
(6
|
)
|
(c)
|
1,273
|
|
|
(300
|
)
|
(177
|
)
|
(c)
|
(477
|
)
|
|||||||||
Other changes in fair value
|
127
|
|
5,263
|
|
(c)
|
5,390
|
|
|
(312
|
)
|
4,449
|
|
(c)
|
4,137
|
|
|
1,132
|
|
3,119
|
|
(c)
|
4,251
|
|
|||||||||
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Changes in instrument-specific credit risk
|
2
|
|
—
|
|
|
2
|
|
|
95
|
|
—
|
|
|
95
|
|
|
(78
|
)
|
—
|
|
|
(78
|
)
|
|||||||||
Other changes in fair value
|
535
|
|
—
|
|
|
535
|
|
|
90
|
|
—
|
|
|
90
|
|
|
(343
|
)
|
—
|
|
|
(343
|
)
|
|||||||||
Other assets
|
(49
|
)
|
(19
|
)
|
(d)
|
(68
|
)
|
|
—
|
|
(263
|
)
|
(d)
|
(263
|
)
|
|
—
|
|
(731
|
)
|
(d)
|
(731
|
)
|
|||||||||
Deposits
(a)
|
(237
|
)
|
—
|
|
|
(237
|
)
|
|
(564
|
)
|
—
|
|
|
(564
|
)
|
|
(770
|
)
|
—
|
|
|
(770
|
)
|
|||||||||
Federal funds purchased and securities loaned or sold under repurchase agreements
|
(4
|
)
|
—
|
|
|
(4
|
)
|
|
(29
|
)
|
—
|
|
|
(29
|
)
|
|
116
|
|
—
|
|
|
116
|
|
|||||||||
Other borrowed funds
(a)
|
2,986
|
|
—
|
|
|
2,986
|
|
|
123
|
|
—
|
|
|
123
|
|
|
(1,287
|
)
|
—
|
|
|
(1,287
|
)
|
|||||||||
Trading liabilities
|
(57
|
)
|
—
|
|
|
(57
|
)
|
|
(23
|
)
|
—
|
|
|
(23
|
)
|
|
(3
|
)
|
—
|
|
|
(3
|
)
|
|||||||||
Beneficial interests issued by consolidated VIEs
|
(83
|
)
|
—
|
|
|
(83
|
)
|
|
(12
|
)
|
—
|
|
|
(12
|
)
|
|
(351
|
)
|
—
|
|
|
(351
|
)
|
|||||||||
Other liabilities
|
(3
|
)
|
(5
|
)
|
(d)
|
(8
|
)
|
|
(9
|
)
|
8
|
|
(d)
|
(1
|
)
|
|
64
|
|
—
|
|
|
64
|
|
|||||||||
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Changes in instrument-specific credit risk
(a)
|
927
|
|
—
|
|
|
927
|
|
|
400
|
|
—
|
|
|
400
|
|
|
(1,704
|
)
|
—
|
|
|
(1,704
|
)
|
|||||||||
Other changes in fair value
(b)
|
322
|
|
—
|
|
|
322
|
|
|
1,297
|
|
—
|
|
|
1,297
|
|
|
(2,393
|
)
|
—
|
|
|
(2,393
|
)
|
(a)
|
Total changes in instrument-specific credit risk related to structured notes were
$899 million
,
$468 million
, and
$(1.7) billion
for the years ended
December 31, 2011
,
2010
and
2009
, respectively. These totals include adjustments for structured notes classified within deposits and other borrowed funds, as well as long-term debt.
|
(b)
|
Structured notes are debt instruments with embedded derivatives that are tailored to meet a client’s need. The embedded derivative is the primary driver of risk. Although the risk associated with the structured notes is actively managed, the gains reported in this table do not include the income statement impact of such risk management instruments.
|
(c)
|
Reported in mortgage fees and related income.
|
(d)
|
Reported in other income.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
199
|
•
|
Loans and lending-related commitments: For floating-rate instruments, all changes in value are attributed to instrument-specific credit risk. For fixed-rate instruments, an allocation of the changes in value for the period is made between those changes in value that are interest rate-related and changes in value that are credit-related. Allocations are generally based on an analysis of borrower-specific credit spread and
|
•
|
Long-term debt: Changes in value attributable to instrument-specific credit risk were derived principally from observable changes in the Firm’s credit spread.
|
•
|
Resale and repurchase agreements, securities borrowed agreements and securities lending agreements: Generally, for these types of agreements, there is a requirement that collateral be maintained with a market value equal to or in excess of the principal amount loaned; as a result, there would be no adjustment or an immaterial adjustment for instrument-specific credit risk related to these agreements.
|
|
2011
|
|
2010
|
||||||||||||||||||
December 31, (in millions)
|
Contractual principal outstanding
|
|
Fair value
|
Fair value over/(under) contractual principal outstanding
|
|
Contractual principal outstanding
|
|
Fair value
|
Fair value over/(under) contractual principal outstanding
|
||||||||||||
Loans
(a)
|
|
|
|
|
|
|
|
|
|
||||||||||||
Nonaccrual loans
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loans reported as trading assets
|
$
|
4,875
|
|
|
$
|
1,141
|
|
$
|
(3,734
|
)
|
|
$
|
5,246
|
|
|
$
|
1,239
|
|
$
|
(4,007
|
)
|
Loans
|
820
|
|
|
56
|
|
(764
|
)
|
|
927
|
|
|
132
|
|
(795
|
)
|
||||||
Subtotal
|
5,695
|
|
|
1,197
|
|
(4,498
|
)
|
|
6,173
|
|
|
1,371
|
|
(4,802
|
)
|
||||||
All other performing loans
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loans reported as trading assets
|
37,481
|
|
|
32,657
|
|
(4,824
|
)
|
|
39,490
|
|
|
33,641
|
|
(5,849
|
)
|
||||||
Loans
|
2,136
|
|
|
1,601
|
|
(535
|
)
|
|
2,496
|
|
|
1,434
|
|
(1,062
|
)
|
||||||
Total loans
|
$
|
45,312
|
|
|
$
|
35,455
|
|
$
|
(9,857
|
)
|
|
$
|
48,159
|
|
|
$
|
36,446
|
|
$
|
(11,713
|
)
|
Long-term debt
|
|
|
|
|
|
|
|
|
|
||||||||||||
Principal-protected debt
|
$
|
19,417
|
|
(c)
|
$
|
19,890
|
|
$
|
473
|
|
|
$
|
20,761
|
|
(c)
|
$
|
21,315
|
|
$
|
554
|
|
Nonprincipal-protected debt
(b)
|
NA
|
|
|
14,830
|
|
NA
|
|
|
NA
|
|
|
17,524
|
|
NA
|
|
||||||
Total long-term debt
|
NA
|
|
|
$
|
34,720
|
|
NA
|
|
|
NA
|
|
|
$
|
38,839
|
|
NA
|
|
||||
Long-term beneficial interests
|
|
|
|
|
|
|
|
|
|
||||||||||||
Principal-protected debt
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
49
|
|
|
$
|
49
|
|
$
|
—
|
|
Nonprincipal-protected debt
(b)
|
NA
|
|
|
1,250
|
|
NA
|
|
|
NA
|
|
|
1,446
|
|
NA
|
|
||||||
Total long-term beneficial interests
|
NA
|
|
|
$
|
1,250
|
|
NA
|
|
|
NA
|
|
|
$
|
1,495
|
|
NA
|
|
(a)
|
There were no performing loans which were ninety days or more past due as of
December 31, 2011
and
2010
, respectively.
|
(b)
|
Remaining contractual principal is not applicable to nonprincipal-protected notes. Unlike principal-protected structured notes, for which the Firm is obligated to return a stated amount of principal at the maturity of the note, nonprincipal-protected structured notes do not obligate the Firm to return a stated amount of principal at maturity, but to return an amount based on the performance of an underlying variable or derivative feature embedded in the note.
|
(c)
|
Where the Firm issues principal-protected zero-coupon or discount notes, the balance reflected as the remaining contractual principal is the final principal payment at maturity.
|
200
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
|
2011
|
|
2010
|
||||||||||||||||||||||||||||
|
|
Credit
|
|
On-balance sheet
|
|
Off-balance
|
|
Credit
|
|
On-balance sheet
|
|
Off-balance
|
||||||||||||||||||||
December 31, (in millions)
|
|
exposure
|
|
Loans
|
|
Derivatives
|
|
sheet
(c)
|
|
exposure
|
|
Loans
|
|
Derivatives
|
|
sheet
(c)
|
||||||||||||||||
Wholesale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Banks and finance companies
|
|
$
|
71,440
|
|
|
$
|
29,392
|
|
|
$
|
20,372
|
|
|
$
|
21,676
|
|
|
$
|
65,867
|
|
|
$
|
21,562
|
|
|
$
|
20,935
|
|
|
$
|
23,370
|
|
Real estate
|
|
67,594
|
|
|
54,684
|
|
|
1,155
|
|
|
11,755
|
|
|
64,351
|
|
|
53,635
|
|
|
868
|
|
|
9,848
|
|
||||||||
Healthcare
|
|
42,247
|
|
|
8,908
|
|
|
3,021
|
|
|
30,318
|
|
|
41,093
|
|
|
6,047
|
|
|
2,121
|
|
|
32,925
|
|
||||||||
State and municipal governments
|
|
41,930
|
|
|
7,144
|
|
|
6,575
|
|
|
28,211
|
|
|
35,808
|
|
|
6,095
|
|
|
5,148
|
|
|
24,565
|
|
||||||||
Oil and gas
|
|
35,437
|
|
|
10,780
|
|
|
3,521
|
|
|
21,136
|
|
|
26,459
|
|
|
5,701
|
|
|
3,866
|
|
|
16,892
|
|
||||||||
Asset managers
|
|
33,465
|
|
|
6,182
|
|
|
9,458
|
|
|
17,825
|
|
|
29,364
|
|
|
7,070
|
|
|
7,124
|
|
|
15,170
|
|
||||||||
Consumer products
|
|
29,637
|
|
|
9,187
|
|
|
1,079
|
|
|
19,371
|
|
|
27,508
|
|
|
7,921
|
|
|
1,039
|
|
|
18,548
|
|
||||||||
Utilities
|
|
28,650
|
|
|
5,191
|
|
|
3,602
|
|
|
19,857
|
|
|
25,911
|
|
|
4,220
|
|
|
3,104
|
|
|
18,587
|
|
||||||||
Retail and consumer services
|
|
22,891
|
|
|
6,353
|
|
|
565
|
|
|
15,973
|
|
|
20,882
|
|
|
5,876
|
|
|
796
|
|
|
14,210
|
|
||||||||
Technology
|
|
17,898
|
|
|
4,394
|
|
|
1,310
|
|
|
12,194
|
|
|
14,348
|
|
|
2,752
|
|
|
1,554
|
|
|
10,042
|
|
||||||||
Central government
|
|
17,138
|
|
|
623
|
|
|
10,813
|
|
|
5,702
|
|
|
11,173
|
|
|
1,146
|
|
|
6,052
|
|
|
3,975
|
|
||||||||
Machinery and equipment manufacturing
|
|
16,498
|
|
|
5,111
|
|
|
417
|
|
|
10,970
|
|
|
13,311
|
|
|
3,601
|
|
|
445
|
|
|
9,265
|
|
||||||||
Transportation
|
|
16,305
|
|
|
10,000
|
|
|
947
|
|
|
5,358
|
|
|
9,652
|
|
|
3,754
|
|
|
822
|
|
|
5,076
|
|
||||||||
Metals/mining
|
|
15,254
|
|
|
6,073
|
|
|
690
|
|
|
8,491
|
|
|
11,426
|
|
|
3,301
|
|
|
1,018
|
|
|
7,107
|
|
||||||||
Insurance
|
|
13,092
|
|
|
1,109
|
|
|
2,061
|
|
|
9,922
|
|
|
10,918
|
|
|
1,103
|
|
|
1,660
|
|
|
8,155
|
|
||||||||
All other
(a)
|
|
284,135
|
|
|
113,264
|
|
|
26,891
|
|
|
143,980
|
|
|
240,999
|
|
|
88,726
|
|
|
23,929
|
|
|
128,344
|
|
||||||||
Subtotal
|
|
753,611
|
|
|
278,395
|
|
|
92,477
|
|
|
382,739
|
|
|
649,070
|
|
|
222,510
|
|
|
80,481
|
|
|
346,079
|
|
||||||||
Loans held-for-sale and loans at fair value
|
|
4,621
|
|
|
4,621
|
|
|
—
|
|
|
—
|
|
|
5,123
|
|
|
5,123
|
|
|
—
|
|
|
—
|
|
||||||||
Receivables from customers and interests in purchased receivables
|
|
17,461
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32,932
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total wholesale
|
|
775,693
|
|
|
283,016
|
|
|
92,477
|
|
|
382,739
|
|
|
687,125
|
|
|
227,633
|
|
|
80,481
|
|
|
346,079
|
|
||||||||
Total consumer, excluding credit card
(b)
|
|
370,834
|
|
|
308,427
|
|
|
—
|
|
|
62,307
|
|
|
393,021
|
|
|
327,618
|
|
|
—
|
|
|
65,403
|
|
||||||||
Total credit card
|
|
662,893
|
|
|
132,277
|
|
|
—
|
|
|
530,616
|
|
|
684,903
|
|
|
137,676
|
|
|
—
|
|
|
547,227
|
|
||||||||
Total exposure
|
|
$
|
1,809,420
|
|
|
$
|
723,720
|
|
|
$
|
92,477
|
|
|
$
|
975,662
|
|
|
$
|
1,765,049
|
|
|
$
|
692,927
|
|
|
$
|
80,481
|
|
|
$
|
958,709
|
|
(a)
|
For more information on exposures to SPEs included within All other see Note 16 on pages 256–267 of this Annual Report.
|
(b)
|
As of December 31, 2011, credit exposure for total consumer, excluding credit card, includes receivables from customers of
$100 million
.
|
(c)
|
Represents lending-related financial instruments.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
201
|
202
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
Notional amounts
(a)
|
|||||
December 31, (in billions)
|
2011
|
|
2010
|
|
||
Interest rate contracts
|
|
|
||||
Swaps
|
$
|
38,704
|
|
$
|
46,299
|
|
Futures and forwards
|
7,888
|
|
9,298
|
|
||
Written options
|
3,842
|
|
4,075
|
|
||
Purchased options
|
4,026
|
|
3,968
|
|
||
Total interest rate contracts
|
54,460
|
|
63,640
|
|
||
Credit derivatives
|
5,774
|
|
5,472
|
|
||
Foreign exchange contracts
|
|
|
|
|||
Cross-currency swaps
|
2,931
|
|
2,568
|
|
||
Spot, futures and forwards
|
4,512
|
|
3,893
|
|
||
Written options
|
674
|
|
674
|
|
||
Purchased options
|
670
|
|
649
|
|
||
Total foreign exchange contracts
|
8,787
|
|
7,784
|
|
||
Equity contracts
|
|
|
||||
Swaps
|
119
|
|
116
|
|
||
Futures and forwards
|
38
|
|
49
|
|
||
Written options
|
460
|
|
430
|
|
||
Purchased options
|
405
|
|
377
|
|
||
Total equity contracts
|
1,022
|
|
972
|
|
||
Commodity contracts
|
|
|
|
|||
Swaps
|
341
|
|
349
|
|
||
Spot, futures and forwards
|
188
|
|
170
|
|
||
Written options
|
310
|
|
264
|
|
||
Purchased options
|
274
|
|
254
|
|
||
Total commodity contracts
|
1,113
|
|
1,037
|
|
||
Total derivative notional amounts
|
$
|
71,156
|
|
$
|
78,905
|
|
(a)
|
Represents the sum of gross long and gross short third-party notional derivative contracts.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
203
|
(a)
|
Excludes structured notes for which the fair value option has been elected. See Note 4 on pages 198–200 of this
Annual Report
for further information.
|
(b)
|
Excludes
$11 million
and
$21 million
of foreign currency-denominated debt designated as a net investment hedge at
December 31, 2011
and
2010
, respectively.
|
(c)
|
Excludes
$1.0 billion
related to commodity derivatives that were embedded in a debt instrument and used as fair value hedging instruments that were recorded in the line item of the host contract (other borrowed funds) at
December 31, 2010
.
|
204
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
Gains/(losses) recorded in income
|
|
Income statement impact due to:
|
||||||||||||||
Year ended December 31, 2011
(in millions)
|
Derivatives
|
Hedged items
|
Total income statement impact
|
|
Hedge ineffectiveness
(e)
|
Excluded components
(f)
|
|||||||||||
Contract type
|
|
|
|
|
|
|
|
||||||||||
Interest rate
(a)
|
$
|
558
|
|
|
$
|
6
|
|
$
|
564
|
|
|
$
|
104
|
|
$
|
460
|
|
Foreign exchange
(b)
|
5,684
|
|
(d)
|
(3,761
|
)
|
1,923
|
|
|
—
|
|
1,923
|
|
|||||
Commodity
(c)
|
1,784
|
|
|
(2,880
|
)
|
(1,096
|
)
|
|
(10
|
)
|
(1,086
|
)
|
|||||
Total
|
$
|
8,026
|
|
|
$
|
(6,635
|
)
|
$
|
1,391
|
|
|
$
|
94
|
|
$
|
1,297
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Gains/(losses) recorded in income
|
|
Income statement impact due to:
|
||||||||||||||
Year ended December 31, 2010
(in millions)
|
Derivatives
|
Hedged items
|
|
Total income statement impact
|
|
Hedge ineffectiveness
(e)
|
|
Excluded components
(f)
|
|
||||||||
Contract type
|
|
|
|
|
|
|
|
||||||||||
Interest rate
(a)
|
$
|
1,066
|
|
|
$
|
(454
|
)
|
$
|
612
|
|
|
$
|
172
|
|
$
|
440
|
|
Foreign exchange
(b)
|
1,357
|
|
(d)
|
(1,812
|
)
|
(455
|
)
|
|
—
|
|
(455
|
)
|
|||||
Commodity
(c)
|
(1,354
|
)
|
|
1,882
|
|
528
|
|
|
—
|
|
528
|
|
|||||
Total
|
$
|
1,069
|
|
|
$
|
(384
|
)
|
$
|
685
|
|
|
$
|
172
|
|
$
|
513
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Gains/(losses) recorded in income
|
|
Income statement impact due to:
|
||||||||||||||
Year ended December 31, 2009
(in millions) |
Derivatives
|
Hedged items
|
|
Total income statement impact
|
|
Hedge ineffectiveness
(e)
|
|
Excluded components
(f)
|
|
||||||||
Contract type
|
|
|
|
|
|
|
|
||||||||||
Interest rate
(a)
|
$
|
(3,830
|
)
|
|
$
|
4,638
|
|
$
|
808
|
|
|
$
|
(466
|
)
|
$
|
1,274
|
|
Foreign exchange
(b)
|
(1,421
|
)
|
(d)
|
1,445
|
|
24
|
|
|
—
|
|
24
|
|
|||||
Commodity
(c)
|
(430
|
)
|
|
399
|
|
(31
|
)
|
|
—
|
|
(31
|
)
|
|||||
Total
|
$
|
(5,681
|
)
|
|
$
|
6,482
|
|
$
|
801
|
|
|
$
|
(466
|
)
|
$
|
1,267
|
|
(a)
|
Primarily consists of hedges of the benchmark (e.g., London Interbank Offered Rate (“LIBOR”)) interest rate risk of fixed-rate long-term debt and AFS securities. Gains and losses were recorded in net interest income.
|
(b)
|
Primarily consists of hedges of the foreign currency risk of long-term debt and AFS securities for changes in spot foreign currency rates. Gains and losses related to the derivatives and the hedged items, due to changes in spot foreign currency rates, were recorded in principal transactions revenue.
|
(c)
|
Consists of overall fair value hedges of certain commodities inventories. Gains and losses were recorded in principal transactions revenue.
|
(d)
|
Included
$4.9 billion
,
$278 million
and
$(1.6) billion
for the years ended
December 31, 2011
,
2010
and
2009
, respectively, of revenue related to certain foreign exchange trading derivatives designated as fair value hedging instruments.
|
(e)
|
Hedge ineffectiveness is the amount by which the gain or loss on the designated derivative instrument does not exactly offset the gain or loss on the hedged item attributable to the hedged risk.
|
(f)
|
Certain components of hedging derivatives are permitted to be excluded from the assessment of hedge effectiveness, such as forward points on foreign exchange forward contracts. Amounts related to excluded components are recorded in current-period income.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
205
|
|
Gains/(losses) recorded in income and other comprehensive income/(loss)
(c)
|
||||||||||||||
Year ended December 31, 2011
(in millions)
|
Derivatives – effective portion reclassified from AOCI to income
|
Hedge ineffectiveness recorded directly in income
(d)
|
Total income statement impact
|
Derivatives – effective portion recorded in OCI
|
Total change
in OCI
for period
|
||||||||||
Contract type
|
|
|
|
|
|
||||||||||
Interest rate
(a)
|
$
|
310
|
|
$
|
19
|
|
$
|
329
|
|
$
|
107
|
|
$
|
(203
|
)
|
Foreign exchange
(b)
|
(9
|
)
|
—
|
|
(9
|
)
|
(57
|
)
|
(48
|
)
|
|||||
Total
|
$
|
301
|
|
$
|
19
|
|
$
|
320
|
|
$
|
50
|
|
$
|
(251
|
)
|
|
Gains/(losses) recorded in income and other comprehensive income/(loss)
(c)
|
||||||||||||||
Year ended December 31, 2010
(in millions)
|
Derivatives – effective portion reclassified from AOCI to income
|
Hedge ineffectiveness recorded directly in income
(d)
|
Total income statement impact
|
Derivatives – effective portion recorded in OCI
|
Total change
in OCI for period |
||||||||||
Contract type
|
|
|
|
|
|
||||||||||
Interest rate
(a)
|
$
|
288
|
|
$
|
20
|
|
$
|
308
|
|
$
|
388
|
|
$
|
100
|
|
Foreign exchange
(b)
|
(82
|
)
|
(3
|
)
|
(85
|
)
|
(141
|
)
|
(59
|
)
|
|||||
Total
|
$
|
206
|
|
$
|
17
|
|
$
|
223
|
|
$
|
247
|
|
$
|
41
|
|
|
|
|
|
|
|
||||||||||
|
Gains/(losses) recorded in income and other comprehensive income/(loss)
(c)
|
||||||||||||||
Year ended December 31, 2009
(in millions)
|
Derivatives – effective portion reclassified from AOCI to income
|
Hedge ineffectiveness recorded directly in income
(d)
|
Total income statement impact
|
Derivatives – effective portion recorded in OCI
|
Total change
in OCI for period |
||||||||||
Contract type
|
|
|
|
|
|
||||||||||
Interest rate
(a)
|
$
|
(158
|
)
|
$
|
(62
|
)
|
$
|
(220
|
)
|
$
|
61
|
|
$
|
219
|
|
Foreign exchange
(b)
|
282
|
|
—
|
|
282
|
|
706
|
|
424
|
|
|||||
Total
|
$
|
124
|
|
$
|
(62
|
)
|
$
|
62
|
|
$
|
767
|
|
$
|
643
|
|
(a)
|
Primarily consists of benchmark interest rate hedges of LIBOR-indexed floating-rate assets and floating-rate liabilities. Gains and losses were recorded in net interest income.
|
(b)
|
Primarily consists of hedges of the foreign currency risk of non-U.S. dollar-denominated revenue and expense. The income statement classification of gains and losses follows the hedged item – primarily net interest income, noninterest revenue and compensation expense.
|
(c)
|
The Firm did not experience any forecasted transactions that failed to occur for the years ended
December 31, 2011
and
2009
. In
2010
, the Firm reclassified a
$25 million
loss from AOCI to earnings because the Firm determined that it was probable that forecasted interest payment cash flows related to certain wholesale deposits would not occur.
|
(d)
|
Hedge ineffectiveness is the amount by which the cumulative gain or loss on the designated derivative instrument exceeds the present value of the cumulative expected change in cash flows on the hedged item attributable to the hedged risk.
|
206
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
Gains/(losses) recorded in income and other comprehensive income/(loss)
|
|||||||||||||||||||
|
2011
|
|
2010
|
|
2009
|
|||||||||||||||
Year ended December 31,
(in millions)
|
Excluded components recorded directly in income
(a)
|
Effective portion recorded in OCI
|
|
Excluded components recorded directly in income
(a)
|
Effective portion recorded in OCI
|
|
Excluded components recorded directly in income
(a)
|
Effective portion recorded in OCI
|
||||||||||||
Contract type
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange derivatives
|
$
|
(251
|
)
|
$
|
225
|
|
|
$
|
(139
|
)
|
$
|
(30
|
)
|
|
$
|
(112
|
)
|
$
|
(259
|
)
|
Foreign currency denominated debt
|
—
|
|
1
|
|
|
—
|
|
41
|
|
|
NA
|
|
NA
|
|
||||||
Total
|
$
|
(251
|
)
|
$
|
226
|
|
|
$
|
(139
|
)
|
$
|
11
|
|
|
$
|
(112
|
)
|
$
|
(259
|
)
|
(a)
|
Certain components of hedging derivatives are permitted to be excluded from the assessment of hedge effectiveness, such as forward points on foreign exchange forward contracts. Amounts related to excluded components are recorded in current-period income. The Firm measures the ineffectiveness of net investment hedge accounting relationships based on changes in spot foreign currency rates, and therefore there was no ineffectiveness for net investment hedge accounting relationships during
2011
,
2010
and
2009
.
|
(a)
|
Gains and losses were recorded in principal transactions revenue, mortgage fees and related income, and net interest income.
|
(b)
|
Gains and losses were recorded in principal transactions revenue.
|
(c)
|
Gains and losses were recorded in principal transactions revenue and net interest income.
|
|
Gains/(losses) recorded in principal transactions revenue
|
||||||||
Year ended December 31,
(in millions)
|
2011
|
|
2010
|
|
2009
|
|
|||
Type of instrument
|
|
|
|
||||||
Interest rate
|
$
|
(1,531
|
)
|
$
|
(683
|
)
|
$
|
4,375
|
|
Credit
|
3,346
|
|
4,636
|
|
5,022
|
|
|||
Foreign exchange
|
1,216
|
|
1,854
|
|
2,583
|
|
|||
Equity
|
1,956
|
|
1,827
|
|
1,475
|
|
|||
Commodity
|
3,697
|
|
243
|
|
1,329
|
|
|||
Total
|
$
|
8,684
|
|
$
|
7,877
|
|
$
|
14,784
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
207
|
Derivative payables containing downgrade triggers
|
||||||
December 31, (in millions)
|
2011
|
|
2010
|
|
||
Aggregate fair value of net derivative payables
|
$
|
16,937
|
|
$
|
19,777
|
|
Collateral posted
|
11,429
|
|
14,629
|
|
|
2011
|
|
2010
|
||||||||||
December 31, (in millions)
|
Single-notch downgrade
|
Two-notch downgrade
|
|
Single-notch downgrade
|
Two-notch downgrade
|
||||||||
Amount of additional collateral to be posted
|
$
|
1,460
|
|
$
|
2,054
|
|
|
$
|
1,904
|
|
$
|
3,462
|
|
Amount required to settle contracts with termination triggers
|
1,054
|
|
1,923
|
|
|
430
|
|
994
|
|
|
Derivative receivables
|
|
Derivative payables
|
||||||||||
December 31, (in millions)
|
2011
|
|
2010
|
|
|
2011
|
|
2010
|
|
||||
Gross derivative fair value
|
$
|
1,884,499
|
|
$
|
1,529,412
|
|
|
$
|
1,837,256
|
|
$
|
1,485,109
|
|
Netting adjustment – offsetting receivables/payables
(a)
|
(1,710,525
|
)
|
(1,376,969
|
)
|
|
(1,710,523
|
)
|
(1,376,969
|
)
|
||||
Netting adjustment – cash collateral received/paid
(a)
|
(81,497
|
)
|
(71,962
|
)
|
|
(51,756
|
)
|
(38,921
|
)
|
||||
Carrying value on Consolidated Balance Sheets
|
$
|
92,477
|
|
$
|
80,481
|
|
|
$
|
74,977
|
|
$
|
69,219
|
|
|
Collateral held
|
|
Collateral transferred
|
||||||||||
December 31, (in millions)
|
2011
|
|
2010
|
|
|
2011
|
|
2010
|
|
||||
Netting adjustment for cash collateral
(a)
|
$
|
81,497
|
|
$
|
71,962
|
|
|
$
|
51,756
|
|
$
|
38,921
|
|
Liquid securities and other cash collateral
(b)
|
21,807
|
|
16,486
|
|
|
19,439
|
|
10,899
|
|
||||
Additional liquid securities and cash collateral
(c)
|
17,615
|
|
18,048
|
|
|
10,824
|
|
8,435
|
|
||||
Total collateral for derivative transactions
|
$
|
120,919
|
|
$
|
106,496
|
|
|
$
|
82,019
|
|
$
|
58,255
|
|
(a)
|
As permitted under U.S. GAAP, the Firm has elected to net cash collateral received and paid together with the related derivative receivables and derivative payables when a legally enforceable master netting agreement exists.
|
(b)
|
Represents cash collateral received and paid that is not subject to a legally enforceable master netting agreement, and liquid securities collateral held and transferred.
|
(c)
|
Represents liquid securities and cash collateral held and transferred at the initiation of derivative transactions, which is available as security against potential exposure that could arise should the fair value of the transactions move, as well as collateral held and transferred related to contracts that have non-daily call frequency for collateral to be posted, and collateral that the Firm or a counterparty has agreed to return but has not yet settled as of the reporting date. These amounts were not netted against the derivative receivables and payables in the tables above, because, at an individual counterparty level, the collateral exceeded the fair value exposure at both
December 31, 2011
and
2010
.
|
208
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
209
|
|
Maximum payout/Notional amount
|
|||||||||||
|
Protection sold
|
Protection purchased with identical underlyings
(b)
|
Net protection (sold)/purchased
(c)
|
Other protection purchased
(d)
|
||||||||
December 31, 2011
(in millions)
|
||||||||||||
Credit derivatives
|
|
|
|
|
||||||||
Credit default swaps
|
$
|
(2,839,492
|
)
|
$
|
2,798,207
|
|
$
|
(41,285
|
)
|
$
|
29,139
|
|
Other credit derivatives
(a)
|
(79,711
|
)
|
4,954
|
|
(74,757
|
)
|
22,292
|
|
||||
Total credit derivatives
|
(2,919,203
|
)
|
2,803,161
|
|
(116,042
|
)
|
51,431
|
|
||||
Credit-related notes
|
(742
|
)
|
—
|
|
(742
|
)
|
3,944
|
|
||||
Total
|
$
|
(2,919,945
|
)
|
$
|
2,803,161
|
|
$
|
(116,784
|
)
|
$
|
55,375
|
|
|
|
|
|
|
||||||||
|
Maximum payout/Notional amount
|
|||||||||||
|
Protection sold
|
Protection purchased with identical underlyings
(b)
|
Net protection (sold)/purchased
(c)
|
Other protection purchased
(d)
|
||||||||
December 31, 2010 (in millions)
|
||||||||||||
Credit derivatives
|
|
|
|
|
||||||||
Credit default swaps
|
$
|
(2,659,240
|
)
|
$
|
2,652,313
|
|
$
|
(6,927
|
)
|
$
|
32,867
|
|
Other credit derivatives
(a)
|
(93,776
|
)
|
10,016
|
|
(83,760
|
)
|
24,234
|
|
||||
Total credit derivatives
|
(2,753,016
|
)
|
2,662,329
|
|
(90,687
|
)
|
57,101
|
|
||||
Credit-related notes
|
(2,008
|
)
|
—
|
|
(2,008
|
)
|
3,327
|
|
||||
Total
|
$
|
(2,755,024
|
)
|
$
|
2,662,329
|
|
$
|
(92,695
|
)
|
$
|
60,428
|
|
(a)
|
Primarily consists of total return swaps and credit default swap options.
|
(b)
|
Represents the total notional amount of protection purchased where the underlying reference instrument is identical to the reference instrument on protection sold; the notional amount of protection purchased for each individual identical underlying reference instrument may be greater or lower than the notional amount of protection sold.
|
(c)
|
Does not take into account the fair value of the reference obligation at the time of settlement, which would generally reduce the amount the seller of protection pays to the buyer of protection in determining settlement value.
|
(d)
|
Represents protection purchased by the Firm through single-name and index credit default swaps or credit-related notes.
|
Protection sold – credit derivatives and credit-related notes ratings
(a)
/maturity profile
|
|
|
|
||||||||||||
December 31, 2011
(in millions)
|
<1 year
|
1–5 years
|
>5 years
|
Total
notional amount
|
Fair value
(b)
|
||||||||||
Risk rating of reference entity
|
|
|
|
|
|
||||||||||
Investment-grade
|
$
|
(352,215
|
)
|
$
|
(1,262,143
|
)
|
$
|
(345,996
|
)
|
$
|
(1,960,354
|
)
|
$
|
(57,697
|
)
|
Noninvestment-grade
|
(241,823
|
)
|
(589,954
|
)
|
(127,814
|
)
|
(959,591
|
)
|
(85,304
|
)
|
|||||
Total
|
$
|
(594,038
|
)
|
$
|
(1,852,097
|
)
|
$
|
(473,810
|
)
|
$
|
(2,919,945
|
)
|
$
|
(143,001
|
)
|
December 31, 2010 (in millions)
|
<1 year
|
1–5 years
|
>5 years
|
Total
notional amount
|
Fair value
(b)
|
||||||||||
Risk rating of reference entity
|
|
|
|
|
|
||||||||||
Investment-grade
|
$
|
(175,618
|
)
|
$
|
(1,194,695
|
)
|
$
|
(336,309
|
)
|
$
|
(1,706,622
|
)
|
$
|
(17,261
|
)
|
Noninvestment-grade
|
(148,434
|
)
|
(702,638
|
)
|
(197,330
|
)
|
(1,048,402
|
)
|
(59,939
|
)
|
|||||
Total
|
$
|
(324,052
|
)
|
$
|
(1,897,333
|
)
|
$
|
(533,639
|
)
|
$
|
(2,755,024
|
)
|
$
|
(77,200
|
)
|
(a)
|
The ratings scale is based on the Firm’s internal ratings, which generally correspond to ratings as defined by S&P and Moody’s.
|
(b)
|
Amounts are shown on a gross basis, before the benefit of legally enforceable master netting agreements and cash collateral received by the Firm.
|
210
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Year ended December 31,
(in millions)
|
2011
|
|
2010
|
|
2009
|
||||||
Underwriting
|
|
|
|
|
|
||||||
Equity
|
$
|
1,181
|
|
|
$
|
1,589
|
|
|
$
|
2,487
|
|
Debt
|
2,934
|
|
|
3,172
|
|
|
2,739
|
|
|||
Total underwriting
|
4,115
|
|
|
4,761
|
|
|
5,226
|
|
|||
Advisory
(a)
|
1,796
|
|
|
1,429
|
|
|
1,861
|
|
|||
Total investment banking fees
|
$
|
5,911
|
|
|
$
|
6,190
|
|
|
$
|
7,087
|
|
(a)
|
Effective January 1, 2010, the Firm adopted accounting guidance related to VIEs. Upon adoption of the guidance, the Firm consolidated its Firm-administered multi-seller conduits. The consolidation of the conduits did not significantly change the Firm’s net income as a whole; however, certain advisory fees considered inter-company were eliminated while net interest income and lending-and-deposit-related fees increased.
|
Year ended December 31,
(in millions)
|
2011
|
|
2010
|
|
2009
|
||||||
Trading revenue by risk exposure
|
|
|
|
|
|
||||||
Interest rate
|
$
|
(873
|
)
|
|
$
|
(199
|
)
|
|
$
|
3,681
|
|
Credit
|
3,393
|
|
|
4,543
|
|
|
546
|
|
|||
Foreign exchange
|
1,154
|
|
|
1,896
|
|
|
2,317
|
|
|||
Equity
|
2,401
|
|
|
2,275
|
|
|
2,056
|
|
|||
Commodity
(a)
|
2,823
|
|
|
889
|
|
|
1,270
|
|
|||
Total trading revenue
|
8,898
|
|
|
9,404
|
|
|
9,870
|
|
|||
Private equity gains/(losses)
(b)
|
1,107
|
|
|
1,490
|
|
|
(74
|
)
|
|||
Principal transactions
(c)
|
$
|
10,005
|
|
|
$
|
10,894
|
|
|
$
|
9,796
|
|
(a)
|
Includes realized gains and losses and unrealized losses on physical commodities inventories that are generally carried at the lower of cost or fair value, and gains and losses on commodity derivatives and other financial instruments that are carried at fair value through income. Commodity derivatives are frequently used to manage the Firm's risk exposure to its physical commodities inventories.
|
(b)
|
Includes revenue on private equity investments held in the Private Equity business within Corporate/Private Equity, as well as those held in other business segments.
|
(c)
|
Principal transactions included DVA related to derivatives and structured liabilities measured at fair value in IB. DVA gains/(losses) were
$1.4 billion
,
$509 million
, and
$(2.3) billion
for the years ended
December 31, 2011
,
2010
and
2009
, respectively.
|
Year ended December 31,
(in millions)
|
2011
|
|
2010
|
|
2009
|
||||||
Asset management
|
|
|
|
|
|
||||||
Investment management fees
|
$
|
6,085
|
|
|
$
|
5,632
|
|
|
$
|
4,997
|
|
All other asset management fees
|
605
|
|
|
496
|
|
|
356
|
|
|||
Total asset management fees
|
6,690
|
|
|
6,128
|
|
|
5,353
|
|
|||
|
|
|
|
|
|
||||||
Total administration fees
(a)
|
2,171
|
|
|
2,023
|
|
|
1,927
|
|
|||
|
|
|
|
|
|
||||||
Commission and other fees
|
|
|
|
|
|
|
|||||
Brokerage commissions
|
2,753
|
|
|
2,804
|
|
|
2,904
|
|
|||
All other commissions and fees
|
2,480
|
|
|
2,544
|
|
|
2,356
|
|
|||
Total commissions and fees
|
5,233
|
|
|
5,348
|
|
|
5,260
|
|
|||
Total asset management, administration and commissions
|
$
|
14,094
|
|
|
$
|
13,499
|
|
|
$
|
12,540
|
|
(a)
|
Includes fees for custody, securities lending, funds services and securities clearance.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
211
|
Year ended December 31,
(in millions)
|
2011
|
|
2010
|
|
2009
|
|
|||
Interest income
|
|
|
|
||||||
Loans
|
$
|
37,098
|
|
$
|
40,388
|
|
$
|
38,704
|
|
Securities
|
9,215
|
|
9,540
|
|
12,377
|
|
|||
Trading assets
|
11,142
|
|
11,007
|
|
12,098
|
|
|||
Federal funds sold and securities purchased under resale agreements
|
2,523
|
|
1,786
|
|
1,750
|
|
|||
Securities borrowed
|
110
|
|
175
|
|
4
|
|
|||
Deposits with banks
|
599
|
|
345
|
|
938
|
|
|||
Other assets
(a)
|
606
|
|
541
|
|
479
|
|
|||
Total interest income
(b)
|
61,293
|
|
63,782
|
|
66,350
|
|
|||
Interest expense
|
|
|
|
||||||
Interest-bearing deposits
|
3,855
|
|
3,424
|
|
4,826
|
|
|||
Short-term and other liabilities
(c)(d)
|
2,873
|
|
2,364
|
|
2,786
|
|
|||
Long-term debt
(d)
|
6,109
|
|
5,848
|
|
7,368
|
|
|||
Beneficial interests issued by consolidated VIEs
|
767
|
|
1,145
|
|
218
|
|
|||
Total interest expense
(b)
|
13,604
|
|
12,781
|
|
15,198
|
|
|||
Net interest income
|
47,689
|
|
51,001
|
|
51,152
|
|
|||
Provision for credit losses
|
7,574
|
|
16,639
|
|
32,015
|
|
|||
Net interest income after provision for credit losses
|
$
|
40,115
|
|
$
|
34,362
|
|
$
|
19,137
|
|
(a)
|
Predominantly margin loans.
|
(b)
|
Effective January 1, 2010, the Firm adopted accounting guidance related to VIEs. Upon the adoption of the guidance, the Firm consolidated its Firm-sponsored credit card securitization trusts, its Firm-administered multi-seller conduits and certain other consumer loan securitization entities, primarily mortgage-related. The consolidation of these VIEs did not significantly change the Firm’s total net income. However, it did affect the classification of items on the Firm’s Consolidated Statements of Income; as a result of the adoption of the guidance, certain noninterest revenue was eliminated in consolidation, offset by the recognition of interest income, interest expense, and provision for credit losses.
|
(c)
|
Includes brokerage customer payables.
|
(d)
|
Effective January 1, 2011, the long-term portion of advances from FHLBs was reclassified from other borrowed funds to long-term debt. The related interest expense for the prior-year period has also been reclassified to conform with the current presentation.
|
212
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
213
|
|
Defined benefit pension plans
|
|
|
|
||||||||||||||||||||
As of or for the year ended December 31,
|
U.S.
|
|
Non-U.S.
|
|
|
OPEB plans
(f)
|
||||||||||||||||||
(in millions)
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
2011
|
|
2010
|
||||||||||||
Change in benefit obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Benefit obligation, beginning of year
|
$
|
(8,320
|
)
|
|
$
|
(7,977
|
)
|
|
$
|
(2,600
|
)
|
|
$
|
(2,536
|
)
|
|
|
$
|
(980
|
)
|
|
$
|
(1,025
|
)
|
Benefits earned during the year
|
(249
|
)
|
|
(230
|
)
|
|
(36
|
)
|
|
(30
|
)
|
|
|
(1
|
)
|
|
(2
|
)
|
||||||
Interest cost on benefit obligations
|
(451
|
)
|
|
(468
|
)
|
|
(133
|
)
|
|
(128
|
)
|
|
|
(51
|
)
|
|
(55
|
)
|
||||||
Plan amendments
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
|
—
|
|
|
—
|
|
||||||
Business combinations
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
(b)
|
|
—
|
|
|
—
|
|
||||||
Employee contributions
|
NA
|
|
|
NA
|
|
|
(5
|
)
|
|
(4
|
)
|
|
|
(84
|
)
|
|
(70
|
)
|
||||||
Net gain/(loss)
|
(563
|
)
|
|
(249
|
)
|
|
(160
|
)
|
|
(71
|
)
|
|
|
(39
|
)
|
|
13
|
|
||||||
Benefits paid
|
540
|
|
|
604
|
|
|
93
|
|
|
96
|
|
|
|
166
|
|
|
168
|
|
||||||
Expected Medicare Part D subsidy receipts
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
|
(10
|
)
|
|
(10
|
)
|
||||||
Curtailments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
|
—
|
|
|
—
|
|
||||||
Special termination benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
|
—
|
|
|
—
|
|
||||||
Foreign exchange impact and other
|
—
|
|
|
—
|
|
|
12
|
|
|
71
|
|
|
|
—
|
|
|
1
|
|
||||||
Benefit obligation, end of year
|
$
|
(9,043
|
)
|
|
$
|
(8,320
|
)
|
|
$
|
(2,829
|
)
|
|
$
|
(2,600
|
)
|
|
|
$
|
(999
|
)
|
|
$
|
(980
|
)
|
Change in plan assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fair value of plan assets, beginning of year
|
$
|
10,828
|
|
|
$
|
10,218
|
|
|
$
|
2,647
|
|
|
$
|
2,432
|
|
|
|
$
|
1,381
|
|
|
$
|
1,269
|
|
Actual return on plan assets
|
147
|
|
|
1,179
|
|
|
277
|
|
|
228
|
|
|
|
78
|
|
|
137
|
|
||||||
Firm contributions
|
37
|
|
|
35
|
|
|
169
|
|
|
157
|
|
|
|
2
|
|
|
3
|
|
||||||
Employee contributions
|
—
|
|
|
—
|
|
|
5
|
|
|
4
|
|
|
|
—
|
|
|
—
|
|
||||||
Benefits paid
|
(540
|
)
|
|
(604
|
)
|
|
(93
|
)
|
|
(96
|
)
|
|
|
(26
|
)
|
|
(28
|
)
|
||||||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
|
—
|
|
|
—
|
|
||||||
Foreign exchange impact and other
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
(73
|
)
|
|
|
—
|
|
|
—
|
|
||||||
Fair value of plan assets, end of year
|
$
|
10,472
|
|
(c)(d)
|
$
|
10,828
|
|
(c)(d)
|
$
|
2,989
|
|
(d)
|
$
|
2,647
|
|
(d)
|
|
$
|
1,435
|
|
|
$
|
1,381
|
|
Funded/(unfunded) status
(a)
|
$
|
1,429
|
|
(e)
|
$
|
2,508
|
|
(e)
|
$
|
160
|
|
|
$
|
47
|
|
|
|
$
|
436
|
|
|
$
|
401
|
|
Accumulated benefit obligation, end of year
|
$
|
(9,008
|
)
|
|
$
|
(8,271
|
)
|
|
$
|
(2,800
|
)
|
|
$
|
(2,576
|
)
|
|
|
NA
|
|
|
NA
|
|
(a)
|
Represents overfunded plans with an aggregate balance of
$2.6 billion
and
$3.5 billion
at
December 31, 2011
and
2010
, respectively, and underfunded plans with an aggregate balance of
$621 million
and
$561 million
at
December 31, 2011
and
2010
, respectively.
|
(b)
|
Represents change resulting from acquisition of RBS Sempra Commodities business in
2010
.
|
(c)
|
At
December 31, 2011
and
2010
, approximately
$426 million
and
$385 million
, respectively, of U.S. plan assets included participation rights under participating annuity contracts.
|
(d)
|
At
December 31, 2011
and
2010
, defined benefit pension plan amounts not measured at fair value included
$50 million
and
$52 million
, respectively, of accrued receivables, and
$245 million
and
$187 million
, respectively, of accrued liabilities, for U.S. plans; and
$56 million
and
$9 million
, respectively, of accrued receivables , and at December 31, 2011,
$69 million
of accrued liabilities, for non-U.S. plans.
|
(e)
|
Does not include any amounts attributable to the Washington Mutual Qualified Pension plan. The disposition of this plan remained subject to litigation and was not determinable at December 31, 2011 and 2010.
|
(f)
|
Includes an unfunded accumulated postretirement benefit obligation of
$33 million
and
$36 million
at
December 31, 2011
and
2010
, respectively, for the U.K. plan.
|
214
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
Defined benefit pension plans
|
|
|
||||||||||||||||||||
December 31,
|
U.S.
|
|
Non-U.S.
|
|
OPEB plans
|
||||||||||||||||||
(in millions)
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||||||
Net gain/(loss)
|
$
|
(3,669
|
)
|
|
$
|
(2,627
|
)
|
|
$
|
(544
|
)
|
|
$
|
(566
|
)
|
|
$
|
(176
|
)
|
|
$
|
(119
|
)
|
Prior service credit/(cost)
|
278
|
|
|
321
|
|
|
12
|
|
|
13
|
|
|
1
|
|
|
9
|
|
||||||
Accumulated other comprehensive income/(loss), pretax, end of year
|
$
|
(3,391
|
)
|
|
$
|
(2,306
|
)
|
|
$
|
(532
|
)
|
|
$
|
(553
|
)
|
|
$
|
(175
|
)
|
|
$
|
(110
|
)
|
|
Pension plans
|
|
|
|
|
||||||||||||||||||||||||
|
U.S.
|
|
Non-U.S.
|
|
OPEB plans
|
||||||||||||||||||||||||
Year ended December 31, (in millions)
|
2011
|
|
2010
|
|
2009
|
|
|
2011
|
|
2010
|
|
2009
|
|
|
2011
|
|
2010
|
|
2009
|
|
|||||||||
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Benefits earned during the year
|
$
|
249
|
|
$
|
230
|
|
$
|
313
|
|
|
$
|
36
|
|
$
|
31
|
|
$
|
28
|
|
|
$
|
1
|
|
$
|
2
|
|
$
|
3
|
|
Interest cost on benefit obligations
|
451
|
|
468
|
|
514
|
|
|
133
|
|
128
|
|
122
|
|
|
51
|
|
55
|
|
65
|
|
|||||||||
Expected return on plan assets
|
(791
|
)
|
(742
|
)
|
(585
|
)
|
|
(141
|
)
|
(126
|
)
|
(115
|
)
|
|
(88
|
)
|
(96
|
)
|
(97
|
)
|
|||||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net (gain)/loss
|
165
|
|
225
|
|
304
|
|
|
48
|
|
56
|
|
44
|
|
|
1
|
|
(1
|
)
|
—
|
|
|||||||||
Prior service cost/(credit)
|
(43
|
)
|
(43
|
)
|
4
|
|
|
(1
|
)
|
(1
|
)
|
—
|
|
|
(8
|
)
|
(13
|
)
|
(14
|
)
|
|||||||||
Curtailment (gain)/loss
|
—
|
|
—
|
|
1
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
5
|
|
|||||||||
Settlement (gain)/loss
|
—
|
|
—
|
|
—
|
|
|
—
|
|
1
|
|
1
|
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Special termination benefits
|
—
|
|
—
|
|
—
|
|
|
—
|
|
1
|
|
1
|
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Net periodic defined benefit cost
|
31
|
|
138
|
|
551
|
|
|
75
|
|
90
|
|
81
|
|
|
(43
|
)
|
(53
|
)
|
(38
|
)
|
|||||||||
Other defined benefit pension plans
(a)
|
19
|
|
14
|
|
15
|
|
|
12
|
|
11
|
|
12
|
|
|
NA
|
|
NA
|
|
NA
|
|
|||||||||
Total defined benefit plans
|
50
|
|
152
|
|
566
|
|
|
87
|
|
101
|
|
93
|
|
|
(43
|
)
|
(53
|
)
|
(38
|
)
|
|||||||||
Total defined contribution plans
|
370
|
|
332
|
|
359
|
|
|
285
|
|
251
|
|
226
|
|
|
NA
|
|
NA
|
|
NA
|
|
|||||||||
Total pension and OPEB cost included in compensation expense
|
$
|
420
|
|
$
|
484
|
|
$
|
925
|
|
|
$
|
372
|
|
$
|
352
|
|
$
|
319
|
|
|
$
|
(43
|
)
|
$
|
(53
|
)
|
$
|
(38
|
)
|
Changes in plan assets and benefit obligations recognized in other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net (gain)/loss arising during the year
|
1,207
|
|
(187
|
)
|
(168
|
)
|
|
25
|
|
(21
|
)
|
183
|
|
|
58
|
|
(54
|
)
|
(176
|
)
|
|||||||||
Prior service credit arising during the year
|
—
|
|
—
|
|
(384
|
)
|
|
—
|
|
(10
|
)
|
(1
|
)
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Amortization of net loss
|
(165
|
)
|
(225
|
)
|
(304
|
)
|
|
(48
|
)
|
(56
|
)
|
(44
|
)
|
|
(1
|
)
|
1
|
|
—
|
|
|||||||||
Amortization of prior service (cost)/credit
|
43
|
|
43
|
|
(6
|
)
|
|
1
|
|
1
|
|
—
|
|
|
8
|
|
13
|
|
15
|
|
|||||||||
Curtailment (gain)/loss
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
2
|
|
|||||||||
Settlement loss/(gain)
|
—
|
|
—
|
|
—
|
|
|
—
|
|
(1
|
)
|
(1
|
)
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Foreign exchange impact and other
|
—
|
|
—
|
|
18
|
|
|
1
|
|
(23
|
)
|
36
|
|
|
—
|
|
1
|
|
(1
|
)
|
|||||||||
Total recognized in other comprehensive income
|
1,085
|
|
(369
|
)
|
(844
|
)
|
|
(21
|
)
|
(110
|
)
|
173
|
|
|
65
|
|
(39
|
)
|
(160
|
)
|
|||||||||
Total recognized in net periodic benefit cost and other comprehensive income
|
$
|
1,116
|
|
$
|
(231
|
)
|
$
|
(293
|
)
|
|
$
|
54
|
|
$
|
(20
|
)
|
$
|
254
|
|
|
$
|
22
|
|
$
|
(92
|
)
|
$
|
(198
|
)
|
(a)
|
Includes various defined benefit pension plans which are individually immaterial.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
215
|
|
|
Defined benefit pension plans
|
|
OPEB plans
|
||||||||||||
(in millions)
|
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
||||||||
Net loss
|
|
$
|
287
|
|
|
$
|
36
|
|
|
$
|
7
|
|
|
$
|
—
|
|
Prior service cost/(credit)
|
|
(41
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
||||
Total
|
|
$
|
246
|
|
|
$
|
35
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
U.S.
|
|
Non-U.S.
|
|||||||||||
Year ended December 31,
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
2011
|
|
2010
|
|
2009
|
Actual rate of return:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Defined benefit pension plans
|
0.72
|
%
|
|
12.23
|
%
|
|
13.78
|
%
|
|
(4.29)-13.12%
|
|
0.77-10.65%
|
|
3.17-22.43%
|
OPEB plans
|
5.22
|
%
|
|
11.23
|
%
|
|
15.93
|
%
|
|
NA
|
|
NA
|
|
NA
|
216
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Weighted-average assumptions used to determine net periodic benefit costs
|
|
|
|
|
|
|
|||||||||||
|
U.S.
|
|
Non-U.S.
|
||||||||||||||
Year ended December 31,
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
Discount rate:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Defined benefit pension plans
|
5.50
|
%
|
|
6.00
|
%
|
|
6.65
|
%
|
|
1.60-5.50%
|
|
|
2.00–5.70%
|
|
|
2.00–6.20%
|
|
OPEB plans
|
5.50
|
|
|
6.00
|
|
|
6.70
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Expected long-term rate of return on plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Defined benefit pension plans
|
7.50
|
|
|
7.50
|
|
|
7.50
|
|
|
2.40-5.40
|
|
|
2.40–6.20
|
|
|
2.50–6.90
|
|
OPEB plans
|
6.25
|
|
|
7.00
|
|
|
7.00
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
Rate of compensation increase
|
4.00
|
|
|
4.00
|
|
|
4.00
|
|
|
3.00-4.50
|
|
|
3.00–4.50
|
|
|
3.00–4.00
|
|
Health care cost trend rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Assumed for next year
|
7.00
|
|
|
7.75
|
|
|
8.50
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Ultimate
|
5.00
|
|
|
5.00
|
|
|
5.00
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Year when rate will reach ultimate
|
2017
|
|
|
2014
|
|
|
2014
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Year ended December 31, 2011(in millions)
|
1-Percentage point increase
|
|
1-Percentage point decrease
|
||||
Effect on total service and interest cost
|
$
|
1
|
|
|
$
|
(1
|
)
|
Effect on accumulated postretirement benefit obligation
|
27
|
|
|
(24
|
)
|
JPMorgan Chase & Co./2011 Annual Report
|
|
217
|
|
Defined benefit pension plans
|
|
|
||||||||||||||||||||||
|
U.S.
|
|
Non-U.S.
|
|
OPEB plans
(c)
|
||||||||||||||||||||
|
Target
|
|
% of plan assets
|
|
Target
|
|
% of plan assets
|
|
Target
|
|
% of plan assets
|
||||||||||||||
December 31,
|
Allocation
|
|
2011
|
|
|
2010
|
|
|
Allocation
|
|
2011
|
|
|
2010
|
|
|
Allocation
|
|
2011
|
|
|
2010
|
|
||
Asset category
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Debt securities
(a)
|
10–30%
|
|
20
|
%
|
|
29
|
%
|
|
72
|
%
|
|
74
|
%
|
|
71
|
%
|
|
50
|
%
|
|
50
|
%
|
|
50
|
%
|
Equity securities
|
25–60
|
|
39
|
|
|
40
|
|
|
27
|
|
|
25
|
|
|
28
|
|
|
50
|
|
|
50
|
|
|
50
|
|
Real estate
|
5–20
|
|
5
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Alternatives
(b)
|
15–50
|
|
36
|
|
|
27
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
100%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
(a)
|
Debt securities primarily include corporate debt, U.S. federal, state, local and non-U.S. government, and mortgage-backed securities.
|
(b)
|
Alternatives primarily include limited partnerships.
|
(c)
|
Represents the U.S. OPEB plan only, as the U.K. OPEB plan is unfunded.
|
218
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
219
|
|
U.S. defined benefit pension plans
|
|
Non-U.S. defined benefit pension plans
|
||||||||||||||||||||||||||||
December 31, 2010
(in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total fair value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total fair value
|
||||||||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
81
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
81
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Capital equipment
|
748
|
|
|
9
|
|
|
—
|
|
|
757
|
|
|
68
|
|
|
13
|
|
|
—
|
|
|
81
|
|
||||||||
Consumer goods
|
712
|
|
|
—
|
|
|
—
|
|
|
712
|
|
|
75
|
|
|
21
|
|
|
—
|
|
|
96
|
|
||||||||
Banks and finance companies
|
414
|
|
|
1
|
|
|
—
|
|
|
415
|
|
|
113
|
|
|
9
|
|
|
—
|
|
|
122
|
|
||||||||
Business services
|
444
|
|
|
—
|
|
|
—
|
|
|
444
|
|
|
53
|
|
|
10
|
|
|
—
|
|
|
63
|
|
||||||||
Energy
|
195
|
|
|
—
|
|
|
—
|
|
|
195
|
|
|
59
|
|
|
6
|
|
|
—
|
|
|
65
|
|
||||||||
Materials
|
205
|
|
|
—
|
|
|
—
|
|
|
205
|
|
|
50
|
|
|
13
|
|
|
—
|
|
|
63
|
|
||||||||
Real estate
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||||
Other
|
857
|
|
|
6
|
|
|
—
|
|
|
863
|
|
|
194
|
|
|
16
|
|
|
—
|
|
|
210
|
|
||||||||
Total equity securities
|
3,596
|
|
|
16
|
|
|
—
|
|
|
3,612
|
|
|
613
|
|
|
88
|
|
|
—
|
|
|
701
|
|
||||||||
Common/collective trust funds
(a)(b)
|
436
|
|
|
1,263
|
|
|
194
|
|
|
1,893
|
|
|
46
|
|
|
180
|
|
|
—
|
|
|
226
|
|
||||||||
Limited partnerships:
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Hedge funds
|
—
|
|
|
959
|
|
|
1,160
|
|
|
2,119
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Private equity
|
—
|
|
|
—
|
|
|
1,232
|
|
|
1,232
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Real estate
|
—
|
|
|
—
|
|
|
304
|
|
|
304
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Real assets
(d)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total limited partnerships
|
—
|
|
|
959
|
|
|
2,696
|
|
|
3,655
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Corporate debt securities
(e)
|
—
|
|
|
424
|
|
|
1
|
|
|
425
|
|
|
—
|
|
|
718
|
|
|
—
|
|
|
718
|
|
||||||||
U.S. federal, state, local and non-U.S. government debt securities
|
—
|
|
|
453
|
|
|
—
|
|
|
453
|
|
|
—
|
|
|
864
|
|
|
—
|
|
|
864
|
|
||||||||
Mortgage-backed securities
|
188
|
|
|
55
|
|
|
—
|
|
|
243
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||||
Derivative receivables
|
2
|
|
|
194
|
|
|
—
|
|
|
196
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||||
Other
(f)
|
218
|
|
|
58
|
|
|
387
|
|
|
663
|
|
|
18
|
|
|
51
|
|
|
—
|
|
|
69
|
|
||||||||
Total assets measured at fair value
(g)(h)
|
$
|
4,440
|
|
|
$
|
3,422
|
|
|
$
|
3,278
|
|
|
$
|
11,140
|
|
|
$
|
759
|
|
|
$
|
1,904
|
|
|
$
|
—
|
|
|
$
|
2,663
|
|
Derivative payables
|
—
|
|
|
(177
|
)
|
|
—
|
|
|
(177
|
)
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
(25
|
)
|
||||||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
(177
|
)
|
|
$
|
—
|
|
|
$
|
(177
|
)
|
(i)
|
$
|
—
|
|
|
$
|
(25
|
)
|
|
$
|
—
|
|
|
$
|
(25
|
)
|
(a)
|
At
December 31, 2011
and
2010
, common/collective trust funds generally include commingled funds that primarily included
23%
and
22%
, respectively, of short-term investment funds;
19%
and
21%
, respectively, of equity (index) investments; and
19%
and
16%
, respectively, of international investments.
|
(b)
|
The prior period has been revised to consider redemption notification periods, in determining the classification of investments within the fair value hierarchy.
|
(c)
|
Unfunded commitments to purchase limited partnership investments for the Plans were
$1.2 billion
and
$1.1 billion
for 2011 and 2010, respectively.
|
(d)
|
Real assets include investments in productive assets such as agriculture, energy rights, mining and timber properties and exclude raw land to be developed for real estate purposes.
|
(e)
|
Corporate debt securities include debt securities of U.S. and non-U.S. corporations.
|
(f)
|
Other consists of exchange traded funds and participating and non-participating annuity contracts. Exchange traded funds are primarily classified within level 1 of the fair value hierarchy given they are valued using market observable prices. Participating and non-participating annuity contracts are classified within level 3 of the fair value hierarchy due to lack of market mechanisms for transferring each policy and surrender restrictions.
|
(g)
|
At
December 31, 2011
and
2010
, the fair value of investments valued at NAV were
$3.9 billion
and
$4.1 billion
, respectively, which were classified within the valuation hierarchy as follows:
$0.4 billion
and
$0.5 billion
in level 1,
$2.1 billion
and
$2.2 billion
in level 2 and
$1.4 billion
and
$1.4 billion
in level 3.
|
(h)
|
At
December 31, 2011
and
2010
, excluded U.S. defined benefit pension plan receivables for investments sold and dividends and interest receivables of
$50 million
and
$52 million
, respectively; and excluded non-U.S. defined benefit pension plan receivables for dividends and interest receivables of
$56 million
and
$9 million
, respectively.
|
(i)
|
At
December 31, 2011
and
2010
, excluded
$241 million
and
$149 million
, respectively, of U.S. defined benefit pension plan payables for investments purchased; and $
4 million
and
$38 million
, respectively, of other liabilities; and excluded non-U.S. defined benefit pension plan payables for investments purchased of $69 million at December 31, 2011.
|
220
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Year ended December 31, 2010
(in millions)
|
|
Fair value, January 1, 2010
|
|
Actual return on plan assets
|
|
Purchases, sales and settlements, net
|
|
Transfers in and/or out of level 3
|
|
Fair value, December 31, 2010
|
||||||||||||||
Realized gains/(losses)
|
|
Unrealized gains/(losses)
|
||||||||||||||||||||||
U.S. defined benefit pension plans
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Common/collective trust funds
(a)
|
|
284
|
|
|
—
|
|
|
(90
|
)
|
|
—
|
|
|
—
|
|
|
194
|
|
||||||
Limited partnerships:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Hedge funds
|
|
680
|
|
|
(1
|
)
|
|
14
|
|
|
388
|
|
|
79
|
|
|
1,160
|
|
||||||
Private equity
|
|
874
|
|
|
3
|
|
|
108
|
|
|
235
|
|
|
12
|
|
|
1,232
|
|
||||||
Real estate
|
|
196
|
|
|
3
|
|
|
16
|
|
|
89
|
|
|
—
|
|
|
304
|
|
||||||
Real assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total limited partnerships
|
|
1,750
|
|
|
5
|
|
|
138
|
|
|
712
|
|
|
91
|
|
|
2,696
|
|
||||||
Corporate debt securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
Other
|
|
334
|
|
|
—
|
|
|
53
|
|
|
—
|
|
|
—
|
|
|
387
|
|
||||||
Total U.S. plans
|
|
$
|
2,368
|
|
|
$
|
5
|
|
|
$
|
101
|
|
|
$
|
712
|
|
|
$
|
92
|
|
|
$
|
3,278
|
|
Non-U.S. defined benefit pension plans
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(12
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Total non-U.S. plans
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(12
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
OPEB plans
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
COLI
|
|
$
|
1,269
|
|
|
$
|
—
|
|
|
$
|
137
|
|
|
$
|
(25
|
)
|
|
$
|
—
|
|
|
$
|
1,381
|
|
Total OPEB plans
|
|
$
|
1,269
|
|
|
$
|
—
|
|
|
$
|
137
|
|
|
$
|
(25
|
)
|
|
$
|
—
|
|
|
$
|
1,381
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
221
|
Year ended December 31, 2009
(in millions)
|
|
Fair value, January 1, 2009
|
|
Actual return on plan assets
|
|
Purchases, sales and settlements, net
|
|
Transfers in and/or out of level 3
|
|
Fair value, December 31, 2009
|
||||||||||||||
Realized gains/(losses)
|
|
Unrealized gains/(losses)
|
||||||||||||||||||||||
U.S. defined benefit pension plans
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Common/collective trust funds
(a)
|
|
340
|
|
|
—
|
|
|
(56
|
)
|
|
—
|
|
|
—
|
|
|
284
|
|
||||||
Limited partnerships:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Hedge funds
|
|
553
|
|
|
—
|
|
|
136
|
|
|
(9
|
)
|
|
—
|
|
|
680
|
|
||||||
Private equity
|
|
810
|
|
|
—
|
|
|
(1
|
)
|
|
80
|
|
|
(15
|
)
|
|
874
|
|
||||||
Real estate
|
|
203
|
|
|
—
|
|
|
(107
|
)
|
|
100
|
|
|
—
|
|
|
196
|
|
||||||
Real assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total limited partnerships
|
|
1,566
|
|
|
—
|
|
|
28
|
|
|
171
|
|
|
(15
|
)
|
|
1,750
|
|
||||||
Corporate debt securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other
|
|
315
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
334
|
|
||||||
Total U.S. plans
|
|
$
|
2,221
|
|
|
$
|
—
|
|
|
$
|
(9
|
)
|
|
$
|
171
|
|
|
$
|
(15
|
)
|
|
$
|
2,368
|
|
Non-U.S. defined benefit pension plans
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13
|
|
Total non-U.S. plans
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13
|
|
OPEB plans
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
COLI
|
|
$
|
1,126
|
|
|
$
|
—
|
|
|
$
|
172
|
|
|
$
|
(29
|
)
|
|
$
|
—
|
|
|
$
|
1,269
|
|
Total OPEB plans
|
|
$
|
1,126
|
|
|
$
|
—
|
|
|
$
|
172
|
|
|
$
|
(29
|
)
|
|
$
|
—
|
|
|
$
|
1,269
|
|
(a)
|
The prior period has been revised to consider redemption notification periods in determining the classification of investments within the fair value hierarchy.
|
Year ended December 31,
(in millions)
|
|
U.S. defined benefit pension plans
|
|
Non-U.S. defined benefit pension plans
|
|
OPEB before Medicare Part D subsidy
|
|
Medicare Part D subsidy
|
||||||||
2012
|
|
$
|
1,038
|
|
|
$
|
95
|
|
|
$
|
96
|
|
|
$
|
11
|
|
2013
|
|
1,035
|
|
|
99
|
|
|
95
|
|
|
12
|
|
||||
2014
|
|
610
|
|
|
101
|
|
|
94
|
|
|
13
|
|
||||
2015
|
|
610
|
|
|
110
|
|
|
92
|
|
|
14
|
|
||||
2016
|
|
613
|
|
|
116
|
|
|
90
|
|
|
14
|
|
||||
Years 2017–2021
|
|
3,084
|
|
|
658
|
|
|
404
|
|
|
80
|
|
222
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
|
RSUs
|
|
Options/SARs
|
|||||||||||||
Year ended December 31, 2011
|
|
Number of
shares
|
Weighted-average grant
date fair value
|
|
Number of awards
|
Weighted-average exercise price
|
|
Weighted-average remaining contractual life (in years)
|
Aggregate intrinsic value
|
||||||||
(in thousands, except weighted-average data, and where otherwise stated)
|
|
|
|
||||||||||||||
Outstanding, January 1
|
|
234,121
|
|
$
|
30.45
|
|
|
234,527
|
|
$
|
43.33
|
|
|
|
|
||
Granted
|
|
59,697
|
|
44.05
|
|
|
15,300
|
|
44.27
|
|
|
|
|
||||
Exercised or vested
|
|
(121,699
|
)
|
26.95
|
|
|
(15,409
|
)
|
32.27
|
|
|
|
|
||||
Forfeited
|
|
(5,488
|
)
|
37.05
|
|
|
(4,168
|
)
|
39.56
|
|
|
|
|
||||
Canceled
|
|
NA
|
|
NA
|
|
|
(74,489
|
)
|
51.77
|
|
|
|
|
||||
Outstanding, December 31
|
|
166,631
|
|
$
|
37.65
|
|
|
155,761
|
|
$
|
40.58
|
|
|
4.6
|
$
|
419,887
|
|
Exercisable, December 31
|
|
NA
|
|
NA
|
|
|
106,335
|
|
41.89
|
|
|
3.1
|
260,309
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
223
|
Year ended December 31, (in millions)
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Cost of prior grants of RSUs and SARs that are amortized over their applicable vesting periods
|
|
$
|
1,986
|
|
|
$
|
2,479
|
|
|
$
|
2,510
|
|
Accrual of estimated costs of RSUs and SARs to be granted in future periods including those to full-career eligible employees
|
|
689
|
|
|
772
|
|
|
845
|
|
|||
Total noncash compensation expense related to employee stock-based incentive plans
|
|
$
|
2,675
|
|
|
$
|
3,251
|
|
|
$
|
3,355
|
|
Year ended December 31, (in millions)
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Cash received for options exercised
|
|
$
|
354
|
|
|
$
|
205
|
|
|
$
|
437
|
|
Tax benefit realized
(a)
|
|
31
|
|
|
14
|
|
|
11
|
|
(a)
|
The tax benefit realized from dividends or dividend equivalents paid on equity-classified share-based payment awards that are charged to retained earnings are recorded as an increase to additional paid-in capital and included in the pool of excess tax benefits available to absorb tax deficiencies on share-based payment awards.
|
Year ended December 31,
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
Weighted-average annualized valuation assumptions
|
|
|
|
|
|
|
|||
Risk-free interest rate
|
|
2.58
|
%
|
|
3.89
|
%
|
|
2.33
|
%
|
Expected dividend yield
(a)
|
|
2.20
|
|
|
3.13
|
|
|
3.40
|
|
Expected common stock price volatility
|
|
34
|
|
|
37
|
|
|
56
|
|
Expected life (in years)
|
|
6.5
|
|
|
6.4
|
|
|
6.6
|
|
(a)
|
In
2011
, the expected dividend yield was determined using forward-looking assumptions. In
2010
and
2009
the expected dividend yield was determined using historical dividend yields.
|
Year ended December 31, (in millions)
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|||
Compensation expense
(a)
|
$
|
29,037
|
|
|
$
|
28,124
|
|
|
$
|
26,928
|
|
|
Noncompensation expense:
|
|
|
|
|
|
|
|
|||||
Occupancy expense
|
3,895
|
|
|
3,681
|
|
|
3,666
|
|
|
|||
Technology, communications and equipment expense
|
4,947
|
|
|
4,684
|
|
|
4,624
|
|
|
|||
Professional and outside services
|
7,482
|
|
|
6,767
|
|
|
6,232
|
|
|
|||
Marketing
|
3,143
|
|
|
2,446
|
|
|
1,777
|
|
|
|||
Other expense
(b)(c)
|
13,559
|
|
|
14,558
|
|
|
7,594
|
|
|
|||
Amortization of intangibles
|
848
|
|
|
936
|
|
|
1,050
|
|
|
|||
Total noncompensation expense
|
33,874
|
|
|
33,072
|
|
|
24,943
|
|
|
|||
Merger costs
|
—
|
|
|
—
|
|
|
481
|
|
(d)
|
|||
Total noninterest expense
|
$
|
62,911
|
|
|
$
|
61,196
|
|
|
$
|
52,352
|
|
|
(a)
|
Expense for
2010
includes a payroll tax expense related to the United Kingdom (“U.K.”) Bank Payroll Tax on certain compensation awarded from December 9, 2009, to April 5, 2010, to relevant banking employees.
|
(b)
|
Included litigation expense of
$4.9 billion
,
$7.4 billion
and
$161 million
for the years ended
December 31, 2011
,
2010
and
2009
, respectively.
|
(c)
|
Included foreclosed property expense of
$718 million
,
$1.0 billion
and
$1.4 billion
for the years ended
December 31, 2011
,
2010
and
2009
, respectively.
|
(d)
|
Total merger-related costs for the year ended
December 31, 2009
, were comprised of
$247 million
in compensation costs,
$12 million
in occupancy costs, and
$222 million
in technology and communications and other costs.
|
224
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Year ended December 31,
(in millions)
|
2011
|
|
2010
|
|
2009
|
|
|||
Realized gains
|
$
|
1,811
|
|
$
|
3,382
|
|
$
|
2,268
|
|
Realized losses
|
(142
|
)
|
(317
|
)
|
(580
|
)
|
|||
Net realized gains
(a)
|
1,669
|
|
3,065
|
|
1,688
|
|
|||
Credit losses included in securities gains
(b)
|
(76
|
)
|
(100
|
)
|
(578
|
)
|
|||
Net securities gains
|
$
|
1,593
|
|
$
|
2,965
|
|
$
|
1,110
|
|
(a)
|
Proceeds from securities sold were within approximately
4%
of amortized cost in
2011
, and within approximately
3%
of amortized cost in
2010
and
2009
.
|
(b)
|
Includes other-than-temporary impairment losses recognized in income on certain prime mortgage-backed securities for the year ended
December 31, 2011
; certain prime mortgage-backed securities and obligations of U.S. states and municipalities for the year ended
December 31, 2010
; and certain prime and subprime mortgage-backed securities and obligations of U.S. states and municipalities for the year ended
December 31, 2009
.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
225
|
|
2011
|
|
2010
|
||||||||||||||||||||||||
December 31, (in millions)
|
Amortized cost
|
Gross unrealized gains
|
Gross unrealized losses
|
Fair
value
|
|
Amortized cost
|
Gross unrealized gains
|
Gross unrealized losses
|
Fair
value
|
||||||||||||||||||
Available-for-sale debt securities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. government agencies
(a)
|
$
|
101,968
|
|
$
|
5,141
|
|
$
|
2
|
|
|
$
|
107,107
|
|
|
$
|
117,364
|
|
$
|
3,159
|
|
$
|
297
|
|
|
$
|
120,226
|
|
Residential:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Prime and Alt-A
|
2,170
|
|
54
|
|
218
|
|
(c)
|
2,006
|
|
|
2,173
|
|
81
|
|
250
|
|
(c)
|
2,004
|
|
||||||||
Subprime
|
1
|
|
—
|
|
—
|
|
|
1
|
|
|
1
|
|
—
|
|
—
|
|
|
1
|
|
||||||||
Non-U.S.
|
66,067
|
|
170
|
|
687
|
|
|
65,550
|
|
|
47,089
|
|
290
|
|
409
|
|
|
46,970
|
|
||||||||
Commercial
|
10,632
|
|
650
|
|
53
|
|
|
11,229
|
|
|
5,169
|
|
502
|
|
17
|
|
|
5,654
|
|
||||||||
Total mortgage-backed securities
|
180,838
|
|
6,015
|
|
960
|
|
|
185,893
|
|
|
171,796
|
|
4,032
|
|
973
|
|
|
174,855
|
|
||||||||
U.S. Treasury and government agencies
(a)
|
8,184
|
|
169
|
|
2
|
|
|
8,351
|
|
|
11,258
|
|
118
|
|
28
|
|
|
11,348
|
|
||||||||
Obligations of U.S. states and municipalities
|
15,404
|
|
1,184
|
|
48
|
|
|
16,540
|
|
|
11,732
|
|
165
|
|
338
|
|
|
11,559
|
|
||||||||
Certificates of deposit
|
3,017
|
|
—
|
|
—
|
|
|
3,017
|
|
|
3,648
|
|
1
|
|
2
|
|
|
3,647
|
|
||||||||
Non-U.S. government debt securities
|
44,944
|
|
402
|
|
81
|
|
|
45,265
|
|
|
20,614
|
|
191
|
|
28
|
|
|
20,777
|
|
||||||||
Corporate debt securities
(b)
|
63,607
|
|
216
|
|
1,647
|
|
|
62,176
|
|
|
61,717
|
|
495
|
|
419
|
|
|
61,793
|
|
||||||||
Asset-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Credit card receivables
|
4,506
|
|
149
|
|
—
|
|
|
4,655
|
|
|
7,278
|
|
335
|
|
5
|
|
|
7,608
|
|
||||||||
Collateralized loan obligations
|
24,474
|
|
553
|
|
166
|
|
|
24,861
|
|
|
13,336
|
|
472
|
|
210
|
|
|
13,598
|
|
||||||||
Other
|
11,273
|
|
102
|
|
57
|
|
|
11,318
|
|
|
8,968
|
|
130
|
|
16
|
|
|
9,082
|
|
||||||||
Total available-for-sale debt securities
|
356,247
|
|
8,790
|
|
2,961
|
|
(c)
|
362,076
|
|
|
310,347
|
|
5,939
|
|
2,019
|
|
(c)
|
314,267
|
|
||||||||
Available-for-sale equity securities
|
2,693
|
|
14
|
|
2
|
|
|
2,705
|
|
|
1,894
|
|
163
|
|
6
|
|
|
2,051
|
|
||||||||
Total available-for-sale securities
|
$
|
358,940
|
|
$
|
8,804
|
|
$
|
2,963
|
|
(c)
|
$
|
364,781
|
|
|
$
|
312,241
|
|
$
|
6,102
|
|
$
|
2,025
|
|
(c)
|
$
|
316,318
|
|
Total held-to-maturity securities
|
$
|
12
|
|
$
|
1
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
18
|
|
$
|
2
|
|
$
|
—
|
|
|
$
|
20
|
|
(a)
|
Includes total U.S. government-sponsored enterprise obligations with fair values of
$89.3 billion
and
$94.2 billion
at
December 31, 2011
and
2010
, respectively, which were predominantly mortgage-related.
|
(b)
|
Consists primarily of bank debt including sovereign government-guaranteed bank debt.
|
(c)
|
Includes a total of
$91 million
and
$133 million
(pretax) of unrealized losses related to prime mortgage-backed securities for which credit losses have been recognized in income at
December 31, 2011
and
2010
, respectively. These unrealized losses are not credit-related and remain reported in AOCI.
|
226
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
Securities with gross unrealized losses
|
||||||||||||||||||
|
Less than 12 months
|
|
12 months or more
|
|
|
||||||||||||||
December 31, 2011
(in millions)
|
Fair value
|
Gross unrealized losses
|
|
Fair value
|
Gross unrealized losses
|
Total fair value
|
Total gross unrealized losses
|
||||||||||||
Available-for-sale debt securities
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||||||
U.S. government agencies
|
$
|
2,724
|
|
$
|
2
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,724
|
|
$
|
2
|
|
Residential:
|
|
|
|
|
|
|
|
||||||||||||
Prime and Alt-A
|
649
|
|
12
|
|
|
970
|
|
206
|
|
1,619
|
|
218
|
|
||||||
Subprime
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Non-U.S.
|
30,500
|
|
266
|
|
|
25,176
|
|
421
|
|
55,676
|
|
687
|
|
||||||
Commercial
|
837
|
|
53
|
|
|
—
|
|
—
|
|
837
|
|
53
|
|
||||||
Total mortgage-backed securities
|
34,710
|
|
333
|
|
|
26,146
|
|
627
|
|
60,856
|
|
960
|
|
||||||
U.S. Treasury and government agencies
|
3,369
|
|
2
|
|
|
—
|
|
—
|
|
3,369
|
|
2
|
|
||||||
Obligations of U.S. states and municipalities
|
147
|
|
42
|
|
|
40
|
|
6
|
|
187
|
|
48
|
|
||||||
Certificates of deposit
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Non-U.S. government debt securities
|
11,901
|
|
66
|
|
|
1,286
|
|
15
|
|
13,187
|
|
81
|
|
||||||
Corporate debt securities
|
22,230
|
|
901
|
|
|
9,585
|
|
746
|
|
31,815
|
|
1,647
|
|
||||||
Asset-backed securities:
|
|
|
|
|
|
|
|
||||||||||||
Credit card receivables
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Collateralized loan obligations
|
5,610
|
|
49
|
|
|
3,913
|
|
117
|
|
9,523
|
|
166
|
|
||||||
Other
|
4,735
|
|
40
|
|
|
1,185
|
|
17
|
|
5,920
|
|
57
|
|
||||||
Total available-for-sale debt securities
|
82,702
|
|
1,433
|
|
|
42,155
|
|
1,528
|
|
124,857
|
|
2,961
|
|
||||||
Available-for-sale equity securities
|
338
|
|
2
|
|
|
—
|
|
—
|
|
338
|
|
2
|
|
||||||
Total securities with gross unrealized losses
|
$
|
83,040
|
|
$
|
1,435
|
|
|
$
|
42,155
|
|
$
|
1,528
|
|
$
|
125,195
|
|
$
|
2,963
|
|
|
Securities with gross unrealized losses
|
||||||||||||||||||
|
Less than 12 months
|
|
12 months or more
|
|
|
||||||||||||||
December 31, 2010 (in millions)
|
Fair value
|
Gross unrealized losses
|
|
Fair value
|
Gross unrealized losses
|
Total fair value
|
Total gross unrealized losses
|
||||||||||||
Available-for-sale debt securities
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||||||
U.S. government agencies
|
$
|
14,039
|
|
$
|
297
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
14,039
|
|
$
|
297
|
|
Residential:
|
|
|
|
|
|
|
|
||||||||||||
Prime and Alt-A
|
—
|
|
—
|
|
|
1,193
|
|
250
|
|
1,193
|
|
250
|
|
||||||
Subprime
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Non-U.S.
|
35,166
|
|
379
|
|
|
1,080
|
|
30
|
|
36,246
|
|
409
|
|
||||||
Commercial
|
548
|
|
14
|
|
|
11
|
|
3
|
|
559
|
|
17
|
|
||||||
Total mortgage-backed securities
|
49,753
|
|
690
|
|
|
2,284
|
|
283
|
|
52,037
|
|
973
|
|
||||||
U.S. Treasury and government agencies
|
921
|
|
28
|
|
|
—
|
|
—
|
|
921
|
|
28
|
|
||||||
Obligations of U.S. states and municipalities
|
6,890
|
|
330
|
|
|
20
|
|
8
|
|
6,910
|
|
338
|
|
||||||
Certificates of deposit
|
1,771
|
|
2
|
|
|
—
|
|
—
|
|
1,771
|
|
2
|
|
||||||
Non-U.S. government debt securities
|
6,960
|
|
28
|
|
|
—
|
|
—
|
|
6,960
|
|
28
|
|
||||||
Corporate debt securities
|
18,783
|
|
418
|
|
|
90
|
|
1
|
|
18,873
|
|
419
|
|
||||||
Asset-backed securities:
|
|
|
|
|
|
|
|
||||||||||||
Credit card receivables
|
—
|
|
—
|
|
|
345
|
|
5
|
|
345
|
|
5
|
|
||||||
Collateralized loan obligations
|
460
|
|
10
|
|
|
6,321
|
|
200
|
|
6,781
|
|
210
|
|
||||||
Other
|
2,615
|
|
9
|
|
|
32
|
|
7
|
|
2,647
|
|
16
|
|
||||||
Total available-for-sale debt securities
|
88,153
|
|
1,515
|
|
|
9,092
|
|
504
|
|
97,245
|
|
2,019
|
|
||||||
Available-for-sale equity securities
|
—
|
|
—
|
|
|
2
|
|
6
|
|
2
|
|
6
|
|
||||||
Total securities with gross unrealized losses
|
$
|
88,153
|
|
$
|
1,515
|
|
|
$
|
9,094
|
|
$
|
510
|
|
$
|
97,247
|
|
$
|
2,025
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
227
|
Year ended December 31,
(in millions)
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Debt securities the Firm does not intend to sell that have credit losses
|
|
|
|
|
|
|
||||||
Total other-than-temporary impairment losses
(a)
|
|
$
|
(27
|
)
|
|
$
|
(94
|
)
|
|
$
|
(946
|
)
|
Losses recorded in/(reclassified from) other comprehensive income
|
|
(49
|
)
|
|
(6
|
)
|
|
368
|
|
|||
Total credit losses recognized in income
(b)(c)
|
|
$
|
(76
|
)
|
|
$
|
(100
|
)
|
|
$
|
(578
|
)
|
(a)
|
For initial OTTI, represents the excess of the amortized cost over the fair value of AFS debt securities. For subsequent impairments of the same security, represents additional declines in fair value subsequent to previously recorded OTTI, if applicable.
|
(b)
|
Represents the credit loss component on certain prime mortgage-backed securities for
2011
; certain prime mortgage-backed securities and obligations of U.S. states and municipalities for
2010
; and certain prime and subprime mortgage-backed securities and obligations of U.S. states and municipalities for
2009
that the Firm does not intend to sell. Subsequent credit losses may be recorded on securities without a corresponding further decline in fair value if there has been a decline in expected cash flows.
|
(c)
|
Excluded from this table are OTTI losses of
$7 million
that were recognized in income in 2009, related to subprime mortgage-backed debt securities the Firm intended to sell. These securities were sold in
2009
, resulting in the recognition of a recovery of
$1 million
.
|
Year ended December 31, (in millions)
|
2011
|
|
2010
|
|
2009
|
|
|||
Balance, beginning of period
|
$
|
632
|
|
$
|
578
|
|
$
|
—
|
|
Additions:
|
|
|
|
||||||
Newly credit-impaired securities
|
4
|
|
—
|
|
578
|
|
|||
Increase in losses on previously credit-impaired securities
|
—
|
|
94
|
|
—
|
|
|||
Losses reclassified from other comprehensive income on previously credit-impaired securities
|
72
|
|
6
|
|
—
|
|
|||
Reductions:
|
|
|
|
||||||
Sales of credit-impaired securities
|
—
|
|
(31
|
)
|
—
|
|
|||
Impact of new accounting guidance related to VIEs
|
—
|
|
(15
|
)
|
—
|
|
|||
Balance, end of period
|
$
|
708
|
|
$
|
632
|
|
$
|
578
|
|
228
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
229
|
By remaining maturity
December 31, 2011
(in millions)
|
Due in one
year or less
|
Due after one year through five years
|
Due after five years through 10 years
|
Due after
10 years
(c)
|
Total
|
||||||||||
Available-for-sale debt securities
|
|
|
|
|
|
||||||||||
Mortgage-backed securities
(a)
|
|
|
|
|
|
||||||||||
Amortized cost
|
$
|
15
|
|
$
|
3,666
|
|
$
|
3,932
|
|
$
|
173,225
|
|
$
|
180,838
|
|
Fair value
|
15
|
|
3,653
|
|
4,073
|
|
178,152
|
|
185,893
|
|
|||||
Average yield
(b)
|
5.04
|
%
|
3.20
|
%
|
3.08
|
%
|
3.64
|
%
|
3.62
|
%
|
|||||
U.S. Treasury and government agencies
(a)
|
|
|
|
|
|
||||||||||
Amortized cost
|
$
|
4,949
|
|
$
|
2,984
|
|
$
|
—
|
|
$
|
251
|
|
$
|
8,184
|
|
Fair value
|
4,952
|
|
3,099
|
|
—
|
|
300
|
|
8,351
|
|
|||||
Average yield
(b)
|
0.58
|
%
|
2.20
|
%
|
—
|
%
|
3.89
|
%
|
1.27
|
%
|
|||||
Obligations of U.S. states and municipalities
|
|
|
|
|
|
||||||||||
Amortized cost
|
$
|
61
|
|
$
|
306
|
|
$
|
1,132
|
|
$
|
13,905
|
|
$
|
15,404
|
|
Fair value
|
62
|
|
326
|
|
1,206
|
|
14,946
|
|
16,540
|
|
|||||
Average yield
(b)
|
3.10
|
%
|
3.66
|
%
|
3.59
|
%
|
4.84
|
%
|
4.72
|
%
|
|||||
Certificates of deposit
|
|
|
|
|
|
||||||||||
Amortized cost
|
$
|
3,017
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3,017
|
|
Fair value
|
3,017
|
|
—
|
|
—
|
|
—
|
|
3,017
|
|
|||||
Average yield
(b)
|
4.33
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
4.33
|
%
|
|||||
Non-U.S. government debt securities
|
|
|
|
|
|
||||||||||
Amortized cost
|
$
|
20,863
|
|
$
|
15,967
|
|
$
|
7,524
|
|
$
|
590
|
|
$
|
44,944
|
|
Fair value
|
20,861
|
|
16,106
|
|
7,700
|
|
598
|
|
45,265
|
|
|||||
Average yield
(b)
|
1.27
|
%
|
2.06
|
%
|
2.86
|
%
|
4.94
|
%
|
1.87
|
%
|
|||||
Corporate debt securities
|
|
|
|
|
|
||||||||||
Amortized cost
|
$
|
22,019
|
|
$
|
30,171
|
|
$
|
11,398
|
|
$
|
19
|
|
$
|
63,607
|
|
Fair value
|
22,091
|
|
29,291
|
|
10,776
|
|
18
|
|
62,176
|
|
|||||
Average yield
(b)
|
2.05
|
%
|
3.09
|
%
|
4.45
|
%
|
5.42
|
%
|
2.97
|
%
|
|||||
Asset-backed securities
|
|
|
|
|
|
||||||||||
Amortized cost
|
$
|
2
|
|
$
|
5,965
|
|
$
|
17,951
|
|
$
|
16,335
|
|
$
|
40,253
|
|
Fair value
|
2
|
|
6,102
|
|
18,287
|
|
16,443
|
|
40,834
|
|
|||||
Average yield
(b)
|
2.28
|
%
|
2.88
|
%
|
2.02
|
%
|
2.51
|
%
|
2.35
|
%
|
|||||
Total available-for-sale debt securities
|
|
|
|
|
|
||||||||||
Amortized cost
|
$
|
50,926
|
|
$
|
59,059
|
|
$
|
41,937
|
|
$
|
204,325
|
|
$
|
356,247
|
|
Fair value
|
51,000
|
|
58,577
|
|
42,042
|
|
210,457
|
|
362,076
|
|
|||||
Average yield
(b)
|
1.73
|
%
|
2.75
|
%
|
2.97
|
%
|
3.64
|
%
|
3.14
|
%
|
|||||
Available-for-sale equity securities
|
|
|
|
|
|
||||||||||
Amortized cost
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,693
|
|
$
|
2,693
|
|
Fair value
|
—
|
|
—
|
|
—
|
|
2,705
|
|
2,705
|
|
|||||
Average yield
(b)
|
—
|
%
|
—
|
%
|
—
|
%
|
0.38
|
%
|
0.38
|
%
|
|||||
Total available-for-sale securities
|
|
|
|
|
|
||||||||||
Amortized cost
|
$
|
50,926
|
|
$
|
59,059
|
|
$
|
41,937
|
|
$
|
207,018
|
|
$
|
358,940
|
|
Fair value
|
51,000
|
|
58,577
|
|
42,042
|
|
213,162
|
|
364,781
|
|
|||||
Average yield
(b)
|
1.73
|
%
|
2.75
|
%
|
2.97
|
%
|
3.60
|
%
|
3.12
|
%
|
|||||
Total held-to-maturity securities
|
|
|
|
|
|
||||||||||
Amortized cost
|
$
|
—
|
|
$
|
8
|
|
$
|
3
|
|
$
|
1
|
|
$
|
12
|
|
Fair value
|
—
|
|
9
|
|
3
|
|
1
|
|
13
|
|
|||||
Average yield
(b)
|
—
|
%
|
6.90
|
%
|
6.76
|
%
|
6.48
|
%
|
6.84
|
%
|
(a)
|
U.S. government agencies and U.S. government-sponsored enterprises were the only issuers whose securities exceeded
10%
of
JPMorgan Chase
’s total stockholders’ equity at
December 31, 2011
.
|
(b)
|
Average yield is computed using the effective yield of each security owned at the end of the period, weighted based on the amortized cost of each security. The effective yield considers the contractual coupon, amortization of premiums and accretion of discounts, and the effect of related hedging derivatives. Taxable-equivalent amounts are used where applicable.
|
(c)
|
Includes securities with no stated maturity. Substantially all of the Firm’s residential mortgage-backed securities and collateralized mortgage obligations are due in
10
years or more, based on contractual maturity. The estimated duration, which reflects anticipated future prepayments based on a consensus of dealers in the market, is approximately
three
years for agency residential mortgage-backed securities,
two
years for agency residential collateralized mortgage obligations and
four
years for nonagency residential collateralized mortgage obligations.
|
230
|
|
JPMorgan Chase & Co./2011 Annual Report
|
December 31,
(in millions)
|
2011
|
|
2010
|
||||||||
Securities purchased under resale agreements
(a)
|
|
$
|
235,000
|
|
|
|
|
$
|
222,302
|
|
|
Securities borrowed
(b)
|
|
142,462
|
|
|
|
|
123,587
|
|
|
||
Securities sold under repurchase agreements
(c)
|
|
$
|
197,789
|
|
|
|
|
$
|
262,722
|
|
|
Securities loaned
|
|
14,214
|
|
|
|
|
10,592
|
|
|
(a)
|
At
December 31, 2011
and
2010
, included resale agreements of
$24.9 billion
and
$20.3 billion
, respectively, accounted for at fair value.
|
(b)
|
At
December 31, 2011
and
2010
, included securities borrowed of
$15.3 billion
and
$14.0 billion
, respectively, accounted for at fair value.
|
(c)
|
At
December 31, 2011
and
2010
, included repurchase agreements of
$9.5 billion
and
$4.1 billion
, respectively, accounted for at fair value.
|
•
|
Originated or purchased loans held-for-investment (i.e., “retained”), other than purchased credit-impaired (“PCI”) loans
|
•
|
Loans held-for-sale
|
•
|
Loans at fair value
|
•
|
PCI loans held-for-investment
|
JPMorgan Chase & Co./2011 Annual Report
|
|
231
|
232
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
233
|
Wholesale
(a)
|
|
Consumer, excluding
credit card
(b)
|
|
Credit card
|
• Commercial and industrial
• Real estate
• Financial institutions
• Government agencies
• Other
|
|
Residential real estate – excluding PCI
• Home equity – senior lien
• Home equity – junior lien
• Prime mortgage, including
option ARMs
• Subprime mortgage
Other consumer loans
• Auto
(c)
• Business banking
(c)
• Student and other
Residential real estate – PCI
• Home equity
• Prime mortgage
• Subprime mortgage
• Option ARMs
|
|
• Chase, excluding accounts
originated by Washington
Mutual
• Accounts originated by
Washington Mutual
|
(a)
|
Includes loans reported in IB, Commercial Banking (“CB”), Treasury & Securities Services (“TSS”), Asset Management (“AM”), and Corporate/Private Equity segments.
|
(b)
|
Includes loans reported in RFS, auto and student loans reported in
Card Services & Auto
(“
Card
”), and residential real estate loans reported in the Corporate/Private Equity and AM segment.
|
(c)
|
Includes auto and business banking risk-rated loans that apply the wholesale methodology for determining the allowance for loan losses; these loans are managed by Card and RFS, respectively, and therefore, for consistency in presentation, are included with the other consumer loan classes.
|
December 31, 2011
(in millions)
|
Wholesale
|
Consumer, excluding
credit card
|
Credit card
|
Total
|
|
||||||||
Retained
|
$
|
278,395
|
|
$
|
308,427
|
|
$
|
132,175
|
|
$
|
718,997
|
|
(a)
|
Held-for-sale
|
2,524
|
|
—
|
|
102
|
|
2,626
|
|
|
||||
At fair value
|
2,097
|
|
—
|
|
—
|
|
2,097
|
|
|
||||
Total
|
$
|
283,016
|
|
$
|
308,427
|
|
$
|
132,277
|
|
$
|
723,720
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2010
(in millions)
|
Wholesale
|
Consumer, excluding
credit card
|
Credit card
|
Total
|
|
||||||||
Retained
|
$
|
222,510
|
|
$
|
327,464
|
|
$
|
135,524
|
|
$
|
685,498
|
|
(a)
|
Held-for-sale
|
3,147
|
|
154
|
|
2,152
|
|
5,453
|
|
|
||||
At fair value
|
1,976
|
|
—
|
|
—
|
|
1,976
|
|
|
||||
Total
|
$
|
227,633
|
|
$
|
327,618
|
|
$
|
137,676
|
|
$
|
692,927
|
|
|
(a)
|
Loans (other than PCI loans and those for which the fair value option has been selected) are presented net of unearned income, unamortized discounts and premiums, and net deferred loan costs of
$2.7 billion
and
$1.9 billion
at
December 31, 2011
and
2010
, respectively.
|
234
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Year ended
December 31, 2011 (in millions) |
|
Wholesale
|
Consumer, excluding credit card
|
Credit card
|
Total
|
||||||||
Purchases
|
|
$
|
906
|
|
$
|
7,525
|
|
$
|
—
|
|
$
|
8,431
|
|
Sales
|
|
3,289
|
|
1,384
|
|
—
|
|
4,673
|
|
||||
Retained loans reclassified to held-for-sale
|
|
538
|
|
—
|
|
2,006
|
|
2,544
|
|
(a)
|
Excludes sales related to loans accounted for at fair value.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
235
|
As of or for the year ended December 31,
(in millions, except ratios)
|
Commercial
and industrial
|
|
Real estate
|
||||||||||
2011
|
2010
|
|
2011
|
2010
|
|||||||||
Loans by risk ratings
|
|
|
|
|
|
||||||||
Investment grade
|
$
|
52,428
|
|
$
|
31,697
|
|
|
$
|
33,920
|
|
$
|
28,504
|
|
Noninvestment grade:
|
|
|
|
|
|
||||||||
Noncriticized
|
38,644
|
|
30,874
|
|
|
15,972
|
|
16,425
|
|
||||
Criticized performing
|
2,254
|
|
2,371
|
|
|
3,906
|
|
5,769
|
|
||||
Criticized nonaccrual
|
889
|
|
1,634
|
|
|
886
|
|
2,937
|
|
||||
Total noninvestment grade
|
41,787
|
|
34,879
|
|
|
20,764
|
|
25,131
|
|
||||
Total retained loans
|
$
|
94,215
|
|
$
|
66,576
|
|
|
$
|
54,684
|
|
$
|
53,635
|
|
% of total criticized to total retained loans
|
3.34
|
%
|
6.02
|
%
|
|
8.76
|
%
|
16.23
|
%
|
||||
% of nonaccrual loans to total retained loans
|
0.94
|
|
2.45
|
|
|
1.62
|
|
5.48
|
|
||||
Loans by geographic distribution
(a)
|
|
|
|
|
|
||||||||
Total non-U.S.
|
$
|
30,813
|
|
$
|
17,731
|
|
|
$
|
1,497
|
|
$
|
1,963
|
|
Total U.S.
|
63,402
|
|
48,845
|
|
|
53,187
|
|
51,672
|
|
||||
Total retained loans
|
$
|
94,215
|
|
$
|
66,576
|
|
|
$
|
54,684
|
|
$
|
53,635
|
|
|
|
|
|
|
|
||||||||
Net charge-offs
|
$
|
124
|
|
$
|
403
|
|
|
$
|
256
|
|
$
|
862
|
|
% of net charge-offs to end-of-period retained loans
|
0.13
|
%
|
0.61
|
%
|
|
0.47
|
%
|
1.61
|
%
|
||||
|
|
|
|
|
|
||||||||
Loan delinquency
(b)
|
|
|
|
|
|
||||||||
Current and less than 30 days past due and still accruing
|
$
|
93,060
|
|
$
|
64,501
|
|
|
$
|
53,387
|
|
$
|
50,299
|
|
30–89 days past due and still accruing
|
266
|
|
434
|
|
|
327
|
|
290
|
|
||||
90 or more days past due and still accruing
(c)
|
—
|
|
7
|
|
|
84
|
|
109
|
|
||||
Criticized nonaccrual
|
889
|
|
1,634
|
|
|
886
|
|
2,937
|
|
||||
Total retained loans
|
$
|
94,215
|
|
$
|
66,576
|
|
|
$
|
54,684
|
|
$
|
53,635
|
|
(a)
|
The U.S. and non-U.S. distribution is determined based predominantly on the domicile of the borrower.
|
(b)
|
The credit quality of wholesale loans is assessed primarily through ongoing review and monitoring of an obligor’s ability to meet contractual obligations rather than relying on the past due status, which is generally a lagging indicator of credit quality. For a discussion of more significant risk factors, see page 235 of this Note.
|
(c)
|
Represents loans that are considered well-collateralized and therefore still accruing interest.
|
(d)
|
Other primarily includes loans to SPEs and loans to private banking clients. See Note 1 on pages 182–183 of this Annual Report for additional information on SPEs.
|
December 31,
(in millions, except ratios)
|
Multifamily
|
|
Commercial lessors
|
||||||||||
2011
|
2010
|
|
2011
|
2010
|
|||||||||
Real estate retained loans
|
$
|
32,524
|
|
$
|
30,604
|
|
|
$
|
14,444
|
|
$
|
15,796
|
|
Criticized exposure
|
2,451
|
|
3,798
|
|
|
1,662
|
|
3,593
|
|
||||
% of criticized exposure to total real estate retained loans
|
7.54
|
%
|
12.41
|
%
|
|
11.51
|
%
|
22.75
|
%
|
||||
Criticized nonaccrual
|
$
|
412
|
|
$
|
1,016
|
|
|
$
|
284
|
|
$
|
1,549
|
|
% of criticized nonaccrual to total real estate retained loans
|
1.27
|
%
|
3.32
|
%
|
|
1.97
|
%
|
9.81
|
%
|
236
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Financial
institutions
|
|
Government agencies
|
|
Other
(d)
|
|
Total
retained loans
|
||||||||||||||||||||
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
$
|
28,804
|
|
$
|
22,525
|
|
|
$
|
7,421
|
|
$
|
6,871
|
|
|
$
|
74,497
|
|
$
|
56,450
|
|
|
$
|
197,070
|
|
$
|
146,047
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
9,132
|
|
8,480
|
|
|
378
|
|
382
|
|
|
7,583
|
|
6,012
|
|
|
71,709
|
|
62,173
|
|
||||||||
246
|
|
317
|
|
|
4
|
|
3
|
|
|
808
|
|
320
|
|
|
7,218
|
|
8,780
|
|
||||||||
37
|
|
136
|
|
|
16
|
|
22
|
|
|
570
|
|
781
|
|
|
2,398
|
|
5,510
|
|
||||||||
9,415
|
|
8,933
|
|
|
398
|
|
407
|
|
|
8,961
|
|
7,113
|
|
|
81,325
|
|
76,463
|
|
||||||||
$
|
38,219
|
|
$
|
31,458
|
|
|
$
|
7,819
|
|
$
|
7,278
|
|
|
$
|
83,458
|
|
$
|
63,563
|
|
|
$
|
278,395
|
|
$
|
222,510
|
|
0.74
|
%
|
1.44
|
%
|
|
0.26
|
%
|
0.34
|
%
|
|
1.65
|
%
|
1.73
|
%
|
|
3.45
|
%
|
6.42
|
%
|
||||||||
0.10
|
|
0.43
|
|
|
0.20
|
|
0.30
|
|
|
0.68
|
|
1.23
|
|
|
0.86
|
|
2.48
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
$
|
29,996
|
|
$
|
19,756
|
|
|
$
|
583
|
|
$
|
870
|
|
|
$
|
32,275
|
|
$
|
25,831
|
|
|
$
|
95,164
|
|
$
|
66,151
|
|
8,223
|
|
11,702
|
|
|
7,236
|
|
6,408
|
|
|
51,183
|
|
37,732
|
|
|
183,231
|
|
156,359
|
|
||||||||
$
|
38,219
|
|
$
|
31,458
|
|
|
$
|
7,819
|
|
$
|
7,278
|
|
|
$
|
83,458
|
|
$
|
63,563
|
|
|
$
|
278,395
|
|
$
|
222,510
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
$
|
(137
|
)
|
$
|
72
|
|
|
$
|
—
|
|
$
|
2
|
|
|
$
|
197
|
|
$
|
388
|
|
|
$
|
440
|
|
$
|
1,727
|
|
(0.36
|
)%
|
0.23
|
%
|
|
—
|
%
|
0.03
|
%
|
|
0.24
|
%
|
0.61
|
%
|
|
0.16
|
%
|
0.78
|
%
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
$
|
38,129
|
|
$
|
31,289
|
|
|
$
|
7,780
|
|
$
|
7,222
|
|
|
$
|
81,802
|
|
$
|
61,837
|
|
|
$
|
274,158
|
|
$
|
215,148
|
|
51
|
|
31
|
|
|
23
|
|
34
|
|
|
1,072
|
|
704
|
|
|
1,739
|
|
1,493
|
|
||||||||
2
|
|
2
|
|
|
—
|
|
—
|
|
|
14
|
|
241
|
|
|
100
|
|
359
|
|
||||||||
37
|
|
136
|
|
|
16
|
|
22
|
|
|
570
|
|
781
|
|
|
2,398
|
|
5,510
|
|
||||||||
$
|
38,219
|
|
$
|
31,458
|
|
|
$
|
7,819
|
|
$
|
7,278
|
|
|
$
|
83,458
|
|
$
|
63,563
|
|
|
$
|
278,395
|
|
$
|
222,510
|
|
Commercial construction and development
|
|
Other
|
|
Total real estate loans
|
|||||||||||||||
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
||||||||||||
$
|
3,148
|
|
$
|
3,395
|
|
|
$
|
4,568
|
|
$
|
3,840
|
|
|
$
|
54,684
|
|
$
|
53,635
|
|
297
|
|
619
|
|
|
382
|
|
696
|
|
|
4,792
|
|
8,706
|
|
||||||
9.43
|
%
|
18.23
|
%
|
|
8.36
|
%
|
18.13
|
%
|
|
8.76
|
%
|
16.23
|
%
|
||||||
$
|
69
|
|
$
|
174
|
|
|
$
|
121
|
|
$
|
198
|
|
|
$
|
886
|
|
$
|
2,937
|
|
2.19
|
%
|
5.13
|
%
|
|
2.65
|
%
|
5.16
|
%
|
|
1.62
|
%
|
5.48
|
%
|
JPMorgan Chase & Co./2011 Annual Report
|
|
237
|
December 31,
(in millions)
|
Commercial
and industrial
|
|
Real estate
|
|
Financial
institutions
|
|
Government
agencies
|
|
Other
|
|
Total
retained loans
|
||||||||||||||||||||||||||||||
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|||||||||||||||||||||||||
Impaired loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
With an allowance
|
$
|
828
|
|
$
|
1,512
|
|
|
$
|
621
|
|
$
|
2,510
|
|
|
$
|
21
|
|
$
|
127
|
|
|
$
|
16
|
|
$
|
22
|
|
|
$
|
473
|
|
$
|
697
|
|
|
$
|
1,959
|
|
$
|
4,868
|
|
Without an allowance
(a)
|
177
|
|
157
|
|
|
292
|
|
445
|
|
|
18
|
|
8
|
|
|
—
|
|
—
|
|
|
103
|
|
8
|
|
|
590
|
|
618
|
|
||||||||||||
Total
impaired loans
|
$
|
1,005
|
|
$
|
1,669
|
|
|
$
|
913
|
|
$
|
2,955
|
|
|
$
|
39
|
|
$
|
135
|
|
|
$
|
16
|
|
$
|
22
|
|
|
$
|
576
|
|
$
|
705
|
|
|
$
|
2,549
|
|
$
|
5,486
|
|
Allowance for loan losses related to impaired loans
|
$
|
276
|
|
$
|
435
|
|
|
$
|
148
|
|
$
|
825
|
|
|
$
|
5
|
|
$
|
61
|
|
|
$
|
10
|
|
$
|
14
|
|
|
$
|
77
|
|
$
|
239
|
|
|
$
|
516
|
|
$
|
1,574
|
|
Unpaid principal balance of impaired loans
(b)
|
1,705
|
|
2,453
|
|
|
1,124
|
|
3,487
|
|
|
63
|
|
244
|
|
|
17
|
|
30
|
|
|
1,008
|
|
1,046
|
|
|
3,917
|
|
7,260
|
|
(a)
|
When the discounted cash flows, collateral value or market price equals or exceeds the recorded investment in the loan, then the loan does not require an allowance. This typically occurs when the impaired loans have been partially charged-off and/or there have been interest payments received and applied to the loan balance.
|
(b)
|
Represents the contractual amount of principal owed at
December 31, 2011
and
2010
. The unpaid principal balance differs from the impaired loan balances due to various factors, including charge-offs; interest payments received and applied to the carrying value; net deferred loan fees or costs; and unamortized discount or premiums on purchased loans.
|
Year ended December 31, (in millions)
|
2011
|
2010
|
2009
|
||||||
Commercial and industrial
|
$
|
1,309
|
|
$
|
1,655
|
|
$
|
1,767
|
|
Real estate
|
1,813
|
|
3,101
|
|
2,420
|
|
|||
Financial institutions
|
84
|
|
304
|
|
685
|
|
|||
Government agencies
|
20
|
|
5
|
|
4
|
|
|||
Other
|
634
|
|
884
|
|
468
|
|
|||
Total
(a)
|
$
|
3,860
|
|
$
|
5,949
|
|
$
|
5,344
|
|
(a)
|
The related interest income on accruing impaired loans and interest income recognized on a cash basis were not material for the years ended
December 31, 2011
,
2010
and
2009
.
|
December 31,
(in millions)
|
Commercial
and industrial
|
|
Real estate
|
|
Financial
institutions
|
|
Government
agencies
|
|
Other
|
|
Total
retained loans
|
||||||||||||||||||||||||||||||
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|||||||||||||||||||||||||
Loans modified in troubled debt restructurings
|
$
|
531
|
|
$
|
212
|
|
|
$
|
176
|
|
$
|
907
|
|
|
$
|
2
|
|
$
|
1
|
|
|
$
|
16
|
|
$
|
22
|
|
|
$
|
25
|
|
$
|
1
|
|
|
$
|
750
|
|
$
|
1,143
|
|
TDRs on nonaccrual status
|
415
|
|
163
|
|
|
128
|
|
831
|
|
|
—
|
|
1
|
|
|
16
|
|
22
|
|
|
19
|
|
1
|
|
|
578
|
|
1,018
|
|
||||||||||||
Additional commitments to lend to borrowers whose loans have been modified in TDRs
|
147
|
|
1
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
147
|
|
1
|
|
Year ended December 31, 2011
(in millions)
|
|
Commercial and industrial
|
|
Real estate
|
|
Other
(b)
|
|
Total
|
||||||||
Beginning balance of TDRs
|
|
$
|
212
|
|
|
$
|
907
|
|
|
$
|
24
|
|
|
$
|
1,143
|
|
New TDRs
|
|
665
|
|
|
113
|
|
|
32
|
|
|
810
|
|
||||
Increases to existing TDRs
|
|
96
|
|
|
16
|
|
|
—
|
|
|
112
|
|
||||
Charge-offs post-modification
|
|
(30
|
)
|
|
(146
|
)
|
|
—
|
|
|
(176
|
)
|
||||
Sales and other
(a)
|
|
(412
|
)
|
|
(714
|
)
|
|
(13
|
)
|
|
(1,139
|
)
|
||||
Ending balance of TDRs
|
|
$
|
531
|
|
|
$
|
176
|
|
|
$
|
43
|
|
|
$
|
750
|
|
(a)
|
Sales and other are predominantly sales and paydowns, but may include performing loans restructured at market rates that are no longer reported as TDRs.
|
(b)
|
Includes loans to Financial institutions, Government agencies and Other.
|
238
|
|
JPMorgan Chase & Co./2011 Annual Report
|
•
|
For residential real estate loans, including both non-PCI and PCI portfolios, the current estimated LTV ratio, or the combined LTV ratio in the case of loans with a junior lien, is an indicator of the potential loss severity in the event of default. Additionally, LTV or combined LTV can provide insight into a borrower’s continued willingness to pay, as the delinquency rate of high-LTV loans tends to be greater than that for loans where the borrower has equity in the collateral. The geographic distribution of the loan collateral also provides insight as to the credit quality of the portfolio, as factors such as the regional economy, home price changes and specific events such as hurricanes, earthquakes, etc., will affect credit quality. The borrower’s current or “refreshed” FICO score is a secondary credit-quality indicator for certain loans, as FICO scores are an indication of the borrower’s credit payment history. Thus, a loan to a borrower with a low FICO score (660 or below) is considered to be of higher risk than a loan to a borrower with a high FICO score. Further, a loan to a borrower with a high LTV ratio and a low FICO score is at greater risk of default than a loan to a borrower that has both a high LTV ratio and a high FICO score.
|
•
|
For auto, scored business banking and student loans, geographic distribution is an indicator of the credit performance of the portfolio. Similar to residential real estate loans, geographic distribution provides insights into the portfolio performance based on regional economic activity and events.
|
•
|
Risk-rated business banking and auto loans are similar to wholesale loans in that the primary credit quality indicators are the risk rating that is assigned to the loan and whether the loans are considered to be criticized and/or nonaccrual. Risk ratings are reviewed on a regular and ongoing basis by Credit Risk Management and are adjusted as necessary for updated information affecting borrowers’ ability to fulfill their obligations. Consistent with other classes of consumer loans, the geographic distribution of the portfolio provides insights into portfolio performance based on regional economic activity and events.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
239
|
Residential real estate – excluding PCI loans
|
|
|
|
|
|
||||||||
|
Home equity
|
||||||||||||
December 31,
(in millions, except ratios)
|
Senior lien
|
|
Junior lien
|
||||||||||
2011
|
2010
|
|
2011
|
2010
|
|||||||||
Loan delinquency
(a)
|
|
|
|
|
|
||||||||
Current and less than 30 days past due
|
$
|
20,992
|
|
$
|
23,615
|
|
|
$
|
54,533
|
|
$
|
62,315
|
|
30–149 days past due
|
405
|
|
414
|
|
|
1,272
|
|
1,508
|
|
||||
150 or more days past due
|
368
|
|
347
|
|
|
230
|
|
186
|
|
||||
Total retained loans
|
$
|
21,765
|
|
$
|
24,376
|
|
|
$
|
56,035
|
|
$
|
64,009
|
|
% of 30+ days past due to total retained loans
|
3.55
|
%
|
3.12
|
%
|
|
2.68
|
%
|
2.65
|
%
|
||||
90 or more days past due and still accruing
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
90 or more days past due and government guarantee
d
(b)
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||
Nonaccrual loans
|
495
|
|
479
|
|
|
792
|
|
784
|
|
||||
Current estimated LTV ratios
(c)(d)(e)(f)
|
|
|
|
|
|
||||||||
Greater than 125% and refreshed FICO scores:
|
|
|
|
|
|
||||||||
Equal to or greater than 660
|
$
|
341
|
|
$
|
363
|
|
|
$
|
6,463
|
|
$
|
6,928
|
|
Less than 660
|
160
|
|
196
|
|
|
2,037
|
|
2,495
|
|
||||
101% to 125% and refreshed FICO scores:
|
|
|
|
|
|
||||||||
Equal to or greater than 660
|
663
|
|
619
|
|
|
8,775
|
|
9,403
|
|
||||
Less than 660
|
241
|
|
249
|
|
|
2,510
|
|
2,873
|
|
||||
80% to 100% and refreshed FICO scores:
|
|
|
|
|
|
||||||||
Equal to or greater than 660
|
1,850
|
|
1,900
|
|
|
11,433
|
|
13,333
|
|
||||
Less than 660
|
601
|
|
657
|
|
|
2,616
|
|
3,155
|
|
||||
Less than 80% and refreshed FICO scores:
|
|
|
|
|
|
||||||||
Equal to or greater than 660
|
15,350
|
|
17,474
|
|
|
19,326
|
|
22,527
|
|
||||
Less than 660
|
2,559
|
|
2,918
|
|
|
2,875
|
|
3,295
|
|
||||
U.S. government-guaranteed
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||
Total retained loans
|
$
|
21,765
|
|
$
|
24,376
|
|
|
$
|
56,035
|
|
$
|
64,009
|
|
Geographic region
|
|
|
|
|
|
||||||||
California
|
$
|
3,066
|
|
$
|
3,348
|
|
|
$
|
12,851
|
|
$
|
14,656
|
|
New York
|
3,023
|
|
3,272
|
|
|
10,979
|
|
12,278
|
|
||||
Florida
|
992
|
|
1,088
|
|
|
3,006
|
|
3,470
|
|
||||
Illinois
|
1,495
|
|
1,635
|
|
|
3,785
|
|
4,248
|
|
||||
Texas
|
3,027
|
|
3,594
|
|
|
1,859
|
|
2,239
|
|
||||
New Jersey
|
687
|
|
732
|
|
|
3,238
|
|
3,617
|
|
||||
Arizona
|
1,339
|
|
1,481
|
|
|
2,552
|
|
2,979
|
|
||||
Washington
|
714
|
|
776
|
|
|
1,895
|
|
2,142
|
|
||||
Ohio
|
1,747
|
|
2,010
|
|
|
1,328
|
|
1,568
|
|
||||
Michigan
|
1,044
|
|
1,176
|
|
|
1,400
|
|
1,618
|
|
||||
All other
(g)
|
4,631
|
|
5,264
|
|
|
13,142
|
|
15,194
|
|
||||
Total retained loans
|
$
|
21,765
|
|
$
|
24,376
|
|
|
$
|
56,035
|
|
$
|
64,009
|
|
(a)
|
Individual delinquency classifications included mortgage loans insured by U.S. government agencies as follows: current and less than 30 days past due includes
$3.0 billion
and
$2.5 billion
; 30–149 days past due includes
$2.3 billion
and
$2.5 billion
; and 150 or more days past due includes
$10.3 billion
and
$7.9 billion
at
December 31, 2011
and
2010
, respectively.
|
(b)
|
These balances, which are 90 days or more past due but insured by U.S. government agencies, are excluded from nonaccrual loans. In predominately all cases, 100% of the principal balance of the loans is insured and interest is guaranteed at a specified reimbursement rate subject to meeting agreed servicing guidelines. These amounts are excluded from nonaccrual loans because reimbursement of insured and guaranteed amounts is proceeding normally. At
December 31, 2011
and
2010
, these balances included
$7.0 billion
and
$2.8 billion
, respectively, of loans that are no longer accruing interest because interest has been curtailed by the U.S. government agencies although, in predominantly all cases, 100% of the principal is still insured. For the remaining balance, interest is being accrued at the guaranteed reimbursement rate.
|
(c)
|
Represents the aggregate unpaid principal balance of loans divided by the estimated current property value. Current property values are estimated, at a minimum, quarterly, based on home valuation models using nationally recognized home price index valuation estimates incorporating actual data to the extent available and forecasted data where actual data is not available. These property values do not represent actual appraised loan level collateral values; as such, the resulting ratios are necessarily imprecise and should be viewed as estimates.
|
(d)
|
Junior lien represents combined LTV, which considers all available lien positions related to the property. All other products are presented without consideration of subordinate liens on the property.
|
(e)
|
Refreshed FICO scores represent each borrower’s most recent credit score, which is obtained by the Firm at least on a quarterly basis.
|
(f)
|
For senior lien home equity loans, prior-period amounts have been revised to conform with the current-period presentation.
|
(g)
|
At
December 31, 2011
and
2010
, included mortgage loans insured by U.S. government agencies of
$15.6 billion
and
$12.9 billion
, respectively.
|
(h)
|
At
December 31, 2011
and
2010
, excluded mortgage loans insured by U.S. government agencies of
$12.6 billion
and
$10.3 billion
, respectively. These amounts were excluded as reimbursement of insured amounts is proceeding normally.
|
240
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Mortgages
|
|
|
|
||||||||||||||||||||
Prime, including option ARMs
|
|
|
Subprime
|
|
Total residential real estate – excluding PCI
|
|
|||||||||||||||||
2011
|
|
2010
|
|
|
2011
|
2010
|
|
2011
|
|
2010
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
$
|
59,855
|
|
|
$
|
59,223
|
|
|
|
$
|
7,585
|
|
$
|
8,477
|
|
|
$
|
142,965
|
|
|
$
|
153,630
|
|
|
3,475
|
|
|
4,052
|
|
|
|
820
|
|
1,184
|
|
|
5,972
|
|
|
7,158
|
|
|
||||||
12,866
|
|
|
11,264
|
|
|
|
1,259
|
|
1,626
|
|
|
14,723
|
|
|
13,423
|
|
|
||||||
$
|
76,196
|
|
|
$
|
74,539
|
|
|
|
$
|
9,664
|
|
$
|
11,287
|
|
|
$
|
163,660
|
|
|
$
|
174,211
|
|
|
4.96
|
%
|
(h)
|
6.68
|
%
|
(h)
|
|
21.51
|
%
|
24.90
|
%
|
|
4.97
|
%
|
(h)
|
5.88
|
%
|
(h)
|
||||||
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
11,516
|
|
|
9,417
|
|
|
|
—
|
|
—
|
|
|
11,516
|
|
|
9,417
|
|
|
||||||
3,462
|
|
|
4,320
|
|
|
|
1,781
|
|
2,210
|
|
|
6,530
|
|
|
7,793
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
$
|
3,168
|
|
|
$
|
3,039
|
|
|
|
$
|
367
|
|
$
|
338
|
|
|
$
|
10,339
|
|
|
$
|
10,668
|
|
|
1,416
|
|
|
1,595
|
|
|
|
1,061
|
|
1,153
|
|
|
4,674
|
|
|
5,439
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
4,626
|
|
|
4,733
|
|
|
|
506
|
|
506
|
|
|
14,570
|
|
|
15,261
|
|
|
||||||
1,636
|
|
|
1,775
|
|
|
|
1,284
|
|
1,486
|
|
|
5,671
|
|
|
6,383
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
9,343
|
|
|
10,720
|
|
|
|
817
|
|
925
|
|
|
23,443
|
|
|
26,878
|
|
|
||||||
2,349
|
|
|
2,786
|
|
|
|
1,556
|
|
1,955
|
|
|
7,122
|
|
|
8,553
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
33,849
|
|
|
32,385
|
|
|
|
1,906
|
|
2,252
|
|
|
70,431
|
|
|
74,638
|
|
|
||||||
4,225
|
|
|
4,557
|
|
|
|
2,167
|
|
2,672
|
|
|
11,826
|
|
|
13,442
|
|
|
||||||
15,584
|
|
|
12,949
|
|
|
|
—
|
|
—
|
|
|
15,584
|
|
|
12,949
|
|
|
||||||
$
|
76,196
|
|
|
$
|
74,539
|
|
|
|
$
|
9,664
|
|
$
|
11,287
|
|
|
$
|
163,660
|
|
|
$
|
174,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
$
|
18,029
|
|
|
$
|
19,278
|
|
|
|
$
|
1,463
|
|
$
|
1,730
|
|
|
$
|
35,409
|
|
|
$
|
39,012
|
|
|
10,200
|
|
|
9,587
|
|
|
|
1,217
|
|
1,381
|
|
|
25,419
|
|
|
26,518
|
|
|
||||||
4,565
|
|
|
4,840
|
|
|
|
1,206
|
|
1,422
|
|
|
9,769
|
|
|
10,820
|
|
|
||||||
3,922
|
|
|
3,765
|
|
|
|
391
|
|
468
|
|
|
9,593
|
|
|
10,116
|
|
|
||||||
2,851
|
|
|
2,569
|
|
|
|
300
|
|
345
|
|
|
8,037
|
|
|
8,747
|
|
|
||||||
2,042
|
|
|
2,026
|
|
|
|
461
|
|
534
|
|
|
6,428
|
|
|
6,909
|
|
|
||||||
1,194
|
|
|
1,320
|
|
|
|
199
|
|
244
|
|
|
5,284
|
|
|
6,024
|
|
|
||||||
1,878
|
|
|
2,056
|
|
|
|
209
|
|
247
|
|
|
4,696
|
|
|
5,221
|
|
|
||||||
441
|
|
|
462
|
|
|
|
234
|
|
275
|
|
|
3,750
|
|
|
4,315
|
|
|
||||||
909
|
|
|
963
|
|
|
|
246
|
|
294
|
|
|
3,599
|
|
|
4,051
|
|
|
||||||
30,165
|
|
|
27,673
|
|
|
|
3,738
|
|
4,347
|
|
|
51,676
|
|
|
52,478
|
|
|
||||||
$
|
76,196
|
|
|
$
|
74,539
|
|
|
|
$
|
9,664
|
|
$
|
11,287
|
|
|
$
|
163,660
|
|
|
$
|
174,211
|
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
241
|
|
|
Delinquencies
|
|
|
|
|
|||||||||||||
December 31, 2011
(in millions, except ratios)
|
|
30–89 days past due
|
|
90–149 days past due
|
|
150+ days past due
|
|
Total loans
|
|
Total 30+ day delinquency rate
|
|||||||||
HELOCs:
(a)
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Within the revolving period
(b)
|
|
$
|
606
|
|
|
$
|
314
|
|
|
$
|
173
|
|
|
$
|
47,760
|
|
|
2.29
|
%
|
Within the required amortization period
|
|
45
|
|
|
19
|
|
|
15
|
|
|
1,636
|
|
|
4.83
|
|
||||
HELOANs
|
|
188
|
|
|
100
|
|
|
42
|
|
|
6,639
|
|
|
4.97
|
|
||||
Total
|
|
$
|
839
|
|
|
$
|
433
|
|
|
$
|
230
|
|
|
$
|
56,035
|
|
|
2.68
|
%
|
|
|
Delinquencies
|
|
|
|
|
|||||||||||||
December 31, 2010
(in millions, except ratios)
|
|
30–89 days past due
|
|
90–149 days past due
|
|
150+ days past due
|
|
Total loans
|
|
Total 30+ day delinquency rate
|
|||||||||
HELOCs:
(a)
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Within the revolving period
(b)
|
|
$
|
665
|
|
|
$
|
384
|
|
|
$
|
145
|
|
|
$
|
54,434
|
|
|
2.19
|
%
|
Within the required amortization period
|
|
41
|
|
|
19
|
|
|
10
|
|
|
1,177
|
|
|
5.95
|
|
||||
HELOANs
|
|
250
|
|
|
149
|
|
|
31
|
|
|
8,398
|
|
|
5.12
|
|
||||
Total
|
|
$
|
956
|
|
|
$
|
552
|
|
|
$
|
186
|
|
|
$
|
64,009
|
|
|
2.65
|
%
|
|
Home equity
|
|
Mortgages
|
|
Total residential
real estate
– excluding PCI
|
|||||||||||||||||||||||||||||
December 31,
(in millions)
|
Senior lien
|
|
Junior lien
|
|
Prime, including
option ARMs
|
|
Subprime
|
|
||||||||||||||||||||||||||
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|||||||||||||||||||||
Impaired loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
With an allowance
|
$
|
319
|
|
$
|
211
|
|
|
$
|
622
|
|
$
|
258
|
|
|
$
|
4,332
|
|
$
|
1,525
|
|
|
$
|
3,047
|
|
$
|
2,563
|
|
|
$
|
8,320
|
|
$
|
4,557
|
|
Without an allowance
(a)
|
16
|
|
15
|
|
|
35
|
|
25
|
|
|
545
|
|
559
|
|
|
172
|
|
188
|
|
|
768
|
|
787
|
|
||||||||||
Total impaired loans
(b)
|
$
|
335
|
|
$
|
226
|
|
|
$
|
657
|
|
$
|
283
|
|
|
$
|
4,877
|
|
$
|
2,084
|
|
|
$
|
3,219
|
|
$
|
2,751
|
|
|
$
|
9,088
|
|
$
|
5,344
|
|
Allowance for loan losses related to impaired loans
|
$
|
80
|
|
$
|
77
|
|
|
$
|
141
|
|
$
|
82
|
|
|
$
|
4
|
|
$
|
97
|
|
|
$
|
366
|
|
$
|
555
|
|
|
$
|
591
|
|
$
|
811
|
|
Unpaid principal balance of impaired loans
(c)
|
433
|
|
265
|
|
|
994
|
|
402
|
|
|
6,190
|
|
2,751
|
|
|
4,827
|
|
3,777
|
|
|
12,444
|
|
7,195
|
|
||||||||||
Impaired loans on nonaccrual status
|
77
|
|
38
|
|
|
159
|
|
63
|
|
|
922
|
|
534
|
|
|
832
|
|
632
|
|
|
1,990
|
|
1,267
|
|
(a)
|
When discounted cash flows or collateral value equals or exceeds the recorded investment in the loan, the loan does not require an allowance. This typically occurs when an impaired loan has been partially charged off.
|
(b)
|
At
December 31, 2011
and
2010
,
$4.3 billion
and
$3.0 billion
, respectively, of loans modified subsequent to repurchase from Ginnie Mae in accordance with the standards of the appropriate government agency (i.e., Federal Housing Administration (“FHA”), U.S. Department of Veterans Affairs (“VA”), Rural Housing Services (“RHS”)) were excluded from loans accounted for as TDRs. When such loans perform subsequent to modification in accordance with Ginnie Mae guidelines, they are generally sold back into Ginnie Mae loan pools. Modified loans that do not re-perform become subject to foreclosure.
|
(c)
|
Represents the contractual amount of principal owed at
December 31, 2011
and
2010
. The unpaid principal balance differs from the impaired loan balances due to various factors, including charge-offs, net deferred loan fees or costs; and unamortized discounts or premiums on purchased loans.
|
242
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Year ended December 31,
|
Average impaired loans
|
|
Interest income on
impaired loans
(a)
|
|
Interest income on impaired
loans on a cash basis
(a)
|
||||||||||||||||||||||||
(in millions)
|
2011
|
|
2010
|
|
2009
|
|
|
2011
|
|
2010
|
|
2009
|
|
|
2011
|
|
2010
|
|
2009
|
|
|||||||||
Home equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Senior lien
|
$
|
287
|
|
$
|
207
|
|
$
|
142
|
|
|
$
|
10
|
|
$
|
15
|
|
$
|
7
|
|
|
$
|
1
|
|
$
|
1
|
|
$
|
1
|
|
Junior lien
|
521
|
|
266
|
|
187
|
|
|
18
|
|
10
|
|
9
|
|
|
2
|
|
1
|
|
1
|
|
|||||||||
Mortgages
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Prime, including option ARMs
|
3,859
|
|
1,530
|
|
496
|
|
|
147
|
|
70
|
|
34
|
|
|
14
|
|
14
|
|
8
|
|
|||||||||
Subprime
|
3,083
|
|
2,539
|
|
1,948
|
|
|
148
|
|
121
|
|
98
|
|
|
16
|
|
19
|
|
6
|
|
|||||||||
Total residential real estate – excluding PCI
|
$
|
7,750
|
|
$
|
4,542
|
|
$
|
2,773
|
|
|
$
|
323
|
|
$
|
216
|
|
$
|
148
|
|
|
$
|
33
|
|
$
|
35
|
|
$
|
16
|
|
(a)
|
Generally, interest income on loans modified in a TDR is recognized on a cash basis until such time as the borrower has made a minimum of six payments under the new terms. As of
December 31, 2011
and
2010
,
$886 million
and
$580 million
, respectively, of loans were TDRs for which the borrowers had not yet made six payments under their modified terms.
|
|
Home equity
|
|
Mortgages
|
|
Total residential real estate – (excluding PCI)
|
||||||||||||||
Year ended December 31, 2011
(in millions)
|
Senior lien
|
|
Junior lien
|
|
Prime, including option ARMs
|
|
Subprime
|
|
|||||||||||
Beginning balance of TDRs
|
$
|
226
|
|
|
$
|
283
|
|
|
$
|
2,084
|
|
|
$
|
2,751
|
|
|
$
|
5,344
|
|
New TDRs
(a)
|
138
|
|
|
518
|
|
|
3,268
|
|
|
883
|
|
|
4,807
|
|
|||||
Charge-offs post-modification
(b)
|
(15
|
)
|
|
(78
|
)
|
|
(119
|
)
|
|
(234
|
)
|
|
(446
|
)
|
|||||
Foreclosures and other liquidations (e.g., short sales)
|
—
|
|
|
(11
|
)
|
|
(108
|
)
|
|
(82
|
)
|
|
(201
|
)
|
|||||
Principal payments and other
|
(14
|
)
|
|
(55
|
)
|
|
(248
|
)
|
|
(99
|
)
|
|
(416
|
)
|
|||||
Ending balance of TDRs
|
$
|
335
|
|
|
$
|
657
|
|
|
$
|
4,877
|
|
|
$
|
3,219
|
|
|
$
|
9,088
|
|
Permanent modifications
|
$
|
285
|
|
|
$
|
634
|
|
|
$
|
4,601
|
|
|
$
|
3,029
|
|
|
$
|
8,549
|
|
Trial modifications
|
$
|
50
|
|
|
$
|
23
|
|
|
$
|
276
|
|
|
$
|
190
|
|
|
$
|
539
|
|
(a)
|
Includes all loans to borrowers who were approved for trial modification on or after January 1, 2011, as well as all loans permanently modified during the year ended
December 31, 2011
. In the event that a trial modification is reported as a new TDR, any subsequent permanent modification of that same loan is not reported as a new TDR.
|
(b)
|
Includes charge-offs on unsuccessful trial modifications.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
243
|
|
Home equity
|
|
Mortgages
|
|
|
|||||||||
Year ended December 31, 2011
|
Senior lien
|
|
Junior lien
|
|
Prime, including option ARMs
|
|
Subprime
|
|
Total residential real estate – (excluding PCI)
|
|||||
Number of loans approved for a trial modification, but not permanently modified
|
654
|
|
|
778
|
|
|
898
|
|
|
1,730
|
|
|
4,060
|
|
Number of loans permanently modified
|
1,006
|
|
|
9,142
|
|
|
9,579
|
|
|
4,972
|
|
|
24,699
|
|
Permanent concession granted:
(a)(b)
|
|
|
|
|
|
|
|
|
|
|||||
Interest rate reduction
|
80
|
%
|
|
95
|
%
|
|
53
|
%
|
|
80
|
%
|
|
75
|
%
|
Term or payment extension
|
88
|
|
|
81
|
|
|
71
|
|
|
72
|
|
|
75
|
|
Principal and/or interest deferred
|
10
|
|
|
21
|
|
|
17
|
|
|
19
|
|
|
19
|
|
Principal forgiveness
|
7
|
|
|
20
|
|
|
2
|
|
|
13
|
|
|
11
|
|
Other
(c)
|
29
|
|
|
7
|
|
|
68
|
|
|
26
|
|
|
35
|
|
(a)
|
As a percentage of the number of loans permanently modified. The sum of the percentages exceeds 100% because predominantly all of the permanent modifications include more than one type of concession.
|
(b)
|
Except for the "Other" category, the percentages representing the various types of concessions granted are estimated to be materially consistent with those related to loans approved for trial modification.
|
(c)
|
Represents variable interest rate to fixed interest rate modifications. To date, these concessions have solely related to permanent modifications.
|
Year ended December 31, 2011
(in millions, except weighted-average data and number of loans) |
Home equity
|
|
Mortgages
|
|
Total residential real estate – (excluding PCI)
|
||||||||||||||
Senior lien
|
|
Junior lien
|
|
Prime, including option ARMs
|
|
Subprime
|
|
||||||||||||
Weighted-average interest rate of loans with interest rate reductions – before TDR
(a)
|
7.25
|
%
|
|
5.46
|
%
|
|
5.98
|
%
|
|
8.25
|
%
|
|
6.44
|
%
|
|||||
Weighted-average interest rate of loans with interest rate reductions – after TDR
(a)
|
3.51
|
|
|
1.49
|
|
|
3.34
|
|
|
3.46
|
|
|
3.09
|
|
|||||
Weighted-average remaining contractual term (in years) of loans with term or payment extensions – before TDR
(a)
|
18
|
|
|
21
|
|
|
25
|
|
|
23
|
|
|
24
|
|
|||||
Weighted-average remaining contractual term (in years) of loans with term or payment extensions – after TDR
(a)
|
30
|
|
|
34
|
|
|
35
|
|
|
34
|
|
|
35
|
|
|||||
Charge-offs recognized upon permanent modification
|
$
|
1
|
|
|
$
|
117
|
|
|
$
|
61
|
|
|
$
|
19
|
|
|
$
|
198
|
|
Principal deferred
(b)
|
4
|
|
|
35
|
|
|
167
|
|
|
61
|
|
|
267
|
|
|||||
Principal forgiven
(b)
|
1
|
|
|
62
|
|
|
20
|
|
|
46
|
|
|
129
|
|
|||||
Number of loans that redefaulted within one year of permanent modification
(c)
|
222
|
|
|
1,310
|
|
|
1,142
|
|
|
1,989
|
|
|
4,663
|
|
|||||
Balance of loans that redefaulted within one year of permanent modification
(c)
|
$
|
18
|
|
|
$
|
52
|
|
|
$
|
340
|
|
|
$
|
281
|
|
|
$
|
691
|
|
Cumulative permanent modification redefault rates
(d)
|
21
|
%
|
|
14
|
%
|
|
13
|
%
|
|
28
|
%
|
|
18
|
%
|
(a)
|
Represents information about loans that have been permanently modified. The financial effects of such concessions related to loans approved for trial modification are estimated to be materially consistent with the financial effects presented above.
|
(b)
|
Represents information about loans that have been permanently modified. Principal deferred and principal forgiven related to loans approved for trial modification totaled
$125 million
for the year ended December 31, 2011.
|
(c)
|
Represents loans permanently modified in TDRs that experienced a payment default in the period presented, and for which the payment default occurred within one year of the modification. The dollar amounts presented represent the balance of such loans at the end of the reporting period in which they defaulted. For residential real estate loans modified in TDRs, payment default is deemed to occur when the loan becomes two contractual payments past due. In the event that a modified loan redefaults, it is probable that the loan will ultimately be liquidated through foreclosure or another similar type of liquidation transaction. Redefaults of loans modified within the last 12 months may not be representative of ultimate redefault levels.
|
(d)
|
Based upon permanent modifications completed after October 1, 2009, that are seasoned more than six months.
|
244
|
|
JPMorgan Chase & Co./2011 Annual Report
|
December 31,
(in millions, except ratios)
|
Auto
|
|
Business banking
|
|
Student and other
|
|
Total other consumer
|
|
||||||||||||||||||||||
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|||||||||||||||||
Loan delinquency
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Current and less than 30 days past due
|
$
|
46,891
|
|
$
|
47,778
|
|
|
$
|
17,173
|
|
$
|
16,240
|
|
|
$
|
12,905
|
|
|
$
|
13,998
|
|
|
$
|
76,969
|
|
|
$
|
78,016
|
|
|
30–119 days past due
|
528
|
|
579
|
|
|
326
|
|
351
|
|
|
777
|
|
|
795
|
|
|
1,631
|
|
|
1,725
|
|
|
||||||||
120 or more days past due
|
7
|
|
10
|
|
|
153
|
|
221
|
|
|
461
|
|
|
518
|
|
|
621
|
|
|
749
|
|
|
||||||||
Total retained loans
|
$
|
47,426
|
|
$
|
48,367
|
|
|
$
|
17,652
|
|
$
|
16,812
|
|
|
$
|
14,143
|
|
|
$
|
15,311
|
|
|
$
|
79,221
|
|
|
$
|
80,490
|
|
|
% of 30+ days past due to total retained loans
|
1.13
|
%
|
1.22
|
%
|
|
2.71
|
%
|
3.40
|
%
|
|
1.76
|
%
|
(d)
|
1.61
|
%
|
(d)
|
1.59
|
%
|
(d)
|
1.75
|
%
|
(d)
|
||||||||
90 or more days past due and still accruing
(b)
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
551
|
|
|
$
|
625
|
|
|
$
|
551
|
|
|
$
|
625
|
|
|
Nonaccrual loans
|
118
|
|
141
|
|
|
694
|
|
832
|
|
|
69
|
|
|
67
|
|
|
881
|
|
|
1,040
|
|
|
||||||||
Geographic region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
California
|
$
|
4,413
|
|
$
|
4,307
|
|
|
$
|
1,342
|
|
$
|
851
|
|
|
$
|
1,261
|
|
|
$
|
1,330
|
|
|
$
|
7,016
|
|
|
$
|
6,488
|
|
|
New York
|
3,616
|
|
3,875
|
|
|
2,792
|
|
2,877
|
|
|
1,401
|
|
|
1,305
|
|
|
7,809
|
|
|
8,057
|
|
|
||||||||
Florida
|
1,881
|
|
1,923
|
|
|
313
|
|
220
|
|
|
658
|
|
|
722
|
|
|
2,852
|
|
|
2,865
|
|
|
||||||||
Illinois
|
2,496
|
|
2,608
|
|
|
1,364
|
|
1,320
|
|
|
851
|
|
|
940
|
|
|
4,711
|
|
|
4,868
|
|
|
||||||||
Texas
|
4,467
|
|
4,505
|
|
|
2,680
|
|
2,550
|
|
|
1,053
|
|
|
1,273
|
|
|
8,200
|
|
|
8,328
|
|
|
||||||||
New Jersey
|
1,829
|
|
1,842
|
|
|
376
|
|
422
|
|
|
460
|
|
|
502
|
|
|
2,665
|
|
|
2,766
|
|
|
||||||||
Arizona
|
1,495
|
|
1,499
|
|
|
1,165
|
|
1,218
|
|
|
316
|
|
|
387
|
|
|
2,976
|
|
|
3,104
|
|
|
||||||||
Washington
|
735
|
|
716
|
|
|
160
|
|
115
|
|
|
249
|
|
|
279
|
|
|
1,144
|
|
|
1,110
|
|
|
||||||||
Ohio
|
2,633
|
|
2,961
|
|
|
1,541
|
|
1,647
|
|
|
880
|
|
|
1,010
|
|
|
5,054
|
|
|
5,618
|
|
|
||||||||
Michigan
|
2,282
|
|
2,434
|
|
|
1,389
|
|
1,401
|
|
|
637
|
|
|
729
|
|
|
4,308
|
|
|
4,564
|
|
|
||||||||
All other
|
21,579
|
|
21,697
|
|
|
4,530
|
|
4,191
|
|
|
6,377
|
|
|
6,834
|
|
|
32,486
|
|
|
32,722
|
|
|
||||||||
Total retained loans
|
$
|
47,426
|
|
$
|
48,367
|
|
|
$
|
17,652
|
|
$
|
16,812
|
|
|
$
|
14,143
|
|
|
$
|
15,311
|
|
|
$
|
79,221
|
|
|
$
|
80,490
|
|
|
Loans by risk ratings
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Noncriticized
|
$
|
6,775
|
|
$
|
5,803
|
|
|
$
|
11,749
|
|
$
|
10,351
|
|
|
NA
|
|
|
NA
|
|
|
$
|
18,524
|
|
|
$
|
16,154
|
|
|
||
Criticized performing
|
166
|
|
265
|
|
|
817
|
|
982
|
|
|
NA
|
|
|
NA
|
|
|
983
|
|
|
1,247
|
|
|
||||||||
Criticized nonaccrual
|
3
|
|
12
|
|
|
524
|
|
574
|
|
|
NA
|
|
|
NA
|
|
|
527
|
|
|
586
|
|
|
(a)
|
Loans insured by U.S. government agencies under the Federal Family Education Loan Program (“FFELP”) are included in the delinquency classifications presented based on their payment status. Prior-period amounts have been revised to conform with the current-period presentation.
|
(b)
|
These amounts represent student loans, which are insured by U.S. government agencies under the FFELP. These amounts were accruing as reimbursement of insured amounts is proceeding normally.
|
(c)
|
For risk-rated business banking and auto loans, the primary credit quality indicator is the risk rating of the loan, including whether the loans are considered to be criticized and/or nonaccrual.
|
(d)
|
December 31, 2011
and
2010
, excluded loans 30 days or more past due and still accruing, which are insured by U.S. government agencies under the FFELP, of
$989 million
and
$1.1 billion
, respectively. These amounts were excluded as reimbursement of insured amounts is proceeding normally.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
245
|
December 31,
(in millions)
|
Auto
|
|
Business banking
|
|
Total other consumer
(c)
|
|||||||||||||||
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|||||||||||||
Impaired loans
|
|
|
|
|
|
|
|
|
||||||||||||
With an allowance
|
$
|
88
|
|
$
|
102
|
|
|
$
|
713
|
|
$
|
774
|
|
|
$
|
801
|
|
$
|
876
|
|
Without an allowance
(a)
|
3
|
|
—
|
|
|
—
|
|
—
|
|
|
3
|
|
—
|
|
||||||
Total impaired loans
|
$
|
91
|
|
$
|
102
|
|
|
$
|
713
|
|
$
|
774
|
|
|
$
|
804
|
|
$
|
876
|
|
Allowance for loan losses related to impaired loans
|
$
|
12
|
|
$
|
16
|
|
|
$
|
225
|
|
$
|
248
|
|
|
$
|
237
|
|
$
|
264
|
|
Unpaid principal balance of impaired loans
(b)
|
126
|
|
132
|
|
|
822
|
|
899
|
|
|
948
|
|
1,031
|
|
||||||
Impaired loans on nonaccrual status
|
41
|
|
50
|
|
|
551
|
|
647
|
|
|
592
|
|
697
|
|
(a)
|
When discounted cash flows, collateral value or market price equals or exceeds the recorded investment in the loan, then the loan does not require an allowance. This typically occurs when the impaired loans have been partially charged off and/or there have been interest payments received and applied to the loan balance.
|
(b)
|
Represents the contractual amount of principal owed at
December 31, 2011
and
2010
. The unpaid principal balance differs from the impaired loan balances due to various factors, including charge-offs; interest payments received and applied to the principal balance; net deferred loan fees or costs; and unamortized discounts or premiums on purchased loans.
|
(c)
|
There were no impaired student and other loans at
December 31, 2011
and
2010
.
|
Year ended December 31,
(in millions) |
Average impaired loans
(b)
|
||||||||
2011
|
2010
|
2009
|
|||||||
Auto
|
$
|
92
|
|
$
|
120
|
|
$
|
100
|
|
Business banking
|
760
|
|
682
|
|
396
|
|
|||
Total other consumer
(a)
|
$
|
852
|
|
$
|
802
|
|
$
|
496
|
|
(a)
|
There were no impaired student and other loans for the years ended
2011
,
2010
and
2009
.
|
(b)
|
The related interest income on impaired loans, including those on a cash basis, was not material for the years ended
2011
,
2010
and
2009
.
|
December 31,
(in millions)
|
Auto
|
|
Business banking
|
|
Total other consumer
(c)
|
|||||||||||||||
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|||||||||||||
Loans modified in troubled debt restructurings
(a)(b)
|
$
|
88
|
|
$
|
91
|
|
|
$
|
415
|
|
$
|
395
|
|
|
$
|
503
|
|
$
|
486
|
|
TDRs on nonaccrual status
|
38
|
|
39
|
|
|
253
|
|
268
|
|
|
291
|
|
307
|
|
(a)
|
These modifications generally provided interest rate concessions to the borrower or deferral of principal repayments.
|
(b)
|
Additional commitments to lend to borrowers whose loans have been modified in TDRs as of
December 31, 2011
and
2010
, were immaterial.
|
(c)
|
There were no student and other loans modified in TDRs at
December 31, 2011
and
2010
.
|
Year ended December 31, 2011
|
|
|
||||||||||
(in millions)
|
Auto
|
|
Business banking
|
|
Total other consumer
|
|
||||||
Beginning balance of TDRs
|
$
|
91
|
|
|
$
|
395
|
|
|
$
|
486
|
|
|
New TDRs
|
54
|
|
|
195
|
|
|
249
|
|
|
|||
Charge-offs
|
(5
|
)
|
|
(11
|
)
|
|
(16
|
)
|
|
|||
Foreclosures and other liquidations
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|
|||
Principal payments and other
|
(52
|
)
|
|
(161
|
)
|
|
(213
|
)
|
|
|||
E
nding balance of TDRs
|
$
|
88
|
|
|
$
|
415
|
|
|
$
|
503
|
|
|
246
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
247
|
December 31,
(in millions, except ratios)
|
Home equity
|
|
Prime mortgage
|
|
Subprime mortgage
|
|
Option ARMs
|
|
Total PCI
|
|||||||||||||||||||||||||
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|||||||||||||||||||||
Carrying value
(a)
|
$
|
22,697
|
|
$
|
24,459
|
|
|
$
|
15,180
|
|
$
|
17,322
|
|
|
$
|
4,976
|
|
$
|
5,398
|
|
|
$
|
22,693
|
|
$
|
25,584
|
|
|
$
|
65,546
|
|
$
|
72,763
|
|
Related allowance for loan losses
(b)
|
1,908
|
|
1,583
|
|
|
1,929
|
|
1,766
|
|
|
380
|
|
98
|
|
|
1,494
|
|
1,494
|
|
|
5,711
|
|
4,941
|
|
||||||||||
Loan delinquency (based on unpaid principal balance)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Current and less than 30 days past due
|
$
|
22,682
|
|
$
|
25,783
|
|
|
$
|
12,148
|
|
$
|
13,035
|
|
|
$
|
4,388
|
|
$
|
4,312
|
|
|
$
|
17,919
|
|
$
|
18,672
|
|
|
$
|
57,137
|
|
$
|
61,802
|
|
30–149 days past due
|
1,130
|
|
1,348
|
|
|
912
|
|
1,468
|
|
|
782
|
|
1,020
|
|
|
1,467
|
|
2,215
|
|
|
4,291
|
|
6,051
|
|
||||||||||
150 or more days past due
|
1,252
|
|
1,181
|
|
|
3,000
|
|
4,425
|
|
|
2,059
|
|
2,710
|
|
|
6,753
|
|
9,904
|
|
|
13,064
|
|
18,220
|
|
||||||||||
Total loans
|
$
|
25,064
|
|
$
|
28,312
|
|
|
$
|
16,060
|
|
$
|
18,928
|
|
|
$
|
7,229
|
|
$
|
8,042
|
|
|
$
|
26,139
|
|
$
|
30,791
|
|
|
$
|
74,492
|
|
$
|
86,073
|
|
% of 30+ days past due to total loans
|
9.50
|
%
|
8.93
|
%
|
|
24.36
|
%
|
31.13
|
%
|
|
39.30
|
%
|
46.38
|
%
|
|
31.45
|
%
|
39.36
|
%
|
|
23.30
|
%
|
28.20
|
%
|
||||||||||
Current estimated LTV ratios (based on unpaid principal balance)
(c)(d)(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Greater than 125% and refreshed FICO scores:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Equal to or greater than 660
|
$
|
5,915
|
|
$
|
6,289
|
|
|
$
|
2,313
|
|
$
|
2,400
|
|
|
$
|
473
|
|
$
|
432
|
|
|
$
|
2,509
|
|
$
|
2,681
|
|
|
$
|
11,210
|
|
$
|
11,802
|
|
Less than 660
|
3,299
|
|
4,043
|
|
|
2,319
|
|
2,744
|
|
|
1,939
|
|
2,129
|
|
|
4,608
|
|
6,330
|
|
|
12,165
|
|
15,246
|
|
||||||||||
101% to 125% and refreshed FICO scores:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Equal to or greater than 660
|
5,393
|
|
6,053
|
|
|
3,328
|
|
3,815
|
|
|
434
|
|
424
|
|
|
3,959
|
|
4,292
|
|
|
13,114
|
|
14,584
|
|
||||||||||
Less than 660
|
2,304
|
|
2,696
|
|
|
2,314
|
|
3,011
|
|
|
1,510
|
|
1,663
|
|
|
3,884
|
|
5,005
|
|
|
10,012
|
|
12,375
|
|
||||||||||
80% to 100% and refreshed FICO scores:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Equal to or greater than 660
|
3,482
|
|
3,995
|
|
|
1,629
|
|
1,970
|
|
|
372
|
|
374
|
|
|
3,740
|
|
4,152
|
|
|
9,223
|
|
10,491
|
|
||||||||||
Less than 660
|
1,264
|
|
1,482
|
|
|
1,457
|
|
1,857
|
|
|
1,197
|
|
1,477
|
|
|
3,035
|
|
3,551
|
|
|
6,953
|
|
8,367
|
|
||||||||||
Lower than 80% and refreshed FICO scores:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Equal to or greater than 660
|
2,409
|
|
2,641
|
|
|
1,276
|
|
1,443
|
|
|
198
|
|
186
|
|
|
2,189
|
|
2,281
|
|
|
6,072
|
|
6,551
|
|
||||||||||
Less than 660
|
998
|
|
1,113
|
|
|
1,424
|
|
1,688
|
|
|
1,106
|
|
1,357
|
|
|
2,215
|
|
2,499
|
|
|
5,743
|
|
6,657
|
|
||||||||||
Total unpaid principal balance
|
$
|
25,064
|
|
$
|
28,312
|
|
|
$
|
16,060
|
|
$
|
18,928
|
|
|
$
|
7,229
|
|
$
|
8,042
|
|
|
$
|
26,139
|
|
$
|
30,791
|
|
|
$
|
74,492
|
|
$
|
86,073
|
|
Geographic region (based on unpaid principal balance)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
California
|
$
|
15,091
|
|
$
|
17,012
|
|
|
$
|
9,121
|
|
$
|
10,891
|
|
|
$
|
1,661
|
|
$
|
1,971
|
|
|
$
|
13,565
|
|
$
|
16,130
|
|
|
$
|
39,438
|
|
$
|
46,004
|
|
New York
|
1,179
|
|
1,316
|
|
|
1,018
|
|
1,111
|
|
|
709
|
|
736
|
|
|
1,548
|
|
1,703
|
|
|
4,454
|
|
4,866
|
|
||||||||||
Florida
|
2,307
|
|
2,595
|
|
|
1,265
|
|
1,519
|
|
|
812
|
|
906
|
|
|
3,201
|
|
3,916
|
|
|
7,585
|
|
8,936
|
|
||||||||||
Illinois
|
558
|
|
627
|
|
|
511
|
|
562
|
|
|
411
|
|
438
|
|
|
702
|
|
760
|
|
|
2,182
|
|
2,387
|
|
||||||||||
Texas
|
455
|
|
525
|
|
|
168
|
|
194
|
|
|
405
|
|
435
|
|
|
140
|
|
155
|
|
|
1,168
|
|
1,309
|
|
||||||||||
New Jersey
|
471
|
|
540
|
|
|
445
|
|
486
|
|
|
297
|
|
316
|
|
|
969
|
|
1,064
|
|
|
2,182
|
|
2,406
|
|
||||||||||
Arizona
|
468
|
|
539
|
|
|
254
|
|
359
|
|
|
126
|
|
165
|
|
|
362
|
|
528
|
|
|
1,210
|
|
1,591
|
|
||||||||||
Washington
|
1,368
|
|
1,535
|
|
|
388
|
|
451
|
|
|
160
|
|
178
|
|
|
649
|
|
745
|
|
|
2,565
|
|
2,909
|
|
||||||||||
Ohio
|
32
|
|
38
|
|
|
79
|
|
91
|
|
|
114
|
|
122
|
|
|
111
|
|
131
|
|
|
336
|
|
382
|
|
||||||||||
Michigan
|
81
|
|
95
|
|
|
239
|
|
279
|
|
|
187
|
|
214
|
|
|
268
|
|
345
|
|
|
775
|
|
933
|
|
||||||||||
All other
|
3,054
|
|
3,490
|
|
|
2,572
|
|
2,985
|
|
|
2,347
|
|
2,561
|
|
|
4,624
|
|
5,314
|
|
|
12,597
|
|
14,350
|
|
||||||||||
Total unpaid principal balance
|
$
|
25,064
|
|
$
|
28,312
|
|
|
$
|
16,060
|
|
$
|
18,928
|
|
|
$
|
7,229
|
|
$
|
8,042
|
|
|
$
|
26,139
|
|
$
|
30,791
|
|
|
$
|
74,492
|
|
$
|
86,073
|
|
(a)
|
Carrying value includes the effect of fair value adjustments that were applied to the consumer PCI portfolio at the date of acquisition.
|
(b)
|
Management concluded as part of the Firm’s regular assessment of the PCI loan pools that it was probable that higher expected credit losses would result in a decrease in expected cash flows. As a result, an allowance for loan losses for impairment of these pools has been recognized.
|
(c)
|
Represents the aggregate unpaid principal balance of loans divided by the estimated current property value. Current property values are estimated, at a minimum, quarterly, based on home valuation models using nationally recognized home price index valuation estimates incorporating actual data to the extent available and forecasted data where actual data is not available. These property values do not represent actual appraised loan level collateral values; as such, the resulting ratios are necessarily imprecise and should be viewed as estimates. Current estimated combined LTV for junior lien home equity loans considers all available lien positions related to the property.
|
(d)
|
Refreshed FICO scores represent each borrower’s most recent credit score obtained by the Firm. The Firm obtains refreshed FICO scores at least quarterly.
|
(e)
|
For home equity loans, prior-period amounts have been revised to conform with the current-period presentation.
|
248
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
|
Delinquencies
|
|
|
|
|
|||||||||||||
December 31, 2011
(in millions, except ratios)
|
|
30–89 days past due
|
|
90–149 days past due
|
|
150+ days past due
|
|
Total loans
|
|
Total 30+ day delinquency rate
|
|||||||||
HELOCs:
(a)
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Within the revolving period
(b)
|
|
$
|
500
|
|
|
$
|
296
|
|
|
$
|
543
|
|
|
$
|
18,246
|
|
|
7.34
|
%
|
Within the required amortization period
(c)
|
|
16
|
|
|
11
|
|
|
5
|
|
|
400
|
|
|
8.00
|
|
||||
HELOANs
|
|
53
|
|
|
29
|
|
|
44
|
|
|
1,327
|
|
|
9.50
|
|
||||
Total
|
|
$
|
569
|
|
|
$
|
336
|
|
|
$
|
592
|
|
|
$
|
19,973
|
|
|
7.50
|
%
|
|
|
Delinquencies
|
|
|
|
|
|||||||||||||
December 31, 2010
(in millions, except ratios)
|
|
30–89 days past due
|
|
90–149 days past due
|
|
150+ days past due
|
|
Total loans
|
|
Total 30+ day delinquency rate
|
|||||||||
HELOCs:
(a)
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Within the revolving period
(b)
|
|
$
|
601
|
|
|
$
|
404
|
|
|
$
|
428
|
|
|
$
|
21,172
|
|
|
6.77
|
%
|
Within the required amortization period
(c)
|
|
1
|
|
|
—
|
|
|
1
|
|
|
37
|
|
|
5.41
|
|
||||
HELOANs
|
|
79
|
|
|
49
|
|
|
46
|
|
|
1,573
|
|
|
11.06
|
|
||||
Total
|
|
$
|
681
|
|
|
$
|
453
|
|
|
$
|
475
|
|
|
$
|
22,782
|
|
|
7.06
|
%
|
(a)
|
In general,
HELOCs are open-ended, revolving loans for a 10-year period,
after which time the HELOC converts to a loan with a 20-year amortization period.
|
(b)
|
Substantially all undrawn HELOCs within the revolving period have been closed.
|
(c)
|
Predominantly all of these loans have been modified to provide a more affordable payment to the borrower.
|
Year ended December 31,
(in millions, except ratios) |
Total PCI
|
||||||||
2011
|
2010
|
2009
|
|||||||
Beginning balance
|
$
|
19,097
|
|
$
|
25,544
|
|
$
|
32,619
|
|
Accretion into interest income
|
(2,767
|
)
|
(3,232
|
)
|
(4,363
|
)
|
|||
Changes in interest rates on variable-rate loans
|
(573
|
)
|
(819
|
)
|
(4,849
|
)
|
|||
Other changes in expected cash flows
(a)
|
3,315
|
|
(2,396
|
)
|
2,137
|
|
|||
Balance at December 31
|
$
|
19,072
|
|
$
|
19,097
|
|
$
|
25,544
|
|
Accretable yield percentage
|
4.33
|
%
|
4.35
|
%
|
5.14
|
%
|
(a)
|
Other changes in expected cash flows may vary from period to period as the Firm continues to refine its cash flow model and periodically updates model assumptions. For the year ended
December 31, 2011
, other changes in expected cash flows were largely driven by the impact of modifications, but also related to changes in prepayment assumptions. For the years ended
December 31, 2010
and
2009
, other changes in expected cash flows were principally driven by changes in prepayment assumptions, as well as reclassification to the nonaccretable difference. Changes to prepayment assumptions change the expected remaining life of the portfolio, which drives changes in expected future interest cash collections. Such changes do not have a significant impact on the accretable yield percentage.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
249
|
As of or for the year ended December 31,
(in millions, except ratios)
|
Chase, excluding
Washington Mutual portfolio
(b)
|
|
Washington Mutual
portfolio
(b)
|
|
Total credit card
(b)
|
|||||||||||||||
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
|||||||||||||
Net charge-offs
|
$
|
5,668
|
|
$
|
11,191
|
|
|
$
|
1,257
|
|
$
|
2,846
|
|
|
$
|
6,925
|
|
$
|
14,037
|
|
% of net charge-offs to retained loans
|
4.91
|
%
|
8.73
|
%
|
|
10.49
|
%
|
17.73
|
%
|
|
5.44
|
%
|
9.73
|
%
|
||||||
Loan delinquency
|
|
|
|
|
|
|
|
|
||||||||||||
Current and less than 30 days past due and still accruing
|
$
|
118,054
|
|
$
|
117,248
|
|
|
$
|
10,410
|
|
$
|
12,670
|
|
|
$
|
128,464
|
|
$
|
129,918
|
|
30–89 days past due and still accruing
|
1,509
|
|
2,092
|
|
|
299
|
|
459
|
|
|
1,808
|
|
2,551
|
|
||||||
90 or more days past due and still accruing
|
1,558
|
|
2,449
|
|
|
344
|
|
604
|
|
|
1,902
|
|
3,053
|
|
||||||
Nonaccrual loans
|
1
|
|
2
|
|
|
—
|
|
—
|
|
|
1
|
|
2
|
|
||||||
Total retained loans
|
$
|
121,122
|
|
$
|
121,791
|
|
|
$
|
11,053
|
|
$
|
13,733
|
|
|
$
|
132,175
|
|
$
|
135,524
|
|
Loan delinquency ratios
|
|
|
|
|
|
|
|
|
||||||||||||
% of 30+ days past due to total retained loans
|
2.53
|
%
|
3.73
|
%
|
|
5.82
|
%
|
7.74
|
%
|
|
2.81
|
%
|
4.14
|
%
|
||||||
% of 90+ days past due to total retained loans
|
1.29
|
|
2.01
|
|
|
3.11
|
|
4.40
|
|
|
1.44
|
|
2.25
|
|
||||||
Credit card loans by geographic region
|
|
|
|
|
|
|
|
|
||||||||||||
California
|
$
|
15,479
|
|
$
|
15,454
|
|
|
$
|
2,119
|
|
$
|
2,650
|
|
|
$
|
17,598
|
|
$
|
18,104
|
|
New York
|
9,755
|
|
9,540
|
|
|
839
|
|
1,032
|
|
|
10,594
|
|
10,572
|
|
||||||
Texas
|
9,418
|
|
9,217
|
|
|
821
|
|
1,006
|
|
|
10,239
|
|
10,223
|
|
||||||
Florida
|
6,658
|
|
6,724
|
|
|
925
|
|
1,165
|
|
|
7,583
|
|
7,889
|
|
||||||
Illinois
|
7,108
|
|
7,077
|
|
|
440
|
|
542
|
|
|
7,548
|
|
7,619
|
|
||||||
New Jersey
|
5,208
|
|
5,070
|
|
|
396
|
|
494
|
|
|
5,604
|
|
5,564
|
|
||||||
Ohio
|
4,882
|
|
5,035
|
|
|
320
|
|
401
|
|
|
5,202
|
|
5,436
|
|
||||||
Pennsylvania
|
4,434
|
|
4,521
|
|
|
345
|
|
424
|
|
|
4,779
|
|
4,945
|
|
||||||
Michigan
|
3,777
|
|
3,956
|
|
|
217
|
|
273
|
|
|
3,994
|
|
4,229
|
|
||||||
Virginia
|
3,061
|
|
3,020
|
|
|
237
|
|
295
|
|
|
3,298
|
|
3,315
|
|
||||||
Georgia
|
2,737
|
|
2,834
|
|
|
315
|
|
398
|
|
|
3,052
|
|
3,232
|
|
||||||
Washington
|
2,081
|
|
2,053
|
|
|
359
|
|
438
|
|
|
2,440
|
|
2,491
|
|
||||||
All other
|
46,524
|
|
47,290
|
|
|
3,720
|
|
4,615
|
|
|
50,244
|
|
51,905
|
|
||||||
Total retained loans
|
$
|
121,122
|
|
$
|
121,791
|
|
|
$
|
11,053
|
|
$
|
13,733
|
|
|
$
|
132,175
|
|
$
|
135,524
|
|
Percentage of portfolio based on carrying value with estimated refreshed FICO scores
(a)
|
|
|
|
|
|
|
|
|
||||||||||||
Equal to or greater than 660
|
83.3
|
%
|
80.6
|
%
|
|
62.6
|
%
|
56.4
|
%
|
|
81.4
|
%
|
77.9
|
%
|
||||||
Less than 660
|
16.7
|
|
19.4
|
|
|
37.4
|
|
43.6
|
|
|
18.6
|
|
22.1
|
|
(a)
|
Refreshed FICO scores are estimated based on a statistically significant random sample of credit card accounts in the credit card portfolio for the period shown. The Firm obtains refreshed FICO scores at least quarterly.
|
(b)
|
Includes billed finance charges and fees net of an allowance for uncollectible amounts.
|
250
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
Chase, excluding
Washington Mutual
portfolio
|
|
Washington Mutual
portfolio
|
|
Total credit card
|
|||||||||||||||
December 31, (in millions)
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
||||||||||||
Impaired loans with an allowance
(a)(b)
|
|
|
|
|
|
|
|
|
||||||||||||
Credit card loans with modified payment terms
(c)
|
$
|
4,959
|
|
$
|
6,685
|
|
|
$
|
1,116
|
|
$
|
1,570
|
|
|
$
|
6,075
|
|
$
|
8,255
|
|
Modified credit card loans that have reverted to pre-modification payment terms
(d)
|
930
|
|
1,439
|
|
|
209
|
|
311
|
|
|
1,139
|
|
1,750
|
|
||||||
Total impaired loans
|
$
|
5,889
|
|
$
|
8,124
|
|
|
$
|
1,325
|
|
$
|
1,881
|
|
|
$
|
7,214
|
|
$
|
10,005
|
|
Allowance for loan losses related to impaired loans
|
$
|
2,195
|
|
$
|
3,175
|
|
|
$
|
532
|
|
$
|
894
|
|
|
$
|
2,727
|
|
$
|
4,069
|
|
(a)
|
The carrying value and the unpaid principal balance are the same for credit card impaired loans.
|
(b)
|
There were no impaired loans without an allowance.
|
(c)
|
Represents credit card loans outstanding to borrowers enrolled in a credit card modification program as of the date presented.
|
(d)
|
Represents credit card loans that were modified in TDRs but that have subsequently reverted back to the loans’ pre-modification payment terms. At
December 31, 2011
and
2010
,
$762 million
and
$1.2 billion
, respectively, of loans have reverted back to the pre-modification payment terms of the loans due to noncompliance with the terms of the modified loans. Based on the Firm’s historical experience a substantial portion of these loans is expected to be charged-off in accordance with the Firm’s standard charge-off policy. The remaining
$377 million
and
$590 million
at
December 31, 2011
and
2010
, respectively, of these loans are to borrowers who have successfully completed a short-term modification program. The Firm continues to report these loans as TDRs since the borrowers’ credit lines remain closed.
|
Year ended December 31,
|
Average impaired loans
|
|
Interest income on impaired loans
|
||||||||||||||||
(in millions)
|
2011
|
2010
|
2009
|
|
2011
|
2010
|
2009
|
||||||||||||
Chase, excluding Washington Mutual portfolio
|
$
|
6,914
|
|
$
|
8,747
|
|
$
|
3,059
|
|
|
$
|
360
|
|
$
|
479
|
|
$
|
181
|
|
Washington Mutual portfolio
|
1,585
|
|
1,983
|
|
991
|
|
|
103
|
|
126
|
|
70
|
|
||||||
Total credit card
|
$
|
8,499
|
|
$
|
10,730
|
|
$
|
4,050
|
|
|
$
|
463
|
|
$
|
605
|
|
$
|
251
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
251
|
|
Chase, excluding Washington Mutual portfolio
|
|
Washington Mutual portfolio
|
|
Total credit card
|
||||||||||||||||||
Year ended December 31, 2011
(in millions)
|
Short-term programs
|
|
Long-term programs
|
|
Short-term programs
|
|
Long-term programs
|
|
Short-term programs
|
|
Long-term programs
|
||||||||||||
New enrollments
|
$
|
141
|
|
|
$
|
2,075
|
|
|
$
|
26
|
|
|
$
|
448
|
|
|
$
|
167
|
|
|
$
|
2,523
|
|
Year ended December 31, 2011
(in millions, except weighted-average data)
|
Chase, excluding Washington Mutual portfolio
|
|
Washington Mutual portfolio
|
|
Total credit card
|
||||||
Weighted-average interest rate of loans – before TDR
|
14.91
|
%
|
|
21.38
|
%
|
|
16.05
|
%
|
|||
Weighted-average interest rate of loans – after TDR
|
5.04
|
|
|
6.39
|
|
|
5.28
|
|
|||
Loans that redefaulted within one year of modification
(a)
|
$
|
559
|
|
|
$
|
128
|
|
|
$
|
687
|
|
(a)
|
Represents loans modified in TDRs that experienced a payment default in the period presented, and for which the payment default occurred within one year of the modification. The amounts presented represent the balance of such loans as of the end of the quarter in which they defaulted.
|
252
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
253
|
|
2011
|
||||||||||||
Year ended December 31,
(in millions)
|
Wholesale
|
Consumer,
excluding
credit card
|
|
Credit card
|
Total
|
||||||||
Allowance for loan losses
|
|
|
|
|
|
||||||||
Beginning balance at January 1,
|
$
|
4,761
|
|
$
|
16,471
|
|
|
$
|
11,034
|
|
$
|
32,266
|
|
Cumulative effect of change in accounting principles
(a)
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||
Gross charge-offs
|
916
|
|
5,419
|
|
|
8,168
|
|
14,503
|
|
||||
Gross recoveries
|
(476
|
)
|
(547
|
)
|
|
(1,243
|
)
|
(2,266
|
)
|
||||
Net charge-offs
|
440
|
|
4,872
|
|
|
6,925
|
|
12,237
|
|
||||
Provision for loan losses
|
17
|
|
4,670
|
|
|
2,925
|
|
7,612
|
|
||||
Other
|
(22
|
)
|
25
|
|
|
(35
|
)
|
(32
|
)
|
||||
Ending balance at December 31,
|
$
|
4,316
|
|
$
|
16,294
|
|
|
$
|
6,999
|
|
$
|
27,609
|
|
|
|
|
|
|
|
||||||||
Allowance for loan losses by impairment methodology
|
|
|
|
|
|
||||||||
Asset-specific
(b)
|
$
|
516
|
|
$
|
828
|
|
|
$
|
2,727
|
|
$
|
4,071
|
|
Formula-based
|
3,800
|
|
9,755
|
|
|
4,272
|
|
17,827
|
|
||||
PCI
|
—
|
|
5,711
|
|
|
—
|
|
5,711
|
|
||||
Total allowance for loan losses
|
$
|
4,316
|
|
$
|
16,294
|
|
|
$
|
6,999
|
|
$
|
27,609
|
|
|
|
|
|
|
|
||||||||
Loans by impairment methodology
|
|
|
|
|
|
||||||||
Asset-specific
|
$
|
2,549
|
|
$
|
9,892
|
|
|
$
|
7,214
|
|
$
|
19,655
|
|
Formula-based
|
275,825
|
|
232,989
|
|
|
124,961
|
|
633,775
|
|
||||
PCI
|
21
|
|
65,546
|
|
|
—
|
|
65,567
|
|
||||
Total retained loans
|
$
|
278,395
|
|
$
|
308,427
|
|
|
$
|
132,175
|
|
$
|
718,997
|
|
|
|
|
|
|
|
||||||||
Impaired collateral-dependent loans
|
|
|
|
|
|
||||||||
Net charge-offs
(c)
|
$
|
128
|
|
$
|
110
|
|
|
$
|
—
|
|
$
|
238
|
|
Loans measured at fair value of collateral less cost to sell
(c)
|
833
|
|
830
|
|
(d)
|
—
|
|
1,663
|
|
||||
|
|
|
|
|
|
||||||||
Allowance for lending-related commitments
|
|
|
|
|
|
||||||||
Beginning balance at January 1,
|
$
|
711
|
|
$
|
6
|
|
|
$
|
—
|
|
$
|
717
|
|
Cumulative effect of change in accounting principles
(a)
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||
Provision for lending-related commitments
|
(40
|
)
|
2
|
|
|
—
|
|
(38
|
)
|
||||
Other
|
(5
|
)
|
(1
|
)
|
|
—
|
|
(6
|
)
|
||||
Ending balance at December 31,
|
$
|
666
|
|
$
|
7
|
|
|
$
|
—
|
|
$
|
673
|
|
|
|
|
|
|
|
||||||||
Allowance for lending-related commitments by impairment methodology
|
|
|
|
|
|
||||||||
Asset-specific
|
$
|
150
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
150
|
|
Formula-based
|
516
|
|
7
|
|
|
—
|
|
523
|
|
||||
Total allowance for lending-related commitments
|
$
|
666
|
|
$
|
7
|
|
|
$
|
—
|
|
$
|
673
|
|
|
|
|
|
|
|
||||||||
Lending-related commitments by impairment methodology
|
|
|
|
|
|
||||||||
Asset-specific
|
$
|
865
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
865
|
|
Formula-based
|
381,874
|
|
62,307
|
|
|
530,616
|
|
974,797
|
|
||||
Total lending-related commitments
|
$
|
382,739
|
|
$
|
62,307
|
|
|
$
|
530,616
|
|
$
|
975,662
|
|
(a)
|
Effective January 1, 2010, the Firm adopted accounting guidance related to VIEs. Upon adoption of the guidance, the Firm consolidated its Firm-sponsored credit card securitization trusts, its Firm-administered multi-seller conduits and certain other consumer loan securitization entities, primarily mortgage-related. As a result,
$7.4 billion
,
$14 million
and
$127 million
, respectively, of allowance for loan losses were recorded on-balance sheet with the consolidation of these entities. For further discussion, see Note 16 on pages 256–267 of this
Annual Report
.
|
(b)
|
Includes risk-rated loans that have been placed on nonaccrual status and loans that have been modified in a TDR.
|
(c)
|
Prior periods have been revised to conform with the current presentation.
|
(d)
|
Includes collateral-dependent residential mortgage loans that are charged off to the fair value of the underlying collateral less cost to sell. These loans are considered collateral-dependent under regulatory guidance because they involve modifications where an interest-only period is provided or a significant portion of principal is deferred.
|
254
|
|
JPMorgan Chase & Co./2011 Annual Report
|
(table continued from previous page)
|
|
|
|
|
|
|
|
|
||||||||||||||||||
2010
|
|
2009
|
||||||||||||||||||||||||
Wholesale
|
Consumer,
excluding
credit card
|
|
Credit card
|
Total
|
|
Wholesale
|
Consumer,
excluding
credit card
|
|
Credit card
|
Total
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
$
|
7,145
|
|
$
|
14,785
|
|
|
$
|
9,672
|
|
$
|
31,602
|
|
|
$
|
6,545
|
|
$
|
8,927
|
|
|
$
|
7,692
|
|
$
|
23,164
|
|
14
|
|
127
|
|
|
7,353
|
|
7,494
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||||||
1,989
|
|
8,383
|
|
|
15,410
|
|
25,782
|
|
|
3,226
|
|
10,421
|
|
|
10,371
|
|
24,018
|
|
||||||||
(262
|
)
|
(474
|
)
|
|
(1,373
|
)
|
(2,109
|
)
|
|
(94
|
)
|
(222
|
)
|
|
(737
|
)
|
(1,053
|
)
|
||||||||
1,727
|
|
7,909
|
|
|
14,037
|
|
23,673
|
|
|
3,132
|
|
10,199
|
|
|
9,634
|
|
22,965
|
|
||||||||
(673
|
)
|
9,458
|
|
|
8,037
|
|
16,822
|
|
|
3,684
|
|
16,032
|
|
|
12,019
|
|
31,735
|
|
||||||||
2
|
|
10
|
|
|
9
|
|
21
|
|
|
48
|
|
25
|
|
|
(405
|
)
|
(332
|
)
|
||||||||
$
|
4,761
|
|
$
|
16,471
|
|
|
$
|
11,034
|
|
$
|
32,266
|
|
|
$
|
7,145
|
|
$
|
14,785
|
|
|
$
|
9,672
|
|
$
|
31,602
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
$
|
1,574
|
|
$
|
1,075
|
|
|
$
|
4,069
|
|
$
|
6,718
|
|
|
$
|
2,046
|
|
$
|
896
|
|
|
$
|
3,117
|
|
$
|
6,059
|
|
3,187
|
|
10,455
|
|
|
6,965
|
|
20,607
|
|
|
5,099
|
|
12,308
|
|
|
6,555
|
|
23,962
|
|
||||||||
—
|
|
4,941
|
|
|
—
|
|
4,941
|
|
|
—
|
|
1,581
|
|
|
—
|
|
1,581
|
|
||||||||
$
|
4,761
|
|
$
|
16,471
|
|
|
$
|
11,034
|
|
$
|
32,266
|
|
|
$
|
7,145
|
|
$
|
14,785
|
|
|
$
|
9,672
|
|
$
|
31,602
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
$
|
5,486
|
|
$
|
6,220
|
|
|
$
|
10,005
|
|
$
|
21,711
|
|
|
$
|
6,960
|
|
$
|
3,648
|
|
|
$
|
6,245
|
|
$
|
16,853
|
|
216,980
|
|
248,481
|
|
|
125,519
|
|
590,980
|
|
|
192,982
|
|
263,462
|
|
|
72,541
|
|
528,985
|
|
||||||||
44
|
|
72,763
|
|
|
—
|
|
72,807
|
|
|
135
|
|
81,245
|
|
|
—
|
|
81,380
|
|
||||||||
$
|
222,510
|
|
$
|
327,464
|
|
|
$
|
135,524
|
|
$
|
685,498
|
|
|
$
|
200,077
|
|
$
|
348,355
|
|
|
$
|
78,786
|
|
$
|
627,218
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
$
|
636
|
|
$
|
304
|
|
|
$
|
—
|
|
$
|
940
|
|
|
$
|
1,394
|
|
$
|
166
|
|
|
$
|
—
|
|
$
|
1,560
|
|
1,269
|
|
890
|
|
(d)
|
—
|
|
2,159
|
|
|
1,744
|
|
210
|
|
(d)
|
—
|
|
1,954
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
$
|
927
|
|
$
|
12
|
|
|
$
|
—
|
|
$
|
939
|
|
|
$
|
634
|
|
$
|
25
|
|
|
$
|
—
|
|
$
|
659
|
|
(18
|
)
|
—
|
|
|
—
|
|
(18
|
)
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||||||
(177
|
)
|
(6
|
)
|
|
—
|
|
(183
|
)
|
|
290
|
|
(10
|
)
|
|
—
|
|
280
|
|
||||||||
(21
|
)
|
—
|
|
|
—
|
|
(21
|
)
|
|
3
|
|
(3
|
)
|
|
—
|
|
—
|
|
||||||||
$
|
711
|
|
$
|
6
|
|
|
$
|
—
|
|
$
|
717
|
|
|
$
|
927
|
|
$
|
12
|
|
|
$
|
—
|
|
$
|
939
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
$
|
180
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
180
|
|
|
$
|
297
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
297
|
|
531
|
|
6
|
|
|
—
|
|
537
|
|
|
630
|
|
12
|
|
|
—
|
|
642
|
|
||||||||
$
|
711
|
|
$
|
6
|
|
|
$
|
—
|
|
$
|
717
|
|
|
$
|
927
|
|
$
|
12
|
|
|
$
|
—
|
|
$
|
939
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
$
|
1,005
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
1,005
|
|
|
$
|
1,577
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
1,577
|
|
345,074
|
|
65,403
|
|
|
547,227
|
|
957,704
|
|
|
345,578
|
|
74,827
|
|
|
569,113
|
|
989,518
|
|
||||||||
$
|
346,079
|
|
$
|
65,403
|
|
|
$
|
547,227
|
|
$
|
958,709
|
|
|
$
|
347,155
|
|
$
|
74,827
|
|
|
$
|
569,113
|
|
$
|
991,095
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
255
|
Line-of-Business
|
Transaction Type
|
Activity
|
Annual Report
page reference
|
Card
|
Credit card securitization trusts
|
Securitization of both originated and purchased credit card receivables
|
257
|
|
Other securitization trusts
|
Securitization of originated automobile and student loans
|
257–260
|
RFS
|
Mortgage securitization trusts
|
Securitization of originated and purchased residential mortgages
|
257–260
|
IB
|
Mortgage and other securitization trusts
|
Securitization of both originated and purchased residential and commercial mortgages, automobile and student loans
|
257–260
|
|
Multi-seller conduits
Investor intermediation activities:
|
Assist clients in accessing the financial markets in a cost-efficient manner and structures transactions to meet investor needs
|
260
|
|
Municipal bond vehicles
|
|
260–261
|
|
Credit-related note and asset swap vehicles
|
|
261–263
|
•
|
Asset Management: Sponsors and manages certain funds that are deemed VIEs. As asset manager of the funds, AM earns a fee based on assets managed; the fee varies with each fund’s investment objective and is competitively priced. For fund entities that qualify as VIEs, AM’s interests are, in certain cases, considered to be significant variable interests that result in consolidation of the financial results of these entities.
|
•
|
Treasury & Securities Services: Provides services to a number of VIEs that are similar to those provided to non-VIEs. TSS earns market-based fees for the services it provides. TSS’s interests are generally not considered to be potentially significant variable interests and/or TSS does not control these VIEs; therefore, TSS does not consolidate these VIEs.
|
•
|
Commercial Banking: CB makes investments in and provides lending to community development entities that may meet the definition of a VIE. In addition, CB provides financing and lending related services to certain client-sponsored VIEs. In general, CB does not control the activities of these entities and does not consolidate these entities.
|
•
|
Corporate/Private Equity: Corporate uses VIEs to issue guaranteed capital debt securities. See Note 21 on pages 273–275 of this Annual Report for further information. The Private Equity business, within Corporate/Private Equity, may be involved with entities that are deemed VIEs. However, the Firm’s private equity business is subject to specialized investment company accounting, which does not require the consolidation of investments, including VIEs.
|
256
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
257
|
|
Principal amount outstanding
|
|
JPMorgan Chase interest in securitized assets in nonconsolidated VIEs
(d)(e)(f)
|
||||||||||||||||
December 31, 2011
(a)
(in billions)
|
Total assets held by securitization VIEs
|
Assets held in consolidated securitization VIEs
|
Assets held in nonconsolidated securitization VIEs with continuing involvement
|
|
Trading assets
|
AFS securities
|
Total interests held by JPMorgan Chase
|
||||||||||||
Securitization-related
|
|
|
|
|
|
|
|
||||||||||||
Residential mortgage:
|
|
|
|
|
|
|
|
||||||||||||
Prime
(b)
|
$
|
129.5
|
|
$
|
2.4
|
|
$
|
101.0
|
|
|
$
|
0.6
|
|
$
|
—
|
|
$
|
0.6
|
|
Subprime
|
38.3
|
|
0.2
|
|
35.8
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Option ARMs
|
31.1
|
|
—
|
|
31.1
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Commercial and other
(c)
|
139.3
|
|
—
|
|
93.3
|
|
|
1.7
|
|
2.0
|
|
3.7
|
|
||||||
Student
|
4.1
|
|
4.1
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Total
|
$
|
342.3
|
|
$
|
6.7
|
|
$
|
261.2
|
|
|
$
|
2.3
|
|
$
|
2.0
|
|
$
|
4.3
|
|
|
Principal amount outstanding
|
|
JPMorgan Chase interest in securitized assets in nonconsolidated VIEs
(d)(e)(f)
|
||||||||||||||||
December 31, 2010
(a)
(in billions)
|
Total assets held by securitization VIEs
|
Assets held in consolidated securitization VIEs
|
Assets held in nonconsolidated securitization VIEs with continuing involvement
|
|
Trading assets
|
AFS securities
|
Total interests held by JPMorgan Chase
|
||||||||||||
Securitization-related
|
|
|
|
|
|
|
|
||||||||||||
Residential mortgage:
|
|
|
|
|
|
|
|
||||||||||||
Prime
(b)
|
$
|
153.1
|
|
$
|
2.2
|
|
$
|
143.8
|
|
|
$
|
0.7
|
|
$
|
—
|
|
$
|
0.7
|
|
Subprime
|
44.0
|
|
1.6
|
|
40.7
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Option ARMs
|
36.1
|
|
0.3
|
|
35.8
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Commercial and other
(c)
|
153.4
|
|
—
|
|
106.2
|
|
|
2.0
|
|
0.9
|
|
2.9
|
|
||||||
Student
|
4.5
|
|
4.5
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Total
|
$
|
391.1
|
|
$
|
8.6
|
|
$
|
326.5
|
|
|
$
|
2.7
|
|
$
|
0.9
|
|
$
|
3.6
|
|
(a)
|
Excludes U.S. government agency securitizations. See page 265 of this Note for information on the Firm’s loan sales to U.S. government agencies.
|
(b)
|
Includes Alt-A loans.
|
(c)
|
Consists of securities backed by commercial loans (predominantly real estate) and non-mortgage-related consumer receivables purchased from third parties. The Firm generally does not retain a residual interest in its sponsored commercial mortgage securitization transactions.
|
(d)
|
The table above excludes the following: retained servicing (see Note 17 on pages 267–271 of this Annual Report for a discussion of MSRs); securities retained from loans sales to U.S. government agencies; interest rate and foreign exchange derivatives primarily used to manage interest rate and foreign exchange risks of securitization entities (See Note 6 on pages 202–210 of this Annual Report for further information on derivatives); senior and subordinated securities of
$110 million
and
$8 million
, respectively, at
December 31, 2011
, and
$182 million
and
$18 million
, respectively, at
December 31, 2010
, which the Firm purchased in connection with IB’s secondary market-making activities.
|
(e)
|
Includes interests held in re-securitization transactions.
|
(f)
|
As of
December 31, 2011
and
2010
,
68%
and
66%
, respectively, of the Firm’s retained securitization interests, which are carried at fair value, were risk-rated “A” or better, on an S&P-equivalent basis. The retained interests in prime residential mortgages consisted of
$136 million
and
$157 million
of investment-grade and
$427 million
and
$552 million
of noninvestment-grade retained interests at
December 31, 2011
and 2010, respectively. The retained interests in commercial and other securitizations trusts consisted of
$3.4 billion
and
$2.6 billion
of investment-grade and
$283 million
and
$250 million
of noninvestment-grade retained interests at
December 31, 2011
and
2010
, respectively.
|
258
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
259
|
260
|
|
JPMorgan Chase & Co./2011 Annual Report
|
December 31,
(in billions)
|
Fair value of assets held by VIEs
|
Liquidity facilities
(a)
|
Excess/(deficit)
(b)
|
Maximum exposure
|
||||||||
Nonconsolidated municipal bond vehicles
|
|
|
|
|
||||||||
2011
|
$
|
13.5
|
|
$
|
7.9
|
|
$
|
5.6
|
|
$
|
7.9
|
|
2010
|
13.7
|
|
8.8
|
|
4.9
|
|
8.8
|
|
||||
|
|
|
|
|
|
Ratings profile of VIE assets
(c)
|
Fair value of assets held by VIEs
|
Wt. avg. expected life of assets (years)
|
||||||||||||||||||
|
Investment-grade
|
|
Noninvestment- grade
|
||||||||||||||||||
December 31,
(in billions, except where otherwise noted)
|
AAA to AAA-
|
AA+ to AA-
|
A+ to A-
|
BBB+ to BBB-
|
|
BB+ and below
|
|||||||||||||||
2011
|
$
|
1.5
|
|
$
|
11.2
|
|
$
|
0.7
|
|
$
|
—
|
|
|
$
|
0.1
|
|
$
|
13.5
|
|
6.6
|
|
2010
|
1.9
|
|
11.2
|
|
0.6
|
|
—
|
|
|
—
|
|
13.7
|
|
15.5
|
|
(a)
|
The Firm may serve as credit enhancement provider to municipal bond vehicles in which it serves as liquidity provider. The Firm provided insurance on underlying municipal bonds, in the form of letters of credit, of
$10 million
at December 31,
2010
. The Firm did not provide insurance on underlying municipal bonds at
December 31, 2011
.
|
(b)
|
Represents the excess/(deficit) of the fair values of municipal bond assets available to repay the liquidity facilities, if drawn.
|
(c)
|
The ratings scale is based on the Firm’s internal risk ratings and is presented on an S&P-equivalent basis.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
261
|
262
|
|
JPMorgan Chase & Co./2011 Annual Report
|
December 31, 2011
(in billions)
|
Net derivative receivables
|
Total exposure
(a)
|
Par value of collateral held by VIEs
(b)
|
||||||
Credit-related notes
|
|
|
|
||||||
Static structure
|
$
|
1.0
|
|
$
|
1.0
|
|
$
|
9.1
|
|
Managed structure
|
2.7
|
|
2.7
|
|
7.7
|
|
|||
Total credit-related notes
|
3.7
|
|
3.7
|
|
16.8
|
|
|||
Asset swaps
|
0.6
|
|
0.6
|
|
8.6
|
|
|||
Total
|
$
|
4.3
|
|
$
|
4.3
|
|
$
|
25.4
|
|
December 31, 2010 (in billions)
|
Net derivative receivables
|
Total exposure
(a)
|
Par value of collateral held by VIEs
(b)
|
||||||
Credit-related notes
|
|
|
|
||||||
Static structure
|
$
|
1.0
|
|
$
|
1.0
|
|
$
|
9.5
|
|
Managed structure
|
2.8
|
|
2.8
|
|
10.7
|
|
|||
Total credit-related notes
|
3.8
|
|
3.8
|
|
20.2
|
|
|||
Asset swaps
|
0.3
|
|
0.3
|
|
7.6
|
|
|||
Total
|
$
|
4.1
|
|
$
|
4.1
|
|
$
|
27.8
|
|
(a)
|
On–balance sheet exposure that includes net derivative receivables and trading assets – debt and equity instruments. At both December 31, 2011 and 2010, the amount of trading assets issued by nonconsolidated credit-related note and asset swap vehicles that were held by the Firm were immaterial.
|
(b)
|
The Firm’s maximum exposure arises through the derivatives executed with the VIEs; the exposure varies over time with changes in the fair value of the derivatives. The Firm relies on the collateral held by the VIEs to pay any amounts due under the derivatives; the vehicles are structured at inception so that the par value of the collateral is expected to be sufficient to pay amounts due under the derivative contracts.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
263
|
|
Assets
|
|
Liabilities
|
|||||||||||||||||||
December 31, 2011
(in billions)
|
Trading assets –
debt and equity instruments |
Loans
|
Other
(c)
|
Total
assets
(d)
|
|
Beneficial interests in
VIE assets
(e)
|
Other
(f)
|
Total
liabilities
|
||||||||||||||
VIE program type
|
|
|
|
|
|
|
|
|
||||||||||||||
Firm-sponsored credit card trusts
|
$
|
—
|
|
$
|
50.7
|
|
$
|
0.8
|
|
$
|
51.5
|
|
|
$
|
32.5
|
|
$
|
—
|
|
$
|
32.5
|
|
Firm-administered multi-seller conduits
|
—
|
|
29.7
|
|
0.2
|
|
29.9
|
|
|
18.7
|
|
—
|
|
18.7
|
|
|||||||
Mortgage securitization entities
(a)
|
1.4
|
|
2.3
|
|
—
|
|
3.7
|
|
|
2.3
|
|
1.3
|
|
3.6
|
|
|||||||
Other
(b)
|
10.7
|
|
4.1
|
|
1.6
|
|
16.4
|
|
|
12.5
|
|
0.2
|
|
12.7
|
|
|||||||
Total
|
$
|
12.1
|
|
$
|
86.8
|
|
$
|
2.6
|
|
$
|
101.5
|
|
|
$
|
66.0
|
|
$
|
1.5
|
|
$
|
67.5
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Assets
|
|
Liabilities
|
|||||||||||||||||||
December 31, 2010 (in billions)
|
Trading assets –
debt and equity instruments |
Loans
|
Other
(c)
|
Total
assets
(d)
|
|
Beneficial interests in
VIE assets
(e)
|
Other
(f)
|
Total
liabilities
|
||||||||||||||
VIE program type
|
|
|
|
|
|
|
|
|
||||||||||||||
Firm-sponsored credit card trusts
|
$
|
—
|
|
$
|
67.2
|
|
$
|
1.3
|
|
$
|
68.5
|
|
|
$
|
44.3
|
|
$
|
—
|
|
$
|
44.3
|
|
Firm-administered multi-seller conduits
|
—
|
|
21.1
|
|
0.6
|
|
21.7
|
|
|
21.6
|
|
0.1
|
|
21.7
|
|
|||||||
Mortgage securitization entities
(a)
|
1.8
|
|
2.9
|
|
—
|
|
4.7
|
|
|
2.4
|
|
1.6
|
|
4.0
|
|
|||||||
Other
(b)
|
8.0
|
|
4.4
|
|
1.6
|
|
14.0
|
|
|
9.3
|
|
0.3
|
|
9.6
|
|
|||||||
Total
|
$
|
9.8
|
|
$
|
95.6
|
|
$
|
3.5
|
|
$
|
108.9
|
|
|
$
|
77.6
|
|
$
|
2.0
|
|
$
|
79.6
|
|
(a)
|
Includes residential and commercial mortgage securitizations as well as re-securitizations.
|
(b)
|
Primarily comprises student loan securitization entities and municipal bond entities. The Firm consolidated
$4.1 billion
and
$4.5 billion
of student loan securitization entities as of December 31, 2011 and 2010, respectively, and
$9.3 billion
and
$4.6 billion
of municipal bond vehicles as of December 31, 2011 and 2010, respectively.
|
(c)
|
Includes assets classified as cash, derivative receivables, AFS securities, and other assets within the Consolidated Balance Sheets.
|
(d)
|
The assets of the consolidated VIEs included in the program types above are used to settle the liabilities of those entities. The difference between total assets and total liabilities recognized for consolidated VIEs represents the Firm’s interest in the consolidated VIEs for each program type.
|
(e)
|
The interest-bearing beneficial interest liabilities issued by consolidated VIEs are classified in the line item on the Consolidated Balance Sheets titled, “Beneficial interests issued by consolidated variable interest entities.” The holders of these beneficial interests do not have recourse to the general credit of
JPMorgan Chase
. Included in beneficial interests in VIE assets are long-term beneficial interests of
$39.7 billion
and
$52.6 billion
at
December 31, 2011
and
2010
, respectively. The maturities of the long-term beneficial interests as of
December 31, 2011
, were as follows:
$13.5 billion
under one year,
$17.8 billion
between one and five years, and
$8.4 billion
over five years, all respectively.
|
(f)
|
Includes liabilities classified as accounts payable and other liabilities in the Consolidated Balance Sheets.
|
264
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
2011
|
|
2010
|
|
2009
|
|||||||||||||||||||
Year ended December 31,
(in millions, except rates)
|
Residential mortgage
(d)(e)
|
Commercial and other
(f)
|
|
Residential mortgage
(d)(e)
|
Commercial and other
(f)
|
|
Residential mortgage
(d)(e)
|
Commercial and other
(f)
|
|
Credit card
|
||||||||||||||
Principal securitized
|
$
|
—
|
|
$
|
5,961
|
|
|
$
|
35
|
|
$
|
2,237
|
|
|
$
|
—
|
|
$
|
500
|
|
|
$
|
26,538
|
|
Pretax gains
|
—
|
|
—
|
|
(g)
|
—
|
|
—
|
|
(g)
|
—
|
|
—
|
|
(g)
|
22
|
|
|||||||
All cash flows during the period:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Proceeds from new securitizations
(a)
|
$
|
—
|
|
$
|
6,142
|
|
|
$
|
36
|
|
$
|
2,369
|
|
|
$
|
—
|
|
$
|
542
|
|
|
$
|
26,538
|
|
Servicing fees collected
|
755
|
|
4
|
|
|
968
|
|
4
|
|
|
1,111
|
|
18
|
|
|
1,251
|
|
|||||||
Other cash flows received
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
11
|
|
—
|
|
|
5,000
|
|
|||||||
Proceeds from collections reinvested in revolving securitizations
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
161,428
|
|
|||||||
Purchases of previously transferred financial assets (or the underlying collateral)
(b)
|
772
|
|
—
|
|
|
321
|
|
—
|
|
|
165
|
|
249
|
|
|
—
|
|
|||||||
Cash flows received on the interests that continue to be held by the Firm
|
235
|
|
178
|
|
|
319
|
|
143
|
|
|
538
|
|
120
|
|
|
261
|
|
|||||||
Key assumptions used to measure retained interests originated during the year (rates per annum)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Prepayment rate
(c)
|
|
—
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
16.7
|
%
|
||||||||||
|
|
CPY
|
|
|
|
CPY
|
|
|
|
CPY
|
|
|
PPR
|
|
||||||||||
Weighted-average life (in years)
|
|
1.7
|
|
|
|
7.1
|
|
|
|
9.0
|
|
|
0.5
|
|
||||||||||
Expected credit losses
|
|
—
|
%
|
|
|
—
|
%
|
|
|
—
|
%
|
|
8.9
|
%
|
||||||||||
Discount rate
|
|
3.5
|
|
|
|
7.7
|
|
|
|
10.7
|
|
|
16.0
|
|
(a)
|
Proceeds from
residential and commercial mortgage securitizations are received in the form of securities. During 2011,
$4.0 billion
and
$2.1 billion
of commercial mortgage securitizations were classified in levels 2 and 3 of the fair value hierarchy, respectively. During 2010,
$2.2 billion
and
$172 million
of residential and commercial mortgage securitizations were classified in levels 2 and 3 of the fair value hierarchy, respectively. During 2009,
$380 million
and
$162 million
of residential and commercial mortgage securitizations were classified in levels 2 and 3 of the fair value hierarchy, respectively; and
$12.8 billion
of proceeds from credit card securitizations were received as securities and were classified in level 2 of the fair value hierarchy.
|
(b)
|
Includes cash paid by the Firm to reacquire assets from off–balance sheet, nonconsolidated entities – for example, loan repurchases due to representation and warranties and servicer clean-up calls.
|
(c)
|
CPY: constant prepayment yield; PPR: principal payment rate.
|
(d)
|
Includes prime, Alt-A, subprime, option ARMS, and re-securitizations. Excludes sales for which the Firm did not securitize the loan (including loans sold to Ginnie Mae, Fannie Mae and Freddie Mac).
|
(e)
|
There were no retained interests held in the residential mortgage securitization completed in
2010
. There were no residential mortgage securitizations in 2011 and 2009.
|
(f)
|
Includes commercial, student loan and automobile loan securitizations.
|
(g)
|
The Firm elected the fair value option for loans pending securitization. The carrying value of these loans accounted for at fair value approximated the proceeds received from securitization.
|
Year ended December 31,
(in millions)
|
2011
|
2010
|
2009
|
||||||
Carrying value of loans sold
(a)(b)
|
$
|
150,632
|
|
$
|
156,615
|
|
$
|
154,571
|
|
Proceeds received from loan sales as cash
|
2,864
|
|
3,887
|
|
1,702
|
|
|||
Proceeds from loans sales as securities
(c)
|
145,340
|
|
149,786
|
|
149,343
|
|
|||
Total proceeds received from loan sales
|
$
|
148,204
|
|
$
|
153,673
|
|
$
|
151,045
|
|
Gains on loan sales
|
133
|
|
212
|
|
89
|
|
(a)
|
Predominantly to U.S. government agencies.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
265
|
(b)
|
MSRs were excluded from the above table. See Note 17 on pages 267–271 of this Annual Report for further information on originated MSRs.
|
(c)
|
Predominantly includes securities from U.S. government agencies that are generally sold shortly after receipt.
|
(a)
|
The Firm’s interests in prime mortgage securitizations were
$555 million
and
$708 million
, as of
December 31, 2011
and
2010
, respectively. These include retained interests in Alt-A loans and re-securitization transactions. The Firm's interests in subprime mortgage securitizations were
$31 million
and
$14 million
, as of
December 31, 2011
and
2010
, respectively. Additionally, the Firm had interests in option ARM mortgage securitizations of
$23 million
and
$29 million
at
December 31, 2011
and
2010
, respectively.
|
(b)
|
Includes certain investments acquired in the secondary market but predominantly held for investment purposes.
|
(c)
|
CPR: constant prepayment rate.
|
266
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
Securitized assets
|
|
90 days past due
|
|
Liquidation losses
|
|||||||||||||||
As of or for the year ended December 31, (in millions)
|
2011
|
2010
|
|
2011
|
2010
|
|
2011
|
2010
|
||||||||||||
Securitized loans
(a)
|
|
|
|
|
|
|
|
|
||||||||||||
Residential mortgage:
|
|
|
|
|
|
|
|
|
||||||||||||
Prime mortgage
(b)
|
$
|
101,004
|
|
$
|
143,764
|
|
|
$
|
24,285
|
|
$
|
33,093
|
|
|
$
|
5,650
|
|
$
|
6,257
|
|
Subprime mortgage
|
35,755
|
|
40,721
|
|
|
14,293
|
|
15,456
|
|
|
3,086
|
|
3,598
|
|
||||||
Option ARMs
|
31,075
|
|
35,786
|
|
|
9,999
|
|
10,788
|
|
|
1,907
|
|
2,305
|
|
||||||
Commercial and other
|
93,336
|
|
106,245
|
|
|
4,836
|
|
5,791
|
|
|
1,101
|
|
618
|
|
||||||
Total loans securitized
(c)
|
$
|
261,170
|
|
$
|
326,516
|
|
|
$
|
53,413
|
|
$
|
65,128
|
|
|
$
|
11,744
|
|
$
|
12,778
|
|
(a)
|
Total assets held in securitization-related SPEs were
$342.3 billion
and
$391.1 billion
, respectively, at
December 31, 2011
and
2010
. The
$261.2 billion
and
$326.5 billion
, respectively, of loans securitized at
December 31, 2011
and
2010
, excludes:
$74.4 billion
and
$56.0 billion
, respectively, of securitized loans in which the Firm has no continuing involvement, and
$6.7 billion
and
$8.6 billion
, respectively, of loan securitizations consolidated on the Firm’s Consolidated Balance Sheets at
December 31, 2011
and
2010
.
|
(b)
|
Includes Alt-A loans.
|
(c)
|
Includes securitized loans that were previously recorded at fair value and classified as trading assets.
|
(in millions, except ratios)
|
U.S. GAAP assets
|
U.S. GAAP liabilities
|
Stockholders' equity
|
Tier 1 capital
|
|||||||
As of December 31, 2009
|
$
|
2,031,989
|
|
$
|
1,866,624
|
|
$
|
165,365
|
|
11.10
|
%
|
Impact of new accounting guidance for consolidation of VIEs
|
|
|
|
|
|||||||
Credit card
|
60,901
|
|
65,353
|
|
(4,452
|
)
|
(0.30
|
)
|
|||
Multi-seller conduits
|
17,724
|
|
17,744
|
|
(20
|
)
|
—
|
|
|||
Mortgage & other
|
9,059
|
|
9,107
|
|
(48
|
)
|
(0.04
|
)
|
|||
Total impact of new guidance
|
87,684
|
|
92,204
|
|
(4,520
|
)
|
(0.34
|
)
|
|||
Beginning balance as of January 1, 2010
|
$
|
2,119,673
|
|
$
|
1,958,828
|
|
$
|
160,845
|
|
10.76
|
%
|
December 31, (in millions)
|
2011
|
2010
|
2009
|
||||||
Goodwill
|
$
|
48,188
|
|
$
|
48,854
|
|
$
|
48,357
|
|
Mortgage servicing rights
|
7,223
|
|
13,649
|
|
15,531
|
|
|||
Other intangible assets:
|
|
|
|
||||||
Purchased credit card relationships
|
$
|
602
|
|
$
|
897
|
|
$
|
1,246
|
|
Other credit card-related intangibles
|
488
|
|
593
|
|
691
|
|
|||
Core deposit intangibles
|
594
|
|
879
|
|
1,207
|
|
|||
Other intangibles
|
1,523
|
|
1,670
|
|
1,477
|
|
|||
Total other intangible assets
|
$
|
3,207
|
|
$
|
4,039
|
|
$
|
4,621
|
|
December 31, (in millions)
|
2011
|
2010
|
2009
|
||||||
Investment Bank
|
$
|
5,276
|
|
$
|
5,278
|
|
$
|
4,959
|
|
Retail Financial Services
|
16,489
|
|
16,496
|
|
16,514
|
|
|||
Card Services & Auto
|
14,507
|
|
14,522
|
|
14,451
|
|
|||
Commercial Banking
|
2,864
|
|
2,866
|
|
2,868
|
|
|||
Treasury & Securities Services
|
1,668
|
|
1,680
|
|
1,667
|
|
|||
Asset Management
|
7,007
|
|
7,635
|
|
7,521
|
|
|||
Corporate/Private Equity
|
377
|
|
377
|
|
377
|
|
|||
Total goodwill
|
$
|
48,188
|
|
$
|
48,854
|
|
$
|
48,357
|
|
Year ended December 31,
(in millions)
|
2011
|
|
2010
|
|
2009
|
||||||
Balance at beginning of period
(a)
|
$
|
48,854
|
|
|
$
|
48,357
|
|
|
$
|
48,027
|
|
Changes during the period from:
|
|
|
|
|
|
|
|||||
Business combinations
|
97
|
|
|
556
|
|
|
271
|
|
|||
Dispositions
|
(685
|
)
|
|
(19
|
)
|
|
—
|
|
|||
Other
(b)
|
(78
|
)
|
|
(40
|
)
|
|
59
|
|
|||
Balance at December 31,
(a)
|
$
|
48,188
|
|
|
$
|
48,854
|
|
|
$
|
48,357
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
267
|
(a)
|
Reflects gross goodwill balances as the Firm has not recognized any impairment losses to date.
|
(b)
|
Includes foreign currency translation adjustments and other tax-related adjustments.
|
268
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Year ended December 31,
(in millions, except where otherwise noted)
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Fair value at beginning of period
|
$
|
13,649
|
|
|
$
|
15,531
|
|
|
$
|
9,403
|
|
MSR activity
|
|
|
|
|
|
|
|||||
Originations of MSRs
|
2,570
|
|
|
3,153
|
|
|
3,615
|
|
|||
Purchase of MSRs
|
33
|
|
|
26
|
|
|
2
|
|
|||
Disposition of MSRs
|
—
|
|
|
(407
|
)
|
|
(10
|
)
|
|||
Changes due to modeled amortization
|
(1,910
|
)
|
|
(2,386
|
)
|
|
(3,286
|
)
|
|||
Net additions and amortization
|
693
|
|
|
386
|
|
|
321
|
|
|||
Changes due to market interest rates
|
(5,392
|
)
|
|
(2,224
|
)
|
|
5,844
|
|
|||
Other changes in valuation due to inputs and assumptions
(a)
|
(1,727
|
)
|
|
(44
|
)
|
|
(37
|
)
|
|||
Total change in fair value of MSRs
(b)
|
(7,119
|
)
|
|
(2,268
|
)
|
|
5,807
|
|
|||
Fair value at December 31
(c)
|
$
|
7,223
|
|
|
$
|
13,649
|
|
|
$
|
15,531
|
|
Change in unrealized gains/(losses) included in income related to MSRs held at December 31
|
$
|
(7,119
|
)
|
|
$
|
(2,268
|
)
|
|
$
|
5,807
|
|
Contractual service fees, late fees and other ancillary fees included in income
|
$
|
3,977
|
|
|
$
|
4,484
|
|
|
$
|
4,818
|
|
Third-party mortgage loans serviced at December 31 (in billions)
|
$
|
910
|
|
|
$
|
976
|
|
|
$
|
1,091
|
|
Servicer advances at December 31 (in billions)
(d)
|
$
|
11.1
|
|
|
$
|
9.9
|
|
|
$
|
7.7
|
|
(a)
|
Represents the aggregate impact of changes in model inputs and assumptions such as costs to service, home prices, mortgage spreads, ancillary income, and assumptions used to derive prepayment speeds, as well as changes to the valuation models themselves.
|
(b)
|
Includes changes related to commercial real estate of
$(9) million
,
|
(c)
|
Includes
$31 million
,
$40 million
and
$41 million
related to commercial real estate at
December 31, 2011
,
2010
and 2009, respectively.
|
(d)
|
Represents amounts the Firm pays as the servicer (e.g., scheduled principal and interest to a trust, taxes and insurance), which will generally be reimbursed within a short period of time after the advance from future cash flows from the trust or the underlying loans. The Firm’s credit risk associated with these advances is minimal because reimbursement of the advances is senior to all cash payments to investors. In addition, the Firm maintains the right to stop payment if the collateral is insufficient to cover the advance.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
269
|
Year ended December 31,
(in millions)
|
2011
|
|
2010
|
|
2009
|
||||||
RFS mortgage fees and related income
|
|
|
|
|
|
||||||
Net production revenue:
|
|
|
|
|
|
||||||
Production revenue
|
$
|
3,395
|
|
|
$
|
3,440
|
|
|
$
|
2,115
|
|
Repurchase losses
|
(1,347
|
)
|
|
(2,912
|
)
|
|
(1,612
|
)
|
|||
Net production revenue
|
2,048
|
|
|
528
|
|
|
503
|
|
|||
Net mortgage servicing revenue
|
|
|
|
|
|
|
|||||
Operating revenue:
|
|
|
|
|
|
|
|||||
Loan servicing revenue
|
4,134
|
|
|
4,575
|
|
|
4,942
|
|
|||
Changes in MSR asset fair value due to modeled amortization
|
(1,904
|
)
|
|
(2,384
|
)
|
|
(3,279
|
)
|
|||
Total operating revenue
|
2,230
|
|
|
2,191
|
|
|
1,663
|
|
|||
Risk management:
|
|
|
|
|
|
|
|||||
Changes in MSR asset fair value due to market interest rates
|
(5,390
|
)
|
|
(2,224
|
)
|
|
5,804
|
|
|||
Other changes in MSR asset fair value due to inputs or assumptions in model
(a)
|
(1,727
|
)
|
|
(44
|
)
|
|
—
|
|
|||
Derivative valuation adjustments and other
|
5,553
|
|
|
3,404
|
|
|
(4,176
|
)
|
|||
Total risk management
|
(1,564
|
)
|
|
1,136
|
|
|
1,628
|
|
|||
Total RFS net mortgage servicing revenue
|
666
|
|
|
3,327
|
|
|
3,291
|
|
|||
All other
|
7
|
|
|
15
|
|
|
(116
|
)
|
|||
Mortgage fees and related income
|
$
|
2,721
|
|
|
$
|
3,870
|
|
|
$
|
3,678
|
|
(a)
|
Represents the aggregate impact of changes in model inputs and assumptions such as costs to service, home prices, mortgage spreads, ancillary income, and assumptions used to derive prepayment speeds, as well as changes to the valuation models themselves.
|
Year ended December 31,
(in millions, except rates)
|
2011
|
|
2010
|
||||
Weighted-average prepayment speed assumption (“CPR”)
|
18.07
|
%
|
|
11.29
|
%
|
||
Impact on fair value of 10% adverse change
|
$
|
(585
|
)
|
|
$
|
(809
|
)
|
Impact on fair value of 20% adverse change
|
(1,118
|
)
|
|
(1,568
|
)
|
||
Weighted-average option adjusted spread
|
7.83
|
%
|
|
3.94
|
%
|
||
Impact on fair value of 100 basis points adverse change
|
$
|
(269
|
)
|
|
$
|
(578
|
)
|
Impact on fair value of 200 basis points adverse change
|
(518
|
)
|
|
(1,109
|
)
|
270
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
December 31, 2011
|
|
December 31, 2010
|
||||||||||||||||
|
Gross amount
(a)
|
Accumulated amortization
(a)
|
Net
carrying value
|
|
Gross amount
|
Accumulated amortization
|
Net
carrying value
|
||||||||||||
December 31, (in millions)
|
|
||||||||||||||||||
Purchased credit card relationships
|
$
|
3,826
|
|
$
|
3,224
|
|
$
|
602
|
|
|
$
|
5,789
|
|
$
|
4,892
|
|
$
|
897
|
|
Other credit card-related intangibles
|
844
|
|
356
|
|
488
|
|
|
907
|
|
314
|
|
593
|
|
||||||
Core deposit intangibles
|
4,133
|
|
3,539
|
|
594
|
|
|
4,280
|
|
3,401
|
|
879
|
|
||||||
Other intangibles
|
2,467
|
|
944
|
|
1,523
|
|
|
2,515
|
|
845
|
|
1,670
|
|
(a)
|
The decrease in the gross amount and accumulated amortization from
December 31, 2010
, was due to the removal of fully amortized assets.
|
December 31, (in millions)
|
2011
|
|
2010
|
|
2009
|
||||||
Purchased credit card relationships
|
$
|
295
|
|
|
$
|
355
|
|
|
$
|
421
|
|
Other credit card-related intangibles
|
106
|
|
|
111
|
|
|
94
|
|
|||
Core deposit intangibles
|
285
|
|
|
328
|
|
|
390
|
|
|||
Other intangibles
|
162
|
|
|
142
|
|
|
145
|
|
|||
Total amortization expense
|
$
|
848
|
|
|
$
|
936
|
|
|
$
|
1,050
|
|
For the year ended December 31,
(in millions)
|
Purchased credit card relationships
|
Other credit
card-related intangibles
|
Core deposit intangibles
|
Other
intangibles
|
Total
|
||||||||||
2012
|
$
|
253
|
|
$
|
106
|
|
$
|
240
|
|
$
|
147
|
|
$
|
746
|
|
2013
|
212
|
|
103
|
|
195
|
|
140
|
|
650
|
|
|||||
2014
|
109
|
|
102
|
|
103
|
|
122
|
|
436
|
|
|||||
2015
|
23
|
|
94
|
|
26
|
|
105
|
|
248
|
|
|||||
2016
|
4
|
|
34
|
|
14
|
|
98
|
|
150
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
271
|
December 31, (in millions)
|
2011
|
|
2010
|
||||
U.S. offices
|
|
|
|
||||
Noninterest-bearing
|
$
|
346,670
|
|
|
$
|
228,555
|
|
Interest-bearing
|
|
|
|
||||
Demand
(a)
|
47,075
|
|
|
33,368
|
|
||
Savings
(b)
|
375,051
|
|
|
334,632
|
|
||
Time (included
$3,861
and $2,733 at fair value)
(c)
|
82,738
|
|
|
87,237
|
|
||
Total interest-bearing deposits
|
504,864
|
|
|
455,237
|
|
||
Total deposits in U.S. offices
|
851,534
|
|
|
683,792
|
|
||
Non-U.S. offices
|
|
|
|
||||
Noninterest-bearing
|
18,790
|
|
|
10,917
|
|
||
Interest-bearing
|
|
|
|
||||
Demand
|
188,202
|
|
|
174,417
|
|
||
Savings
|
687
|
|
|
607
|
|
||
Time (included
$1,072
and $1,636 at fair value)
(c)
|
68,593
|
|
|
60,636
|
|
||
Total interest-bearing deposits
|
257,482
|
|
|
235,660
|
|
||
Total deposits in non-U.S. offices
|
276,272
|
|
|
246,577
|
|
||
Total deposits
|
$
|
1,127,806
|
|
|
$
|
930,369
|
|
(a)
|
Includes Negotiable Order of Withdrawal (“NOW”) accounts, and certain trust accounts.
|
(b)
|
Includes Money Market Deposit Accounts (“MMDAs”).
|
(c)
|
Includes structured notes classified as deposits for which the fair value option has been elected. For further discussion, see Note 4 on pages 198–200 of this
Annual Report
.
|
December 31, (in millions)
|
|
2011
|
|
2010
|
||||
U.S. offices
|
|
$
|
57,802
|
|
|
$
|
59,653
|
|
Non-U.S. offices
|
|
50,614
|
|
|
44,544
|
|
||
Total
|
|
$
|
108,416
|
|
|
$
|
104,197
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|||
(in millions)
|
|
U.S.
|
|
Non-U.S.
|
|
Total
|
||||||
2012
|
|
$
|
68,345
|
|
|
$
|
67,107
|
|
|
$
|
135,452
|
|
2013
|
|
7,222
|
|
|
1,086
|
|
|
8,308
|
|
|||
2014
|
|
1,947
|
|
|
219
|
|
|
2,166
|
|
|||
2015
|
|
2,051
|
|
|
22
|
|
|
2,073
|
|
|||
2016
|
|
2,532
|
|
|
102
|
|
|
2,634
|
|
|||
After 5 years
|
|
641
|
|
|
57
|
|
|
698
|
|
|||
Total
|
|
$
|
82,738
|
|
|
$
|
68,593
|
|
|
$
|
151,331
|
|
December 31, (in millions)
|
|
2011
|
|
|
2010
|
|
||
Brokerage payables
(a)
|
|
$
|
121,353
|
|
|
$
|
95,359
|
|
Accounts payable and other liabilities
(b)
|
|
81,542
|
|
|
74,971
|
|
||
Total
|
|
$
|
202,895
|
|
|
$
|
170,330
|
|
(a)
|
Includes payables to customers, brokers, dealers and clearing organizations, and securities fails.
|
(b)
|
Includes
$51 million
and
$236 million
accounted for at fair value at
December 31, 2011
and
2010
, respectively.
|
272
|
|
JPMorgan Chase & Co./2011 Annual Report
|
By remaining maturity at
|
|
|
|
2011
|
|
|
||||||||||||||||
December 31,
|
|
|
|
Under
|
|
|
|
|
After
|
|
|
|
|
2010
|
|
|||||||
(in millions, except rates)
|
|
|
|
1 year
|
|
|
1-5 years
|
|
|
5 years
|
|
|
Total
|
|
|
Total
|
|
|||||
Parent company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Senior debt:
|
|
Fixed rate
(a)
|
|
$
|
17,142
|
|
|
$
|
40,060
|
|
|
$
|
39,276
|
|
|
$
|
96,478
|
|
|
$
|
98,787
|
|
|
|
Variable rate
(b)
|
|
24,186
|
|
|
25,684
|
|
|
5,909
|
|
|
55,779
|
|
|
59,027
|
|
|||||
|
|
Interest rates
(c)
|
|
0.32-7.00%
|
|
|
0.60-7.00%
|
|
|
0.41-7.25%
|
|
|
0.32-7.25%
|
|
|
0.24-7.25%
|
|
|||||
Subordinated debt:
|
|
Fixed rate
|
|
$
|
1,005
|
|
|
$
|
8,919
|
|
|
$
|
9,243
|
|
|
$
|
19,167
|
|
|
$
|
22,000
|
|
|
|
Variable rate
|
|
118
|
|
|
1,827
|
|
|
9
|
|
|
1,954
|
|
|
1,996
|
|
|||||
|
|
Interest rates
(c)
|
|
6.63-6.63%
|
|
|
1.09-5.75%
|
|
|
2.16-8.53%
|
|
|
1.09-8.53%
|
|
|
1.37-8.53%
|
|
|||||
|
|
Subtotal
|
|
$
|
42,451
|
|
|
$
|
76,490
|
|
|
$
|
54,437
|
|
|
$
|
173,378
|
|
|
$
|
181,810
|
|
Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
FHLB advances:
(d)
|
|
Fixed rate
|
|
$
|
18
|
|
|
$
|
4,548
|
|
|
$
|
172
|
|
|
$
|
4,738
|
|
|
$
|
7,324
|
|
|
|
Variable rate
|
|
5,500
|
|
|
6,822
|
|
|
763
|
|
|
13,085
|
|
|
15,660
|
|
|||||
|
|
Interest rates
(c)
|
|
0.32-0.44%
|
|
|
0.32-2.04%
|
|
|
0.41-0.44%
|
|
|
0.32-2.04%
|
|
|
0.21-4.05%
|
|
|||||
Senior debt:
|
|
Fixed rate
|
|
$
|
699
|
|
|
$
|
2,963
|
|
|
$
|
2,884
|
|
|
$
|
6,546
|
|
|
$
|
5,228
|
|
|
|
Variable rate
|
|
6,465
|
|
|
17,327
|
|
|
4,465
|
|
|
28,257
|
|
|
30,545
|
|
|||||
|
|
Interest rates
(c)
|
|
0.33-0.57%
|
|
|
0.13-4.28%
|
|
|
4.00-14.21%
|
|
|
0.13-14.21%
|
|
|
0.21-14.21%
|
|
|||||
Subordinated debt:
|
|
Fixed rate
|
|
$
|
—
|
|
|
$
|
1,672
|
|
|
$
|
7,083
|
|
|
$
|
8,755
|
|
|
$
|
8,605
|
|
|
|
Variable rate
|
|
—
|
|
|
1,150
|
|
|
—
|
|
|
1,150
|
|
|
1,150
|
|
|||||
|
|
Interest rates
(c)
|
|
—
|
%
|
|
0.87-5.88%
|
|
|
4.38-8.25%
|
|
|
0.87-8.25%
|
|
|
0.63-8.25%
|
|
|||||
|
|
Subtotal
|
|
$
|
12,682
|
|
|
$
|
34,482
|
|
|
$
|
15,367
|
|
|
$
|
62,531
|
|
|
$
|
68,512
|
|
Junior subordinated debt:
|
|
Fixed rate
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,784
|
|
|
$
|
15,784
|
|
|
$
|
15,249
|
|
|
|
Variable rate
|
|
—
|
|
|
—
|
|
|
5,082
|
|
|
5,082
|
|
|
5,082
|
|
|||||
|
|
Interest rates
(c)
|
|
—
|
%
|
|
—
|
%
|
|
0.93-8.75%
|
|
|
0.93-8.75%
|
|
|
0.79-8.75%
|
|
|||||
|
|
Subtotal
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,866
|
|
|
$
|
20,866
|
|
|
$
|
20,331
|
|
Total long-term debt
(e)(f)(g)
|
|
|
|
$
|
55,133
|
|
|
$
|
110,972
|
|
|
$
|
90,670
|
|
|
$
|
256,775
|
|
(i)(j)
|
$
|
270,653
|
|
Long-term beneficial interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Fixed rate
|
|
$
|
2,012
|
|
|
$
|
2,474
|
|
|
$
|
1,775
|
|
|
$
|
6,261
|
|
|
$
|
9,795
|
|
|
|
Variable rate
|
|
11,474
|
|
|
15,306
|
|
|
6,693
|
|
|
33,473
|
|
|
42,759
|
|
|||||
|
|
Interest rates
|
|
0.06-11.00%
|
|
|
0.06-5.63%
|
|
|
0.02-9.19%
|
|
|
0.02-11.00%
|
|
|
0.05-11.00%
|
|
|||||
Total long-term beneficial interests
(h)
|
|
|
|
$
|
13,486
|
|
|
$
|
17,780
|
|
|
$
|
8,468
|
|
|
$
|
39,734
|
|
|
$
|
52,554
|
|
(a)
|
Included
$8.4 billion
and
$18.5 billion
as of
December 31, 2011
and
2010
, respectively, guaranteed by the FDIC under the Temporary Liquidity Guarantee (“TLG”) Program.
|
(b)
|
Included
$11.9 billion
and
$17.9 billion
as of
December 31, 2011
and
2010
, respectively, guaranteed by the FDIC under the TLG Program.
|
(c)
|
The interest rates shown are the range of contractual rates in effect at year-end, including non-U.S. dollar fixed- and variable-rate issuances, which excludes the effects of the associated derivative instruments used in hedge accounting relationships, if applicable. The use of these derivative instruments modifies the Firm’s exposure to the contractual interest rates disclosed in the table above. Including the effects of the hedge accounting derivatives, the range of modified rates in effect at
December 31, 2011
, for total long-term debt was
(0.37)%
to
14.21%
, versus the contractual range of
0.13%
to
14.21%
presented in the table above. The interest rate ranges shown exclude structured notes accounted for at fair value.
|
(d)
|
Effective January 1, 2011,
$23.0 billion
of long-term advances from FHLBs were reclassified from other borrowed funds to long-term debt. The prior-year period has been revised to conform with the current presentation.
|
(e)
|
Included long-term debt of
$23.8 billion
and
$31.3 billion
secured by assets totaling
$89.4 billion
and
$92.0 billion
at
December 31, 2011
and
2010
, respectively. The amount of long-term debt secured by assets does not include amounts related to hybrid instruments.
|
(f)
|
Included
$34.7 billion
and
$38.8 billion
of outstanding structured notes accounted for at fair value at
December 31, 2011
and
2010
, respectively.
|
(g)
|
Included
$2.1 billion
and
$879 million
of outstanding zero-coupon notes at
December 31, 2011
and
2010
, respectively. The aggregate principal amount of these notes at their respective maturities was
$5.0 billion
and
$2.7 billion
, respectively.
|
(h)
|
Included on the Consolidated Balance Sheets in beneficial interests issued by consolidated VIEs. Also included
$1.3 billion
and
$1.5 billion
of outstanding structured notes accounted for at fair value at
December 31, 2011
and
2010
, respectively. Excluded short-term commercial paper and other short-term beneficial interests of
$26.2 billion
and
$25.1 billion
at
December 31, 2011
and
2010
, respectively.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
273
|
(i)
|
At
December 31, 2011
, long-term debt in the aggregate of
$28.6 billion
was redeemable at the option of JPMorgan Chase, in whole or in part, prior to maturity, based on the terms specified in the respective notes.
|
(j)
|
The aggregate carrying values of debt that matures in each of the five years subsequent to 2011 is
$55.1 billion
in 2012,
$34.9 billion
in 2013,
$30.4 billion
in 2014,
$21.6 billion
in 2015 and
$24.1 billion
in 2016.
|
274
|
|
JPMorgan Chase & Co./2011 Annual Report
|
December 31, 2011
(in millions)
|
|
Amount of trust preferred capital debt securities issued by trust
(a)
|
|
Principal amount of debenture issued to trust
(b)
|
|
Issue date
|
|
Stated maturity of trust preferred capital securities and debentures
|
|
Earliest redemption date
|
|
Interest rate of trust preferred capital securities and debentures
|
|
Interest payment/distribution dates
|
Bank One Capital III
|
|
$474
|
|
$765
|
|
2000
|
|
2030
|
|
Any time
|
|
8.75%
|
|
Semiannually
|
Bank One Capital VI
|
|
525
|
|
552
|
|
2001
|
|
2031
|
|
Any time
|
|
7.20%
|
|
Quarterly
|
Chase Capital II
|
|
482
|
|
497
|
|
1997
|
|
2027
|
|
Any time
|
|
LIBOR + 0.50%
|
|
Quarterly
|
Chase Capital III
|
|
295
|
|
305
|
|
1997
|
|
2027
|
|
Any time
|
|
LIBOR + 0.55%
|
|
Quarterly
|
Chase Capital VI
|
|
241
|
|
249
|
|
1998
|
|
2028
|
|
Any time
|
|
LIBOR + 0.625%
|
|
Quarterly
|
First Chicago NBD Capital I
|
|
249
|
|
256
|
|
1997
|
|
2027
|
|
Any time
|
|
LIBOR + 0.55%
|
|
Quarterly
|
J.P. Morgan Chase Capital X
|
|
1,000
|
|
1,016
|
|
2002
|
|
2032
|
|
Any time
|
|
7.00%
|
|
Quarterly
|
J.P. Morgan Chase Capital XI
|
|
1,075
|
|
1,009
|
|
2003
|
|
2033
|
|
Any time
|
|
5.88%
|
|
Quarterly
|
J.P. Morgan Chase Capital XII
|
|
400
|
|
391
|
|
2003
|
|
2033
|
|
Any time
|
|
6.25%
|
|
Quarterly
|
JPMorgan Chase Capital XIII
|
|
465
|
|
480
|
|
2004
|
|
2034
|
|
2014
|
|
LIBOR + 0.95%
|
|
Quarterly
|
JPMorgan Chase Capital XIV
|
|
600
|
|
587
|
|
2004
|
|
2034
|
|
Any time
|
|
6.20%
|
|
Quarterly
|
JPMorgan Chase Capital XV
|
|
93
|
|
132
|
|
2005
|
|
2035
|
|
Any time
|
|
5.88%
|
|
Semiannually
|
JPMorgan Chase Capital XVI
|
|
500
|
|
493
|
|
2005
|
|
2035
|
|
Any time
|
|
6.35%
|
|
Quarterly
|
JPMorgan Chase Capital XVII
|
|
496
|
|
720
|
|
2005
|
|
2035
|
|
Any time
|
|
5.85%
|
|
Semiannually
|
JPMorgan Chase Capital XVIII
|
|
748
|
|
749
|
|
2006
|
|
2036
|
|
Any time
|
|
6.95%
|
|
Semiannually
|
JPMorgan Chase Capital XIX
|
|
563
|
|
564
|
|
2006
|
|
2036
|
|
Any time
|
|
6.63%
|
|
Quarterly
|
JPMorgan Chase Capital XX
|
|
905
|
|
907
|
|
2006
|
|
2036
|
|
Any time
|
|
6.55%
|
|
Semiannually
|
JPMorgan Chase Capital XXI
|
|
836
|
|
837
|
|
2007
|
|
2037
|
|
2012
|
|
LIBOR + 0.95%
|
|
Quarterly
|
JPMorgan Chase Capital XXII
|
|
911
|
|
912
|
|
2007
|
|
2037
|
|
Any time
|
|
6.45%
|
|
Semiannually
|
JPMorgan Chase Capital XXIII
|
|
643
|
|
643
|
|
2007
|
|
2047
|
|
2012
|
|
LIBOR + 1.00%
|
|
Quarterly
|
JPMorgan Chase Capital XXIV
|
|
700
|
|
700
|
|
2007
|
|
2047
|
|
2012
|
|
6.88%
|
|
Quarterly
|
JPMorgan Chase Capital XXV
|
|
1,493
|
|
2,292
|
|
2007
|
|
2037
|
|
2037
|
|
6.80%
|
|
Semiannually
|
JPMorgan Chase Capital XXVI
|
|
1,815
|
|
1,815
|
|
2008
|
|
2048
|
|
2013
|
|
8.00%
|
|
Quarterly
|
JPMorgan Chase Capital XXVII
|
|
995
|
|
995
|
|
2009
|
|
2039
|
|
2039
|
|
7.00%
|
|
Semiannually
|
JPMorgan Chase Capital XXVIII
|
|
1,500
|
|
1,500
|
|
2009
|
|
2039
|
|
2014
|
|
7.20%
|
|
Quarterly
|
JPMorgan Chase Capital XXIX
|
|
1,500
|
|
1,500
|
|
2010
|
|
2040
|
|
2015
|
|
6.70%
|
|
Quarterly
|
Total
|
|
$19,504
|
|
$20,866
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Represents the amount of trust preferred capital debt securities issued to the public by each trust, including unamortized original issue discount.
|
(b)
|
Represents the principal amount of JPMorgan Chase debentures issued to each trust, including unamortized original-issue discount. The principal amount of debentures issued to the trusts includes the impact of hedging and purchase accounting fair value adjustments that were recorded on the Firm’s Consolidated Financial Statements.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
275
|
December 31,
|
|
|
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series I
|
|
8.625% Non-Cumulative Perpetual Preferred Stock, Series J
|
|
Total preferred stock
|
||||||
Contractual rate in effect at December 31, 2011
|
|
7.900
|
%
|
|
8.625
|
%
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
Shares
(a)
|
2011
|
|
600,000
|
|
|
180,000
|
|
|
780,000
|
|
|||
|
2010
|
|
600,000
|
|
|
180,000
|
|
|
780,000
|
|
|||
|
|
|
|
|
|
|
|
||||||
Carrying value
(in millions)
|
2011
|
|
$
|
6,000
|
|
|
$
|
1,800
|
|
|
$
|
7,800
|
|
2010
|
|
6,000
|
|
|
1,800
|
|
|
7,800
|
|
||||
|
|
|
|
|
|
|
|
||||||
Earliest redemption date
|
|
4/30/2018
|
|
|
9/1/2013
|
|
|
|
|||||
Share value and redemption price per share
(b)
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
|
(a)
|
Represented by depositary shares.
|
(b)
|
The redemption price includes the amount shown in the table plus any accrued but unpaid dividends.
|
Year ended December 31,
(in millions)
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
Issued – balance at January 1
|
|
4,104.9
|
|
|
4,104.9
|
|
|
3,941.6
|
|
New open market issuances
|
|
—
|
|
|
—
|
|
|
163.3
|
|
Total issued – balance at December 31
|
|
4,104.9
|
|
|
4,104.9
|
|
|
4,104.9
|
|
Treasury – balance at January 1
|
|
(194.6
|
)
|
|
(162.9
|
)
|
|
(208.8
|
)
|
Purchase of treasury stock
|
|
(226.9
|
)
|
|
(77.9
|
)
|
|
—
|
|
Share repurchases related to employee stock-based awards
(a)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(1.1
|
)
|
Issued from treasury:
|
|
|
|
|
|
|
|||
Employee benefits and compensation plans
|
|
88.3
|
|
|
45.3
|
|
|
45.7
|
|
Employee stock purchase plans
|
|
1.1
|
|
|
1.0
|
|
|
1.3
|
|
Total issued from treasury
|
|
89.4
|
|
|
46.3
|
|
|
47.0
|
|
Total treasury – balance at December 31
|
|
(332.2
|
)
|
|
(194.6
|
)
|
|
(162.9
|
)
|
Outstanding
|
|
3,772.7
|
|
|
3,910.3
|
|
|
3,942.0
|
|
(a)
|
Participants in the Firm’s stock-based incentive plans may have shares withheld to cover income taxes.
|
276
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Year ended December 31,
(in millions, except per share amounts)
|
|
2011
|
|
2010
|
|
2009
|
|
||||||
Basic earnings per share
|
|
|
|
|
|
|
|
||||||
Income before extraordinary gain
|
|
$
|
18,976
|
|
|
$
|
17,370
|
|
|
$
|
11,652
|
|
|
Extraordinary gain
|
|
—
|
|
|
—
|
|
|
76
|
|
|
|||
Net income
|
|
$
|
18,976
|
|
|
$
|
17,370
|
|
|
$
|
11,728
|
|
|
Less: Preferred stock dividends
|
|
629
|
|
|
642
|
|
|
1,327
|
|
|
|||
Less: Accelerated amortization from redemption of preferred stock issued to the U.S. Treasury
|
|
—
|
|
|
—
|
|
|
1,112
|
|
(c)
|
|||
Net income applicable to common equity
|
|
18,347
|
|
|
16,728
|
|
|
9,289
|
|
(c)
|
|||
Less: Dividends and undistributed earnings allocated to participating securities
|
|
779
|
|
|
964
|
|
|
515
|
|
|
|||
Net income applicable to common stockholders
|
|
$
|
17,568
|
|
|
$
|
15,764
|
|
|
$
|
8,774
|
|
|
Total weighted-average basic shares outstanding
|
|
3,900.4
|
|
|
3,956.3
|
|
|
3,862.8
|
|
|
|||
Per share
|
|
|
|
|
|
|
|
||||||
Income before extraordinary gain
|
|
$
|
4.50
|
|
|
$
|
3.98
|
|
|
$
|
2.25
|
|
(c)
|
Extraordinary gain
|
|
—
|
|
|
—
|
|
|
0.02
|
|
|
|||
Net income
|
|
$
|
4.50
|
|
|
$
|
3.98
|
|
|
$
|
2.27
|
|
(c)
|
|
|
|
|
|
|
|
|
||||||
Year ended December 31,
(in millions, except per share amounts) |
|
2011
|
|
2010
|
|
2009
|
|
||||||
Diluted earnings per share
|
|
|
|
|
|
|
|
||||||
Net income applicable to common stockholders
|
|
$
|
17,568
|
|
|
$
|
15,764
|
|
|
$
|
8,774
|
|
|
Total weighted-average basic shares outstanding
|
|
3,900.4
|
|
|
3,956.3
|
|
|
3,862.8
|
|
|
|||
Add: Employee stock options, SARs and warrants
(a)
|
|
19.9
|
|
|
20.6
|
|
|
16.9
|
|
|
|||
Total weighted-average diluted shares outstanding
(b)
|
|
3,920.3
|
|
|
3,976.9
|
|
|
3,879.7
|
|
|
|||
Per share
|
|
|
|
|
|
|
|
||||||
Income before extraordinary gain
|
|
$
|
4.48
|
|
|
$
|
3.96
|
|
|
$
|
2.24
|
|
(c)
|
Extraordinary gain
|
|
—
|
|
|
—
|
|
|
0.02
|
|
|
|||
Net income per share
|
|
$
|
4.48
|
|
|
$
|
3.96
|
|
|
$
|
2.26
|
|
(c)
|
(a)
|
Excluded from the computation of diluted EPS (due to the antidilutive effect) were options issued under employee benefit plans and the warrants originally issued in 2008 under the U.S. Treasury’s Capital Purchase Program to purchase shares of the Firm’s common stock. The aggregate number of shares issuable upon the exercise of such options and warrants was
133 million
,
233 million
and
266 million
for the full years ended
December 31, 2011
,
2010
and
2009
respectively.
|
(b)
|
Participating securities were included in the calculation of diluted EPS using the two-class method, as this computation was more dilutive than the calculation using the treasury stock method.
|
(c)
|
The calculation of basic and diluted EPS and net income applicable to common equity for full year 2009 includes a one-time, noncash reduction of
$1.1 billion
, or
$0.27
per share, resulting from repayment of the U.S. Troubled Asset Relief Program (“TARP”) preferred capital.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
277
|
As of or for the year ended
December 31,
|
Unrealized gains/(losses) on AFS securities
(b)
|
|
Translation adjustments, net of hedges
|
|
Cash flow hedges
|
|
Net loss and prior service costs/(credit) of defined benefit pension and OPEB plans
|
|
Accumulated other comprehensive income/(loss)
|
|
||||||||||||||||||||
(in millions)
|
||||||||||||||||||||||||||||||
Balance at December 31, 2008
|
|
$
|
(2,101
|
)
|
|
|
|
$
|
(598
|
)
|
|
|
|
$
|
(202
|
)
|
|
|
|
$
|
(2,786
|
)
|
|
|
|
$
|
(5,687
|
)
|
|
|
Net change
|
|
4,133
|
|
(c)
|
|
|
582
|
|
|
|
|
383
|
|
|
|
|
498
|
|
|
|
|
5,596
|
|
|
|
|||||
Balance at December 31, 2009
|
|
$
|
2,032
|
|
(d)
|
|
|
$
|
(16
|
)
|
|
|
|
$
|
181
|
|
|
|
|
$
|
(2,288
|
)
|
|
|
|
$
|
(91
|
)
|
|
|
Cumulative effect of changes in accounting principles
(a)
|
|
(144
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(144
|
)
|
|
|
|||||
Net change
|
|
610
|
|
(e)
|
|
|
269
|
|
|
|
|
25
|
|
|
|
|
332
|
|
|
|
|
1,236
|
|
|
|
|||||
Balance at December 31, 2010
|
|
$
|
2,498
|
|
(d)
|
|
|
$
|
253
|
|
|
|
|
$
|
206
|
|
|
|
|
$
|
(1,956
|
)
|
|
|
|
$
|
1,001
|
|
|
|
Net change
|
|
1,067
|
|
(f)
|
|
|
(279
|
)
|
|
|
|
(155
|
)
|
|
|
|
(690
|
)
|
|
|
|
(57
|
)
|
|
|
|||||
Balance at December 31, 2011
|
|
$
|
3,565
|
|
(d)
|
|
|
$
|
(26
|
)
|
|
|
|
$
|
51
|
|
|
|
|
$
|
(2,646
|
)
|
|
|
|
$
|
944
|
|
|
|
(a)
|
Reflects the effect of the adoption of accounting guidance related to the consolidation of VIEs, and to embedded credit derivatives in beneficial interests in securitized financial assets. AOCI decreased by
$129 million
due to the adoption of the accounting guidance related to VIEs, as a result of the reversal of the fair value adjustments taken on retained AFS securities that were eliminated in consolidation; for further discussion see Note 16 on pages 256–267 of this
Annual Report
. AOCI decreased by
$15 million
due to the adoption of the new guidance related to credit derivatives embedded in certain of the Firm’s AFS securities; for further discussion see Note 6 on pages 202–210 of this
Annual Report
.
|
(b)
|
Represents the after-tax difference between the fair value and amortized cost of securities accounted for as AFS.
|
(c)
|
The net change during 2009 was due primarily to overall market spread and market liquidity improvement as well as changes in the composition of investments.
|
(d)
|
Included after-tax unrealized losses not related to credit on debt securities for which credit losses have been recognized in income of
$(56) million
,
$(81) million
and
$(226) million
at
December 31, 2011
,
2010
and
2009
, respectively.
|
(e)
|
The net change during 2010 was due primarily to the narrowing of spreads on commercial and non-agency MBS as well as on collateralized loan obligations; also reflects increased market value on pass-through MBS due to narrowing of spreads and other market factors.
|
(f)
|
The net change for 2011 was due primarily to increased market value on agency MBS and municipal securities, partially offset by the widening of spreads on non-U.S. corporate debt and the realization of gains due to portfolio repositioning.
|
|
2011
|
|
2010
|
|
2009
|
||||||||||||||||||||||||||||||
Year ended December 31, (in millions)
|
Before tax
|
|
Tax effect
|
|
After tax
|
|
Before tax
|
|
Tax effect
|
|
After tax
|
|
Before tax
|
|
Tax effect
|
|
After tax
|
||||||||||||||||||
Unrealized gains/(losses) on AFS securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net unrealized gains/(losses) arising during the period
|
$
|
3,361
|
|
|
$
|
(1,322
|
)
|
|
$
|
2,039
|
|
|
$
|
3,982
|
|
|
$
|
(1,540
|
)
|
|
$
|
2,442
|
|
|
$
|
7,870
|
|
|
$
|
(3,029
|
)
|
|
$
|
4,841
|
|
Reclassification adjustment for realized (gains)/losses included in net income
|
(1,593
|
)
|
|
621
|
|
|
(972
|
)
|
|
(2,982
|
)
|
|
1,150
|
|
|
(1,832
|
)
|
|
(1,152
|
)
|
|
444
|
|
|
(708
|
)
|
|||||||||
Net change
|
1,768
|
|
|
(701
|
)
|
|
1,067
|
|
|
1,000
|
|
|
(390
|
)
|
|
610
|
|
|
6,718
|
|
|
(2,585
|
)
|
|
4,133
|
|
|||||||||
Translation adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Translation
|
(672
|
)
|
|
255
|
|
|
(417
|
)
|
|
402
|
|
|
(139
|
)
|
|
263
|
|
|
1,139
|
|
|
(398
|
)
|
|
741
|
|
|||||||||
Hedges
|
226
|
|
|
(88
|
)
|
|
138
|
|
|
11
|
|
|
(5
|
)
|
|
6
|
|
|
(259
|
)
|
|
100
|
|
|
(159
|
)
|
|||||||||
Net change
|
(446
|
)
|
|
167
|
|
|
(279
|
)
|
|
413
|
|
|
(144
|
)
|
|
269
|
|
|
880
|
|
|
(298
|
)
|
|
582
|
|
|||||||||
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net unrealized gains/(losses) arising during the period
|
50
|
|
|
(19
|
)
|
|
31
|
|
|
247
|
|
|
(96
|
)
|
|
151
|
|
|
767
|
|
|
(308
|
)
|
|
459
|
|
|||||||||
Reclassification adjustment for realized (gains)/losses included in net income
|
(301
|
)
|
|
115
|
|
|
(186
|
)
|
|
(206
|
)
|
|
80
|
|
|
(126
|
)
|
|
(124
|
)
|
|
48
|
|
|
(76
|
)
|
|||||||||
Net change
|
(251
|
)
|
|
96
|
|
|
(155
|
)
|
|
41
|
|
|
(16
|
)
|
|
25
|
|
|
643
|
|
|
(260
|
)
|
|
383
|
|
|||||||||
Net loss and prior service cost/(credit) of defined benefit pension and OPEB plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net gains/(losses) and prior service credits arising during the period
|
(1,291
|
)
|
|
502
|
|
|
(789
|
)
|
|
294
|
|
|
(96
|
)
|
|
198
|
|
|
494
|
|
|
(200
|
)
|
|
294
|
|
|||||||||
Reclassification adjustment for net loss and prior service credits included in net income
|
162
|
|
|
(63
|
)
|
|
99
|
|
|
224
|
|
|
(90
|
)
|
|
134
|
|
|
337
|
|
|
(133
|
)
|
|
204
|
|
|||||||||
Net change
|
(1,129
|
)
|
|
439
|
|
|
(690
|
)
|
|
518
|
|
|
(186
|
)
|
|
332
|
|
|
831
|
|
|
(333
|
)
|
|
498
|
|
|||||||||
Total other comprehensive income/(loss)
|
$
|
(58
|
)
|
|
$
|
1
|
|
|
$
|
(57
|
)
|
|
$
|
1,972
|
|
|
$
|
(736
|
)
|
|
$
|
1,236
|
|
|
$
|
9,072
|
|
|
$
|
(3,476
|
)
|
|
$
|
5,596
|
|
278
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Year ended December 31,
(in millions)
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Current income tax expense
|
|
|
|
|
|
|
||||||
U.S. federal
|
|
$
|
3,719
|
|
|
$
|
4,001
|
|
|
$
|
4,698
|
|
Non-U.S.
|
|
1,183
|
|
|
2,712
|
|
|
2,368
|
|
|||
U.S. state and local
|
|
1,178
|
|
|
1,744
|
|
|
971
|
|
|||
Total current income tax expense
|
|
6,080
|
|
|
8,457
|
|
|
8,037
|
|
|||
Deferred income tax expense/(benefit)
|
|
|
|
|
|
|
||||||
U.S. federal
|
|
2,109
|
|
|
(753
|
)
|
|
(2,867
|
)
|
|||
Non-U.S.
|
|
102
|
|
|
169
|
|
|
(454
|
)
|
|||
U.S. state and local
|
|
(518
|
)
|
|
(384
|
)
|
|
(301
|
)
|
|||
Total deferred income tax expense/(benefit)
|
|
1,693
|
|
|
(968
|
)
|
|
(3,622
|
)
|
|||
Total income tax expense
|
|
$
|
7,773
|
|
|
$
|
7,489
|
|
|
$
|
4,415
|
|
Year ended December 31,
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
Statutory U.S. federal tax rate
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Increase/(decrease) in tax rate resulting from:
|
|
|
|
|
|
|
|||
U.S. state and local income taxes, net of U.S. federal income tax benefit
|
|
1.6
|
|
|
3.6
|
|
|
2.7
|
|
Tax-exempt income
|
|
(2.1
|
)
|
|
(2.4
|
)
|
|
(3.9
|
)
|
Non-U.S. subsidiary earnings
(a)
|
|
(2.3
|
)
|
|
(2.2
|
)
|
|
(1.7
|
)
|
Business tax credits
|
|
(4.0
|
)
|
|
(3.7
|
)
|
|
(5.5
|
)
|
Other, net
|
|
0.9
|
|
|
(0.2
|
)
|
|
0.9
|
|
Effective tax rate
|
|
29.1
|
%
|
|
30.1
|
%
|
|
27.5
|
%
|
(a)
|
Includes earnings deemed to be reinvested indefinitely in non-U.S. subsidiaries.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
279
|
December 31, (in millions)
|
|
2011
|
|
|
2010
|
|
||
Deferred tax assets
|
|
|
|
|
||||
Allowance for loan losses
|
|
$
|
10,689
|
|
|
$
|
12,287
|
|
Employee benefits
|
|
4,570
|
|
|
4,279
|
|
||
Accrued expenses and other
(a)
|
|
9,186
|
|
|
7,850
|
|
||
Non-U.S. operations
|
|
2,943
|
|
|
956
|
|
||
Tax attribute carryforwards
(a)
|
|
1,547
|
|
|
2,348
|
|
||
Gross deferred tax assets
|
|
$
|
28,935
|
|
|
$
|
27,720
|
|
Valuation allowance
|
|
(1,303
|
)
|
|
(1,784
|
)
|
||
Deferred tax assets, net of valuation allowance
|
|
$
|
27,632
|
|
|
$
|
25,936
|
|
Deferred tax liabilities
|
|
|
|
|
||||
Depreciation and amortization
(a)
|
|
$
|
6,358
|
|
|
$
|
4,823
|
|
Leasing transactions
|
|
2,569
|
|
|
2,160
|
|
||
Non-U.S. operations
|
|
2,790
|
|
|
1,136
|
|
||
Other, net
(a)
|
|
1,139
|
|
|
1,497
|
|
||
Gross deferred tax liabilities
|
|
$
|
12,856
|
|
|
$
|
9,616
|
|
Net deferred tax assets
|
|
$
|
14,776
|
|
|
$
|
16,320
|
|
(a)
|
The prior-year period has been revised to conform with the current presentation.
|
Unrecognized tax benefits
|
|
|
|
|
||||||||
Year ended December 31,
(in millions)
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Balance at January 1,
|
|
$
|
7,767
|
|
|
$
|
6,608
|
|
|
$
|
5,894
|
|
Increases based on tax positions related to the current period
|
|
516
|
|
|
813
|
|
|
584
|
|
|||
Decreases based on tax positions related to the current period
|
|
(110
|
)
|
|
(24
|
)
|
|
(6
|
)
|
|||
Increases based on tax positions related to prior periods
|
|
496
|
|
|
1,681
|
|
|
703
|
|
|||
Decreases based on tax positions related to prior periods
|
|
(1,433
|
)
|
|
(1,198
|
)
|
|
(322
|
)
|
|||
Decreases related to settlements with taxing authorities
|
|
(16
|
)
|
|
(74
|
)
|
|
(203
|
)
|
|||
Decreases related to a lapse of applicable statute of limitations
|
|
(31
|
)
|
|
(39
|
)
|
|
(42
|
)
|
|||
Balance at December 31,
|
|
$
|
7,189
|
|
|
$
|
7,767
|
|
|
$
|
6,608
|
|
280
|
|
JPMorgan Chase & Co./2011 Annual Report
|
December 31, 2011
|
|
Periods under examination
|
|
Status
|
JPMorgan Chase – U.S.
|
|
1993 – 2002
|
|
Refund claims under review
|
JPMorgan Chase – U.S.
|
|
2003 – 2005
(a)
|
|
Field examination completed, JPMorgan Chase intends to file refund claims
|
Bank One – U.S.
|
|
2000 – 2004
|
|
Refund claims under review
|
Bear Stearns – U.S.
|
|
2003 – 2005
|
|
In appeals process
|
Bear Stearns – U.S.
|
|
2006 – 2008
|
|
Field examination
|
JPMorgan Chase – United Kingdom
|
|
2006 – 2010
|
|
Field examination
|
JPMorgan Chase – New York State and City
|
|
2005 – 2007
|
|
Field examination
|
JPMorgan Chase – California
|
|
2006 – 2008
|
|
Field examination
|
(a)
|
JPMorgan Chase anticipates that the IRS will commence in 2012 an
examination of the years 2006 through 2008.
|
Year ended December 31,
(in millions)
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
U.S.
|
|
$
|
16,336
|
|
|
$
|
16,568
|
|
|
$
|
6,263
|
|
Non-U.S.
(a)
|
|
10,413
|
|
|
8,291
|
|
|
9,804
|
|
|||
Income before income tax and extraordinary gain
|
|
$
|
26,749
|
|
|
$
|
24,859
|
|
|
$
|
16,067
|
|
(a)
|
For purposes of this table, non-U.S. income is defined as income generated from operations located outside the U.S.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
281
|
December 31,
|
JPMorgan Chase & Co.
(e)
|
|
JPMorgan Chase Bank, N.A.
(e)
|
|
Chase Bank USA, N.A.
(e)
|
|
Well-capitalized ratios
(f)
|
|
Minimum capital ratios
(f)
|
|
||||||||||||||||||||
(in millions, except ratios)
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
||||||||||||||||
Regulatory capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Tier 1
(a)
|
$
|
150,384
|
|
|
$
|
142,450
|
|
|
$
|
98,426
|
|
|
$
|
91,764
|
|
|
$
|
11,903
|
|
|
$
|
12,966
|
|
|
|
|
|
|
||
Total
|
188,088
|
|
|
182,216
|
|
|
136,017
|
|
|
130,444
|
|
|
15,448
|
|
|
16,659
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Risk-weighted
(b)(c)
|
$
|
1,221,198
|
|
|
$
|
1,174,978
|
|
|
$
|
1,042,898
|
|
|
$
|
965,897
|
|
|
$
|
107,421
|
|
|
$
|
116,992
|
|
|
|
|
|
|
||
Adjusted average
(d)
|
2,202,087
|
|
|
2,024,515
|
|
|
1,789,194
|
|
|
1,611,486
|
|
|
106,312
|
|
|
117,368
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Capital ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Tier 1
(a)
|
12.3
|
%
|
|
12.1
|
%
|
|
9.4
|
%
|
|
9.5
|
%
|
|
11.1
|
%
|
|
11.1
|
%
|
|
6.0
|
%
|
|
4.0
|
%
|
|
||||||
Total
|
15.4
|
|
|
15.5
|
|
|
13.0
|
|
|
13.5
|
|
|
14.4
|
|
|
14.2
|
|
|
10.0
|
|
|
8.0
|
|
|
||||||
Tier 1 leverage
|
6.8
|
|
|
7.0
|
|
|
5.5
|
|
|
5.7
|
|
|
11.2
|
|
|
11.0
|
|
|
5.0
|
|
(g)
|
3.0
|
|
(h)
|
(a)
|
At
December 31, 2011
, for
JPMorgan Chase
and
JPMorgan Chase Bank, N.A.
, trust preferred capital debt securities were
$19.6 billion
and
$600 million
, respectively. If these securities were excluded from the calculation at
December 31, 2011
, Tier 1 capital would be
$130.8 billion
and
$97.8 billion
, respectively, and the Tier 1 capital ratio would be
10.7%
and
9.4%
, respectively. At
December 31, 2011
, Chase Bank USA, N.A. had
no
trust preferred capital debt securities.
|
(b)
|
Risk-weighted assets consist of on– and off–balance sheet assets that are assigned to one of several broad risk categories and weighted by factors representing their risk and potential for default. On–balance sheet assets are risk-weighted based on the perceived credit risk associated with the obligor or counterparty, the nature of any collateral, and the guarantor, if any. Off–balance sheet assets such as lending-related commitments, guarantees, derivatives and other applicable off–balance sheet positions are risk-weighted by multiplying the contractual amount by the appropriate credit conversion factor to determine the on–balance sheet credit-equivalent amount, which is then risk-weighted based on the same factors used for on–balance sheet assets. Risk-weighted assets also incorporate a measure for the market risk related to applicable trading assets–debt and equity instruments, and foreign exchange and commodity derivatives. The resulting risk-weighted values for each of the risk categories are then aggregated to determine total risk-weighted assets.
|
(c)
|
Includes off–balance sheet risk-weighted assets at
December 31, 2011
, of
$301.1 billion
,
$291.0 billion
and
$38 million
, and at
December 31, 2010
, of
$282.9 billion
,
$274.2 billion
and
$31 million
, for
JPMorgan Chase
,
JPMorgan Chase Bank, N.A.
and Chase Bank USA, N.A., respectively.
|
(d)
|
Adjusted average assets, for purposes of calculating the leverage ratio, include total quarterly average assets adjusted for unrealized gains/(losses) on securities, less deductions for disallowed goodwill and other intangible assets, investments in certain subsidiaries, and the total adjusted carrying value of nonfinancial equity investments that are subject to deductions from Tier 1 capital.
|
(e)
|
Asset and capital amounts for
JPMorgan Chase
’s banking subsidiaries reflect intercompany transactions; whereas the respective amounts for
JPMorgan Chase
reflect the elimination of intercompany transactions.
|
(f)
|
As defined by the regulations issued by the Federal Reserve, OCC and FDIC.
|
(g)
|
Represents requirements for banking subsidiaries pursuant to regulations issued under the FDIC Improvement Act. There is no Tier 1 leverage component in the definition of a well-capitalized bank holding company.
|
(h)
|
The minimum Tier 1 leverage ratio for bank holding companies and banks is
3%
or
4%
, depending on factors specified in regulations issued by the Federal Reserve and OCC.
|
Note:
|
Rating agencies allow measures of capital to be adjusted upward for deferred tax liabilities, which have resulted from both nontaxable business combinations and from tax-deductible goodwill. The Firm had deferred tax liabilities resulting from nontaxable business combinations totaling
$414 million
and
$647 million
at
December 31, 2011
and
2010
, respectively; and deferred tax liabilities resulting from tax-deductible goodwill of
$2.3 billion
and
$1.9 billion
at
December 31, 2011
and
2010
, respectively.
|
282
|
|
JPMorgan Chase & Co./2011 Annual Report
|
December 31, (in millions)
|
|
2011
|
|
|
2010
|
|
||
Tier 1 capital
|
|
|
|
|
||||
Total stockholders’ equity
|
|
$
|
183,573
|
|
|
$
|
176,106
|
|
Effect of certain items in accumulated other comprehensive income/(loss) excluded from Tier 1 capital
|
|
(970
|
)
|
|
(748
|
)
|
||
Qualifying hybrid securities and noncontrolling interests
(a)
|
|
19,668
|
|
|
19,887
|
|
||
Less: Goodwill
(b)
|
|
45,873
|
|
|
46,915
|
|
||
Fair value DVA on derivative and structured note liabilities related to the Firm’s credit quality
|
|
2,150
|
|
|
1,261
|
|
||
Investments in certain subsidiaries and other
|
|
993
|
|
|
1,032
|
|
||
Other intangible assets
(b)
|
|
2,871
|
|
|
3,587
|
|
||
Total Tier 1 capital
|
|
150,384
|
|
|
142,450
|
|
||
Tier 2 capital
|
|
|
|
|
||||
Long-term debt and other instruments qualifying as Tier 2
|
|
22,275
|
|
|
25,018
|
|
||
Qualifying allowance for credit losses
|
|
15,504
|
|
|
14,959
|
|
||
Adjustment for investments in certain subsidiaries and other
|
|
(75
|
)
|
|
(211
|
)
|
||
Total Tier 2 capital
|
|
37,704
|
|
|
39,766
|
|
||
Total qualifying capital
|
|
$
|
188,088
|
|
|
$
|
182,216
|
|
(a)
|
Primarily includes trust preferred capital debt securities of certain business trusts.
|
(b)
|
Goodwill and other intangible assets are net of any associated deferred tax liabilities.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
283
|
Off–balance sheet lending-related financial instruments, guarantees and other commitments
|
|
|||||||||||||||||||||||||
|
Contractual amount
|
|
Carrying value
(i)
|
|||||||||||||||||||||||
|
2011
|
|
2010
|
|
2011
|
2010
|
||||||||||||||||||||
By remaining maturity at December 31,
(in millions)
|
Expires in 1 year or less
|
Expires after
1 year through 3 years |
Expires after
3 years through 5 years |
Expires after 5 years
|
Total
|
|
Total
|
|
|
|
||||||||||||||||
Lending-related
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Consumer, excluding credit card:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Home equity – senior lien
|
$
|
933
|
|
$
|
4,780
|
|
$
|
4,870
|
|
$
|
5,959
|
|
$
|
16,542
|
|
|
$
|
17,662
|
|
|
$
|
—
|
|
$
|
—
|
|
Home equity – junior lien
|
2,096
|
|
8,964
|
|
8,075
|
|
7,273
|
|
26,408
|
|
|
30,948
|
|
|
—
|
|
—
|
|
||||||||
Prime mortgage
|
1,500
|
|
—
|
|
—
|
|
—
|
|
1,500
|
|
|
1,266
|
|
|
—
|
|
—
|
|
||||||||
Subprime mortgage
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
||||||||
Auto
|
6,431
|
|
97
|
|
149
|
|
17
|
|
6,694
|
|
|
5,246
|
|
|
1
|
|
2
|
|
||||||||
Business banking
|
9,480
|
|
430
|
|
63
|
|
326
|
|
10,299
|
|
|
9,702
|
|
|
6
|
|
4
|
|
||||||||
Student and other
|
82
|
|
169
|
|
127
|
|
486
|
|
864
|
|
|
579
|
|
|
—
|
|
—
|
|
||||||||
Total consumer, excluding credit card
|
20,522
|
|
14,440
|
|
13,284
|
|
14,061
|
|
62,307
|
|
|
65,403
|
|
|
7
|
|
6
|
|
||||||||
Credit card
|
530,616
|
|
—
|
|
—
|
|
—
|
|
530,616
|
|
|
547,227
|
|
|
—
|
|
—
|
|
||||||||
Total consumer
|
551,138
|
|
14,440
|
|
13,284
|
|
14,061
|
|
592,923
|
|
|
612,630
|
|
|
7
|
|
6
|
|
||||||||
Wholesale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other unfunded commitments to extend credit
(a)(b)
|
61,083
|
|
61,628
|
|
87,830
|
|
4,710
|
|
215,251
|
|
|
199,859
|
|
|
347
|
|
364
|
|
||||||||
Standby letters of credit and other financial guarantees
(a)(b)(c)(d)
|
27,982
|
|
34,671
|
|
36,448
|
|
2,798
|
|
101,899
|
|
|
94,837
|
|
|
696
|
|
705
|
|
||||||||
Unused advised lines of credit
|
46,695
|
|
11,324
|
|
327
|
|
1,857
|
|
60,203
|
|
|
44,720
|
|
|
—
|
|
—
|
|
||||||||
Other letters of credit
(a)(d)
|
4,218
|
|
1,020
|
|
148
|
|
—
|
|
5,386
|
|
|
6,663
|
|
|
2
|
|
2
|
|
||||||||
Total wholesale
|
139,978
|
|
108,643
|
|
124,753
|
|
9,365
|
|
382,739
|
|
|
346,079
|
|
|
1,045
|
|
1,071
|
|
||||||||
Total lending-related
|
$
|
691,116
|
|
$
|
123,083
|
|
$
|
138,037
|
|
$
|
23,426
|
|
$
|
975,662
|
|
|
$
|
958,709
|
|
|
$
|
1,052
|
|
$
|
1,077
|
|
Other guarantees and commitments
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Securities lending indemnifications
(e)
|
$
|
186,077
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
186,077
|
|
|
$
|
181,717
|
|
|
NA
|
|
NA
|
|
||
Derivatives qualifying as guarantees
(f)
|
2,998
|
|
5,117
|
|
31,097
|
|
36,381
|
|
75,593
|
|
|
87,768
|
|
|
$
|
457
|
|
$
|
294
|
|
||||||
Unsettled reverse repurchase and securities borrowing agreements
|
39,939
|
|
—
|
|
—
|
|
—
|
|
39,939
|
|
|
39,927
|
|
|
—
|
|
—
|
|
||||||||
Loan sale and securitization-related indemnifications:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Mortgage repurchase liability
(g)
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
|
NA
|
|
|
3,557
|
|
3,285
|
|
||||||||
Loans sold with recourse
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
10,397
|
|
|
10,982
|
|
|
148
|
|
153
|
|
||||||||
Other guarantees and commitments
(h)
|
1,030
|
|
279
|
|
299
|
|
4,713
|
|
6,321
|
|
|
6,492
|
|
|
(5
|
)
|
(6
|
)
|
(a)
|
At
December 31, 2011
and
2010
, reflects the contractual amount net of risk participations totaling
$1.1 billion
and
$542 million
, respectively, for other unfunded commitments to extend credit;
$19.8 billion
and
$22.4 billion
, respectively, for standby letters of credit and other financial guarantees; and
$974 million
and
$1.1 billion
, respectively, for other letters of credit. In regulatory filings with the Federal Reserve these commitments are shown gross of risk participations.
|
(b)
|
At
December 31, 2011
and
2010
, included credit enhancements and bond and commercial paper liquidity commitments to U.S. states and municipalities, hospitals and other not-for-profit entities of
$48.6 billion
and
$43.4 billion
, respectively. These commitments also include liquidity facilities to nonconsolidated municipal bond VIEs; for further information, see Note 16 on pages 256–267 of this
Annual Report
.
|
(c)
|
At
December 31, 2011
and
2010
, included unissued standby letters of credit commitments of
$44.1 billion
and
$41.6 billion
, respectively.
|
(d)
|
At
December 31, 2011
and
2010
,
JPMorgan Chase
held collateral relating to
$41.5 billion
and
$37.8 billion
, respectively, of standby letters of credit; and
$1.3 billion
and
$2.1 billion
, respectively, of other letters of credit.
|
(e)
|
At
December 31, 2011
and
2010
, collateral held by the Firm in support of securities lending indemnification agreements was
$186.3 billion
and
$185.0 billion
, respectively. Securities lending collateral comprises primarily cash and securities issued by governments that are members of the Organisation for Economic Co-operation and Development (“OECD”) and U.S. government agencies.
|
(f)
|
Represents notional amounts of derivatives qualifying as guarantees.
|
(g)
|
Represents the estimated mortgage repurchase liability related to indemnifications for breaches of representations and warranties in loan sale and securitization agreements. For additional information, see Loan sale and securitization-related indemnifications on pages 286–287 of this Note.
|
(h)
|
At
December 31, 2011
and
2010
, included unfunded commitments of
$789 million
and
$1.0 billion
, respectively, to third-party private equity funds; and
$1.5 billion
and
$1.4 billion
, respectively, to other equity investments. These commitments included
$820 million
and
$1.0 billion
, respectively, related to investments that are generally fair valued at net asset value as discussed in Note 3 on pages 184–198 of this
Annual Report
. In addition, at
December 31, 2011
and
2010
, included letters of credit hedged by derivative transactions and managed on a market risk basis of
$3.9 billion
and
$3.8 billion
, respectively.
|
(i)
|
For lending-related products, the carrying value represents the allowance for lending-related commitments and the guarantee liability; for derivative-related products, the carrying value represents the fair value. For all other products the carrying value represents the valuation reserve.
|
284
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
2011
|
|
2010
|
||||||||||||||
December 31,
(in millions)
|
Standby letters of
credit and other financial guarantees
|
Other letters
of credit
|
|
Standby letters of
credit and other financial guarantees
|
Other letters
of credit
|
||||||||||||
Investment-grade
(a)
|
|
$
|
78,884
|
|
|
$
|
4,105
|
|
|
|
$
|
70,236
|
|
|
$
|
5,289
|
|
Noninvestment-grade
(a)
|
|
23,015
|
|
|
1,281
|
|
|
|
24,601
|
|
|
1,374
|
|
||||
Total contractual amount
(b)
|
|
$
|
101,899
|
|
(c)
|
$
|
5,386
|
|
|
|
$
|
94,837
|
|
(c)
|
$
|
6,663
|
|
Allowance for lending-related commitments
|
|
$
|
317
|
|
|
$
|
2
|
|
|
|
$
|
345
|
|
|
$
|
2
|
|
Commitments with collateral
|
|
41,529
|
|
|
1,264
|
|
|
|
37,815
|
|
|
2,127
|
|
(a)
|
The ratings scale is based on the Firm’s internal ratings which generally correspond to ratings as defined by S&P and Moody’s.
|
(b)
|
At
December 31, 2011
and
2010
, reflects the contractual amount net of risk participations totaling
$19.8 billion
and
$22.4 billion
, respectively, for standby letters of credit and other financial guarantees; and
$974 million
and
$1.1 billion
, respectively, for other letters of credit. In regulatory filings with the Federal Reserve these commitments are shown gross of risk participations.
|
(c)
|
At
December 31, 2011
and
2010
, included unissued standby letters of credit commitments of
$44.1 billion
and
$41.6 billion
, respectively.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
285
|
286
|
|
JPMorgan Chase & Co./2011 Annual Report
|
(i)
|
the level of outstanding unresolved repurchase demands,
|
(ii)
|
estimated probable future repurchase demands considering information about file requests, delinquent and liquidated loans, resolved and unresolved mortgage insurance rescission notices and the Firm’s historical experience,
|
(iii)
|
the potential ability of the Firm to cure the defects identified in the repurchase demands (“cure rate”),
|
(iv)
|
the estimated severity of loss upon repurchase of the loan or collateral, make-whole settlement, or indemnification,
|
(v)
|
the Firm’s potential ability to recover its losses from third-party originators, and
|
(vi)
|
the terms of agreements with certain mortgage insurers and other parties.
|
Year ended December 31,
(in millions)
|
2011
|
|
2010
|
|
2009
|
|
||||||
Repurchase liability at beginning of period
|
$
|
3,285
|
|
|
$
|
1,705
|
|
|
$
|
1,093
|
|
|
Realized losses
(b)
|
(1,263
|
)
|
|
(1,423
|
)
|
|
(1,253
|
)
|
(d)
|
|||
Provision for repurchase losses
|
1,535
|
|
|
3,003
|
|
|
1,865
|
|
|
|||
Repurchase liability at end of period
|
$
|
3,557
|
|
(c)
|
$
|
3,285
|
|
|
$
|
1,705
|
|
|
(a)
|
Mortgage repurchase liabilities associated with pending or threatened litigation are not reported in this table because the Firm separately evaluates its exposure to such repurchases in establishing its litigation reserves.
|
(b)
|
Includes principal losses and accrued interest on repurchased loans, “make-whole” settlements, settlements with claimants, and certain related expense. For the years ended
December 31, 2011
,
2010
and
2009
, make-whole settlements were and
$640 million
,
$632 million
and
$277 million
, respectively.
|
(c)
|
Includes
$173 million
at
December 31, 2011
, related to future demands on loans sold by Washington Mutual to the GSEs.
|
(d)
|
Includes the Firm’s resolution of certain current and future repurchase demands for certain loans sold by Washington Mutual.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
287
|
288
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Year ended December 31, (in millions)
|
|
||
2012
|
$
|
1,753
|
|
2013
|
1,758
|
|
|
2014
|
1,577
|
|
|
2015
|
1,438
|
|
|
2016
|
1,300
|
|
|
After 2016
|
7,188
|
|
|
Total minimum payments required
(a)
|
15,014
|
|
|
Less: Sublease rentals under noncancelable subleases
|
(1,542
|
)
|
|
Net minimum payment required
|
$
|
13,472
|
|
(a)
|
Lease restoration obligations are accrued in accordance with U.S. GAAP, and are not reported as a required minimum lease payment.
|
Year ended December 31,
|
|
|
|
|
|
|
||||||
(in millions)
|
|
2011
|
|
2010
|
|
2009
|
||||||
Gross rental expense
|
|
$
|
2,228
|
|
|
$
|
2,212
|
|
|
$
|
1,884
|
|
Sublease rental income
|
|
(403
|
)
|
|
(545
|
)
|
|
(172
|
)
|
|||
Net rental expense
|
|
$
|
1,825
|
|
|
$
|
1,667
|
|
|
$
|
1,712
|
|
December 31, (in billions)
|
|
2011
|
|
2010
|
||||
Securities
|
|
$
|
134.8
|
|
|
$
|
112.1
|
|
Loans
|
|
198.6
|
|
|
214.8
|
|
||
Trading assets and other
|
|
122.8
|
|
|
123.2
|
|
||
Total assets pledged
(a)
|
|
$
|
456.2
|
|
|
$
|
450.1
|
|
(a)
|
Total assets pledged do not include assets of consolidated VIEs; these assets are used to settle the liabilities of those entities. See Note 16 on pages 256–267 of this Annual Report for additional information on assets and liabilities of consolidated VIEs.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
289
|
290
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
291
|
292
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
293
|
294
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
295
|
296
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
297
|
298
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
299
|
As of or for the year ended December 31, (in millions)
|
|
Revenue
(c)
|
|
Expense
(d)
|
|
Income before income tax
expense and extraordinary gain
|
|
Net income
|
|
Total assets
|
||||||||||
2011
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Europe/Middle East and Africa
|
|
$
|
16,212
|
|
|
$
|
9,157
|
|
|
$
|
7,055
|
|
|
$
|
4,844
|
|
|
$
|
566,866
|
|
Asia and Pacific
|
|
5,992
|
|
|
3,802
|
|
|
2,190
|
|
|
1,380
|
|
|
156,411
|
|
|||||
Latin America and the Caribbean
|
|
2,273
|
|
|
1,711
|
|
|
562
|
|
|
340
|
|
|
51,481
|
|
|||||
Total international
|
|
24,477
|
|
|
14,670
|
|
|
9,807
|
|
|
6,564
|
|
|
774,758
|
|
|||||
North America
(a)
|
|
72,757
|
|
|
55,815
|
|
|
16,942
|
|
|
12,412
|
|
|
1,491,034
|
|
|||||
Total
|
|
$
|
97,234
|
|
|
$
|
70,485
|
|
|
$
|
26,749
|
|
|
$
|
18,976
|
|
|
$
|
2,265,792
|
|
2010
(b)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Europe/Middle East and Africa
|
|
$
|
14,135
|
|
|
$
|
8,777
|
|
|
$
|
5,358
|
|
|
$
|
3,635
|
|
|
$
|
446,547
|
|
Asia and Pacific
|
|
6,073
|
|
|
3,677
|
|
|
2,396
|
|
|
1,614
|
|
|
151,379
|
|
|||||
Latin America and the Caribbean
|
|
1,750
|
|
|
1,181
|
|
|
569
|
|
|
362
|
|
|
33,192
|
|
|||||
Total international
|
|
21,958
|
|
|
13,635
|
|
|
8,323
|
|
|
5,611
|
|
|
631,118
|
|
|||||
North America
(a)
|
|
80,736
|
|
|
64,200
|
|
|
16,536
|
|
|
11,759
|
|
|
1,486,487
|
|
|||||
Total
|
|
$
|
102,694
|
|
|
$
|
77,835
|
|
|
$
|
24,859
|
|
|
$
|
17,370
|
|
|
$
|
2,117,605
|
|
2009
(b)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Europe/Middle East and Africa
|
|
$
|
16,294
|
|
|
$
|
8,620
|
|
|
$
|
7,674
|
|
|
$
|
5,212
|
|
|
$
|
375,406
|
|
Asia and Pacific
|
|
5,429
|
|
|
3,528
|
|
|
1,901
|
|
|
1,286
|
|
|
112,798
|
|
|||||
Latin America and the Caribbean
|
|
1,867
|
|
|
1,083
|
|
|
784
|
|
|
463
|
|
|
23,692
|
|
|||||
Total international
|
|
23,590
|
|
|
13,231
|
|
|
10,359
|
|
|
6,961
|
|
|
511,896
|
|
|||||
North America
(a)
|
|
76,844
|
|
|
71,136
|
|
|
5,708
|
|
|
4,767
|
|
|
1,520,093
|
|
|||||
Total
|
|
$
|
100,434
|
|
|
$
|
84,367
|
|
|
$
|
16,067
|
|
|
$
|
11,728
|
|
|
$
|
2,031,989
|
|
(a)
|
Substantially reflects the U.S.
|
(b)
|
The regional allocation of revenue, expense and net income for 2010 and 2009 has been modified to conform with current allocation methodologies.
|
(c)
|
Revenue is composed of net interest income and noninterest revenue.
|
(d)
|
Expense is composed of noninterest expense and the provision for credit losses.
|
300
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
301
|
As of or the year ended
December 31,
(in millions, except ratios)
|
Investment Bank
|
|
Retail Financial Services
|
|
Card Services & Auto
(f)
|
|
Commercial Banking
|
||||||||||||||||||||||||||||||||
2011
|
2010
|
2009
|
|
2011
|
2010
|
2009
|
|
2011
|
2010
|
2009
|
|
2011
|
2010
|
2009
|
|||||||||||||||||||||||||
Noninterest revenue
|
$
|
17,971
|
|
$
|
18,253
|
|
$
|
18,522
|
|
|
$
|
10,405
|
|
$
|
11,227
|
|
$
|
11,414
|
|
|
$
|
4,892
|
|
$
|
4,278
|
|
$
|
3,706
|
|
|
$
|
2,195
|
|
$
|
2,200
|
|
$
|
1,817
|
|
Net interest income
|
8,303
|
|
7,964
|
|
9,587
|
|
|
16,133
|
|
17,220
|
|
18,383
|
|
|
14,249
|
|
16,194
|
|
19,493
|
|
|
4,223
|
|
3,840
|
|
3,903
|
|
||||||||||||
Total net revenue
|
26,274
|
|
26,217
|
|
28,109
|
|
|
26,538
|
|
28,447
|
|
29,797
|
|
|
19,141
|
|
20,472
|
|
23,199
|
|
|
6,418
|
|
6,040
|
|
5,720
|
|
||||||||||||
Provision for credit losses
|
(286
|
)
|
(1,200
|
)
|
2,279
|
|
|
3,999
|
|
8,919
|
|
14,754
|
|
|
3,621
|
|
8,570
|
|
19,648
|
|
|
208
|
|
297
|
|
1,454
|
|
||||||||||||
Credit allocation income/(expense)
(b)
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||||||||
Noninterest expense
(c)
|
16,116
|
|
17,265
|
|
15,401
|
|
|
19,458
|
|
16,483
|
|
15,512
|
|
|
8,045
|
|
7,178
|
|
6,617
|
|
|
2,278
|
|
2,199
|
|
2,176
|
|
||||||||||||
Income/(loss) before income tax expense/(benefit) and extraordinary gain
|
10,444
|
|
10,152
|
|
10,429
|
|
|
3,081
|
|
3,045
|
|
(469
|
)
|
|
7,475
|
|
4,724
|
|
(3,066
|
)
|
|
3,932
|
|
3,544
|
|
2,090
|
|
||||||||||||
Income tax expense/(benefit)
|
3,655
|
|
3,513
|
|
3,530
|
|
|
1,403
|
|
1,317
|
|
(134
|
)
|
|
2,931
|
|
1,852
|
|
(1,273
|
)
|
|
1,565
|
|
1,460
|
|
819
|
|
||||||||||||
Income/(loss) before extraordinary gain
|
6,789
|
|
6,639
|
|
6,899
|
|
|
1,678
|
|
1,728
|
|
(335
|
)
|
|
4,544
|
|
2,872
|
|
(1,793
|
)
|
|
2,367
|
|
2,084
|
|
1,271
|
|
||||||||||||
Extraordinary gain
(d)
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||||||||
Net income/(loss)
|
$
|
6,789
|
|
$
|
6,639
|
|
$
|
6,899
|
|
|
$
|
1,678
|
|
$
|
1,728
|
|
$
|
(335
|
)
|
|
$
|
4,544
|
|
$
|
2,872
|
|
$
|
(1,793
|
)
|
|
$
|
2,367
|
|
$
|
2,084
|
|
$
|
1,271
|
|
Average common equity
|
$
|
40,000
|
|
$
|
40,000
|
|
$
|
33,000
|
|
|
$
|
25,000
|
|
$
|
24,600
|
|
$
|
22,457
|
|
|
$
|
16,000
|
|
$
|
18,400
|
|
$
|
17,543
|
|
|
$
|
8,000
|
|
$
|
8,000
|
|
$
|
8,000
|
|
Total assets
|
776,430
|
|
825,150
|
|
706,944
|
|
|
274,795
|
|
299,950
|
|
322,185
|
|
|
208,467
|
|
208,793
|
|
255,029
|
|
|
158,040
|
|
142,646
|
|
130,280
|
|
||||||||||||
Return on average common equity
(e)
|
17
|
%
|
17
|
%
|
21
|
%
|
|
7
|
%
|
7
|
%
|
(1
|
)%
|
|
28
|
%
|
16
|
%
|
(10
|
)%
|
|
30
|
%
|
26
|
%
|
16
|
%
|
||||||||||||
Overhead ratio
|
61
|
|
66
|
|
55
|
|
|
73
|
|
58
|
|
52
|
|
|
42
|
|
35
|
|
29
|
|
|
35
|
|
36
|
|
38
|
|
(a)
|
In addition to analyzing the Firm’s results on a reported basis, management reviews the Firm’s lines of business results on a “managed basis,” which is a non-GAAP financial measure. The Firm’s definition of managed basis starts with the reported U.S. GAAP results and includes certain reclassifications as discussed below that do not have any impact on net income as reported by the lines of business or by the Firm as a whole.
|
(b)
|
IB manages traditional credit exposures related to the Global Corporate Bank (“GCB”) on behalf of IB and TSS. Effective January 1, 2011, IB and TSS share the economics related to the Firm’s GCB clients. Included within this allocation are net revenue, provision for credit losses and expenses. Prior years reflected a reimbursement to IB for a portion of the total costs of managing the credit portfolio. IB recognizes this credit allocation as a component of all other income.
|
(c)
|
Includes merger costs, which are reported in the Corporate/Private Equity segment. There were no merger costs in
2011
and
2010
. Merger costs attributed to the business segments for
2009
was as follows.
|
Year ended December 31, (in millions)
|
|
2009
|
|
|
Investment Bank
|
|
$
|
27
|
|
Retail Financial Services
|
|
228
|
|
|
Card Services & Auto
|
|
40
|
|
|
Commercial Banking
|
|
6
|
|
|
Treasury & Securities Services
|
|
11
|
|
|
Asset Management
|
|
6
|
|
|
Corporate/Private Equity
|
|
163
|
|
(d)
|
On September 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual from the FDIC for
$1.9 billion
. The fair value of the net assets acquired exceeded the purchase price, which resulted in negative goodwill. In accordance with U.S. GAAP for business combinations, nonfinancial assets that are not held-for-sale, such as premises and equipment and other intangibles, acquired in the Washington Mutual transaction were written down against that negative goodwill. The negative goodwill that remained after writing down nonfinancial assets was recognized as an extraordinary gain. A preliminary gain of
$1.9 billion
was recognized at December 31, 2008. As a result of the final refinement of the purchase price allocation in 2009, the Firm recognized a
$76 million
increase in the extraordinary gain. The final total extraordinary gain that resulted from the Washington Mutual transaction was
$2.0 billion
.
|
(e)
|
Ratio is based on income/(loss) before extraordinary gain for
2009
.
|
(f)
|
Effective January 1, 2010, the Firm adopted accounting guidance related to VIEs. Prior to the adoption of the new guidance, managed results for credit Card excluded the impact of credit card securitizations on total net revenue, provision for credit losses and average assets, as JPMorgan Chase treated the sold receivables as if they were still on the balance sheet in evaluating the credit performance of the entire managed credit card portfolio, as operations are funded, and decisions are made about allocating resources, such as employees and capital, based on managed information. These adjustments are eliminated in reconciling items to arrive at the Firm’s reported U.S. GAAP results. The related securitization adjustments were as follows.
|
Year ended December 31, (in millions)
|
2009
|
|
|
Noninterest revenue
|
$
|
(1,494
|
)
|
Net interest income
|
7,937
|
|
|
Provision for credit losses
|
6,443
|
|
|
Total assets
|
80,882
|
|
302
|
|
JPMorgan Chase & Co./2011 Annual Report
|
Treasury & Securities Services
|
|
Asset Management
|
|
Corporate/Private Equity
|
|
Reconciling Items
(f)(g)
|
|
Total
|
||||||||||||||||||||||||||||||||||||||||
2011
|
2010
|
2009
|
|
2011
|
2010
|
2009
|
|
2011
|
2010
|
2009
|
|
2011
|
2010
|
2009
|
|
2011
|
2010
|
2009
|
||||||||||||||||||||||||||||||
$
|
4,544
|
|
$
|
4,757
|
|
$
|
4,747
|
|
|
$
|
7,895
|
|
$
|
7,485
|
|
$
|
6,372
|
|
|
$
|
3,638
|
|
$
|
5,359
|
|
$
|
2,771
|
|
|
$
|
(1,995
|
)
|
$
|
(1,866
|
)
|
$
|
(67
|
)
|
|
$
|
49,545
|
|
$
|
51,693
|
|
$
|
49,282
|
|
3,158
|
|
2,624
|
|
2,597
|
|
|
1,648
|
|
1,499
|
|
1,593
|
|
|
505
|
|
2,063
|
|
3,863
|
|
|
(530
|
)
|
(403
|
)
|
(8,267
|
)
|
|
47,689
|
|
51,001
|
|
51,152
|
|
|||||||||||||||
7,702
|
|
7,381
|
|
7,344
|
|
|
9,543
|
|
8,984
|
|
7,965
|
|
|
4,143
|
|
7,422
|
|
6,634
|
|
|
(2,525
|
)
|
(2,269
|
)
|
(8,334
|
)
|
|
97,234
|
|
102,694
|
|
100,434
|
|
|||||||||||||||
1
|
|
(47
|
)
|
55
|
|
|
67
|
|
86
|
|
188
|
|
|
(36
|
)
|
14
|
|
80
|
|
|
—
|
|
—
|
|
(6,443
|
)
|
|
7,574
|
|
16,639
|
|
32,015
|
|
|||||||||||||||
8
|
|
(121
|
)
|
(121
|
)
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
(8
|
)
|
121
|
|
121
|
|
|
—
|
|
—
|
|
—
|
|
|||||||||||||||
5,863
|
|
5,604
|
|
5,278
|
|
|
7,002
|
|
6,112
|
|
5,473
|
|
|
4,149
|
|
6,355
|
|
1,895
|
|
|
—
|
|
—
|
|
—
|
|
|
62,911
|
|
61,196
|
|
52,352
|
|
|||||||||||||||
1,846
|
|
1,703
|
|
1,890
|
|
|
2,474
|
|
2,786
|
|
2,304
|
|
|
30
|
|
1,053
|
|
4,659
|
|
|
(2,533
|
)
|
(2,148
|
)
|
(1,770
|
)
|
|
26,749
|
|
24,859
|
|
16,067
|
|
|||||||||||||||
642
|
|
624
|
|
664
|
|
|
882
|
|
1,076
|
|
874
|
|
|
(772
|
)
|
(205
|
)
|
1,705
|
|
|
(2,533
|
)
|
(2,148
|
)
|
(1,770
|
)
|
|
7,773
|
|
7,489
|
|
4,415
|
|
|||||||||||||||
1,204
|
|
1,079
|
|
1,226
|
|
|
1,592
|
|
1,710
|
|
1,430
|
|
|
802
|
|
1,258
|
|
2,954
|
|
|
—
|
|
—
|
|
—
|
|
|
18,976
|
|
17,370
|
|
11,652
|
|
|||||||||||||||
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
76
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
76
|
|
|||||||||||||||
$
|
1,204
|
|
$
|
1,079
|
|
$
|
1,226
|
|
|
$
|
1,592
|
|
$
|
1,710
|
|
$
|
1,430
|
|
|
$
|
802
|
|
$
|
1,258
|
|
$
|
3,030
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
18,976
|
|
$
|
17,370
|
|
$
|
11,728
|
|
$
|
7,000
|
|
$
|
6,500
|
|
$
|
5,000
|
|
|
$
|
6,500
|
|
$
|
6,500
|
|
$
|
7,000
|
|
|
$
|
70,766
|
|
$
|
57,520
|
|
$
|
52,903
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
173,266
|
|
$
|
161,520
|
|
$
|
145,903
|
|
68,665
|
|
45,481
|
|
38,054
|
|
|
86,242
|
|
68,997
|
|
64,502
|
|
|
693,153
|
|
526,588
|
|
595,877
|
|
|
NA
|
|
NA
|
|
(80,882
|
)
|
|
2,265,792
|
|
2,117,605
|
|
2,031,989
|
|
|||||||||||||||
17
|
%
|
17
|
%
|
25
|
%
|
|
25
|
%
|
26
|
%
|
20
|
%
|
|
NM
|
|
NM
|
|
NM
|
|
|
NM
|
|
NM
|
|
NM
|
|
|
11
|
%
|
10
|
%
|
6
|
%
|
|||||||||||||||
76
|
|
76
|
|
72
|
|
|
73
|
|
68
|
|
69
|
|
|
NM
|
|
NM
|
|
NM
|
|
|
NM
|
|
NM
|
|
NM
|
|
|
65
|
|
60
|
|
52
|
|
(g)
|
Segment managed results reflect revenue on a tax-equivalent basis with the corresponding income tax impact recorded within income tax expense/(benefit). These adjustments are eliminated in reconciling items to arrive at the Firm’s reported U.S. GAAP results. Tax-equivalent adjustments for the years ended
December 31, 2011
,
2010
and
2009
were as follows.
|
Year ended December 31, (in millions)
|
2011
|
|
2010
|
|
2009
|
|
|||
Noninterest revenue
|
$
|
2,003
|
|
$
|
1,745
|
|
$
|
1,440
|
|
Net interest income
|
530
|
|
403
|
|
330
|
|
|||
Income tax expense
|
2,533
|
|
2,148
|
|
1,770
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
303
|
Parent company – Statements of income
|
|
|
|
|
||||||||
Year ended December 31,
(in millions)
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Income
|
|
|
|
|
|
|
||||||
Dividends from subsidiaries:
|
|
|
|
|
|
|
||||||
Bank and bank holding company
|
|
$
|
10,852
|
|
|
$
|
16,554
|
|
|
$
|
15,235
|
|
Nonbank
(a)
|
|
2,651
|
|
|
932
|
|
|
1,036
|
|
|||
Interest income from subsidiaries
|
|
1,099
|
|
|
985
|
|
|
1,501
|
|
|||
Other interest income
|
|
384
|
|
|
294
|
|
|
266
|
|
|||
Other income from subsidiaries,
primarily fees:
|
|
|
|
|
|
|
||||||
Bank and bank holding company
|
|
809
|
|
|
680
|
|
|
233
|
|
|||
Nonbank
|
|
92
|
|
|
312
|
|
|
742
|
|
|||
Other income/(loss)
|
|
(85
|
)
|
|
157
|
|
|
844
|
|
|||
Total income
|
|
15,802
|
|
|
19,914
|
|
|
19,857
|
|
|||
Expense
|
|
|
|
|
|
|
||||||
Interest expense to subsidiaries
(a)
|
|
1,121
|
|
|
1,263
|
|
|
1,118
|
|
|||
Other interest expense
|
|
4,447
|
|
|
3,782
|
|
|
4,696
|
|
|||
Other noninterest expense
|
|
649
|
|
|
540
|
|
|
988
|
|
|||
Total expense
|
|
6,217
|
|
|
5,585
|
|
|
6,802
|
|
|||
Income before income tax benefit and undistributed net income of subsidiaries
|
|
9,585
|
|
|
14,329
|
|
|
13,055
|
|
|||
Income tax benefit
|
|
1,089
|
|
|
511
|
|
|
1,269
|
|
|||
Equity in undistributed net income of subsidiaries
|
|
8,302
|
|
|
2,530
|
|
|
(2,596
|
)
|
|||
Net income
|
|
$
|
18,976
|
|
|
$
|
17,370
|
|
|
$
|
11,728
|
|
Parent company – Balance sheets
|
|
|
|
|
|
|
||
December 31, (in millions)
|
|
2011
|
|
|
2010
|
|
||
Assets
|
|
|
|
|
||||
Cash and due from banks
|
|
$
|
132
|
|
|
$
|
96
|
|
Deposits with banking subsidiaries
|
|
91,622
|
|
|
80,201
|
|
||
Trading assets
|
|
18,485
|
|
|
16,038
|
|
||
Available-for-sale securities
|
|
3,657
|
|
|
3,176
|
|
||
Loans
|
|
1,880
|
|
|
1,849
|
|
||
Advances to, and receivables from, subsidiaries:
|
|
|
|
|
||||
Bank and bank holding company
|
|
39,888
|
|
|
54,887
|
|
||
Nonbank
|
|
83,138
|
|
|
72,080
|
|
||
Investments (at equity) in subsidiaries:
|
|
|
|
|
||||
Bank and bank holding company
|
|
157,160
|
|
|
150,876
|
|
||
Nonbank
(a)
|
|
42,231
|
|
|
38,000
|
|
||
Goodwill and other intangibles
|
|
1,027
|
|
|
1,050
|
|
||
Other assets
|
|
15,506
|
|
|
17,171
|
|
||
Total assets
|
|
$
|
454,726
|
|
|
$
|
435,424
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
||||
Borrowings from, and payables to, subsidiaries
(a)
|
|
$
|
30,231
|
|
|
$
|
28,332
|
|
Other borrowed funds, primarily commercial paper
|
|
59,891
|
|
|
41,874
|
|
||
Other liabilities
|
|
7,653
|
|
|
7,302
|
|
||
Long-term debt
(b)(c)
|
|
173,378
|
|
|
181,810
|
|
||
Total liabilities
(c)
|
|
271,153
|
|
|
259,318
|
|
||
Total stockholders’ equity
|
|
183,573
|
|
|
176,106
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
454,726
|
|
|
$
|
435,424
|
|
Parent company – Statements of cash flows
|
|
|
||||||||||
Year ended December 31,
(in millions)
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||
Operating activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
18,976
|
|
|
$
|
17,370
|
|
|
$
|
11,728
|
|
Less: Net income of subsidiaries
(a)
|
|
21,805
|
|
|
20,016
|
|
|
13,675
|
|
|||
Parent company net loss
|
|
(2,829
|
)
|
|
(2,646
|
)
|
|
(1,947
|
)
|
|||
Cash dividends from subsidiaries
(a)
|
|
13,414
|
|
|
17,432
|
|
|
16,054
|
|
|||
Other, net
|
|
889
|
|
|
1,685
|
|
|
1,852
|
|
|||
Net cash provided by operating activities
|
|
11,474
|
|
|
16,471
|
|
|
15,959
|
|
|||
Investing activities
|
|
|
|
|
|
|
||||||
Net change in:
|
|
|
|
|
|
|
||||||
Deposits with banking subsidiaries
|
|
20,866
|
|
|
7,692
|
|
|
(27,342
|
)
|
|||
Available-for-sale securities:
|
|
|
|
|
|
|
||||||
Purchases
|
|
(1,109
|
)
|
|
(1,387
|
)
|
|
(1,454
|
)
|
|||
Proceeds from sales and maturities
|
|
886
|
|
|
745
|
|
|
522
|
|
|||
Loans, net
|
|
153
|
|
|
(90
|
)
|
|
209
|
|
|||
Advances to subsidiaries, net
|
|
(28,105
|
)
|
|
8,051
|
|
|
28,808
|
|
|||
Investments (at equity) in subsidiaries, net
(a)
|
|
(1,530
|
)
|
|
(871
|
)
|
|
(6,582
|
)
|
|||
Net cash (used in)/provided by investing activities
|
|
(8,839
|
)
|
|
14,140
|
|
|
(5,839
|
)
|
|||
Financing activities
|
|
|
|
|
|
|
||||||
Net change in borrowings from subsidiaries
(a)
|
|
2,827
|
|
|
(2,039
|
)
|
|
(4,935
|
)
|
|||
Net change in other borrowed funds
|
|
16,268
|
|
|
(11,843
|
)
|
|
1,894
|
|
|||
Proceeds from the issuance of long-term debt
|
|
33,566
|
|
|
21,610
|
|
|
32,304
|
|
|||
Proceeds from the assumption of subsidiaries long-term debt
(d)
|
|
—
|
|
|
—
|
|
|
15,264
|
|
|||
Repayments of long-term debt
|
|
(41,747
|
)
|
|
(32,893
|
)
|
|
(31,964
|
)
|
|||
Excess tax benefits related to stock-based compensation
|
|
867
|
|
|
26
|
|
|
17
|
|
|||
Redemption of preferred stock issued to the U.S. Treasury
|
|
—
|
|
|
—
|
|
|
(25,000
|
)
|
|||
Redemption of other preferred stock
|
|
—
|
|
|
(352
|
)
|
|
—
|
|
|||
Proceeds from issuance of common stock
|
|
—
|
|
|
—
|
|
|
5,756
|
|
|||
Treasury stock and warrants repurchased
|
|
(8,863
|
)
|
|
(2,999
|
)
|
|
—
|
|
|||
Dividends paid
|
|
(3,895
|
)
|
|
(1,486
|
)
|
|
(3,422
|
)
|
|||
All other financing activities, net
|
|
(1,622
|
)
|
|
(641
|
)
|
|
33
|
|
|||
Net cash used in financing activities
|
|
(2,599
|
)
|
|
(30,617
|
)
|
|
(10,053
|
)
|
|||
Net increase/(decrease) in cash and due from banks
|
|
36
|
|
|
(6
|
)
|
|
67
|
|
|||
Cash and due from banks at the beginning of the year, primarily with bank subsidiaries
|
|
96
|
|
|
102
|
|
|
35
|
|
|||
Cash and due from banks at the end of the year, primarily with bank subsidiaries
|
|
$
|
132
|
|
|
$
|
96
|
|
|
$
|
102
|
|
Cash interest paid
|
|
$
|
5,800
|
|
|
$
|
5,090
|
|
|
$
|
5,629
|
|
Cash income taxes paid, net
|
|
5,885
|
|
|
7,001
|
|
|
3,124
|
|
(a)
|
Subsidiaries include trusts that issued guaranteed capital debt securities (“issuer trusts”). The Parent received dividends of
$13 million
,
$13 million
and
$14 million
from the issuer trusts in 2011, 2010 and 2009, respectively. For further discussion on these issuer trusts, see Note 21 on pages 273–275 of this Annual Report.
|
(b)
|
At December 31, 2011, long-term debt that contractually matures in 2012 through 2016 totaled
$42.5 billion
,
$17.4 billion
,
$24.9 billion
,
$16.7 billion
and
$17.5 billion
, respectively.
|
(c)
|
For information regarding the Firm's guarantees of its subsidiaries' obligations, see Note 21 and Note 29 on pages 273–275 and 283–289, respectively, of this Annual Report.
|
(d)
|
Represents the assumption of Bear Stearns long-term debt by JPMorgan Chase & Co.
|
304
|
|
JPMorgan Chase & Co./2011 Annual Report
|
(Table continued on next page)
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
As of or for the period ended
|
2011
|
|
2010
|
||||||||||||||||||||||
(in millions, except per share, ratio and headcount data)
|
4th quarter
|
3rd quarter
|
2nd quarter
|
1st quarter
|
|
4th quarter
|
3rd quarter
|
2nd quarter
|
1st quarter
|
||||||||||||||||
Selected income statement data
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Noninterest revenue
|
$
|
9,340
|
|
$
|
11,946
|
|
$
|
14,943
|
|
$
|
13,316
|
|
|
$
|
13,996
|
|
$
|
11,322
|
|
$
|
12,414
|
|
$
|
13,961
|
|
Net interest income
|
12,131
|
|
11,817
|
|
11,836
|
|
11,905
|
|
|
12,102
|
|
12,502
|
|
12,687
|
|
13,710
|
|
||||||||
Total net revenue
|
21,471
|
|
23,763
|
|
26,779
|
|
25,221
|
|
|
26,098
|
|
23,824
|
|
25,101
|
|
27,671
|
|
||||||||
Total noninterest expense
|
14,540
|
|
15,534
|
|
16,842
|
|
15,995
|
|
|
16,043
|
|
14,398
|
|
14,631
|
|
16,124
|
|
||||||||
Pre-provision profit
(a)
|
6,931
|
|
8,229
|
|
9,937
|
|
9,226
|
|
|
10,055
|
|
9,426
|
|
10,470
|
|
11,547
|
|
||||||||
Provision for credit losses
|
2,184
|
|
2,411
|
|
1,810
|
|
1,169
|
|
|
3,043
|
|
3,223
|
|
3,363
|
|
7,010
|
|
||||||||
Income before income tax expense
|
4,747
|
|
5,818
|
|
8,127
|
|
8,057
|
|
|
7,012
|
|
6,203
|
|
7,107
|
|
4,537
|
|
||||||||
Income tax expense
|
1,019
|
|
1,556
|
|
2,696
|
|
2,502
|
|
|
2,181
|
|
1,785
|
|
2,312
|
|
1,211
|
|
||||||||
Net income
|
$
|
3,728
|
|
$
|
4,262
|
|
$
|
5,431
|
|
$
|
5,555
|
|
|
$
|
4,831
|
|
$
|
4,418
|
|
$
|
4,795
|
|
$
|
3,326
|
|
Per common share data
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Average: Basic
|
$
|
0.90
|
|
$
|
1.02
|
|
$
|
1.28
|
|
$
|
1.29
|
|
|
$
|
1.13
|
|
$
|
1.02
|
|
$
|
1.10
|
|
$
|
0.75
|
|
Diluted
|
0.90
|
|
1.02
|
|
1.27
|
|
1.28
|
|
|
1.12
|
|
1.01
|
|
1.09
|
|
0.74
|
|
||||||||
Cash dividends declared per share
(b)
|
0.25
|
|
0.25
|
|
0.25
|
|
0.25
|
|
|
0.05
|
|
0.05
|
|
0.05
|
|
0.05
|
|
||||||||
Book value per share
|
46.59
|
|
45.93
|
|
44.77
|
|
43.34
|
|
|
43.04
|
|
42.29
|
|
40.99
|
|
39.38
|
|
||||||||
Common shares outstanding
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Average: Basic
|
3,801.9
|
|
3,859.6
|
|
3,958.4
|
|
3,981.6
|
|
|
3,917.0
|
|
3,954.3
|
|
3,983.5
|
|
3,970.5
|
|
||||||||
Diluted
|
3,811.7
|
|
3,872.2
|
|
3,983.2
|
|
4,014.1
|
|
|
3,935.2
|
|
3,971.9
|
|
4,005.6
|
|
3,994.7
|
|
||||||||
Common shares at period-end
|
3,772.7
|
|
3,798.9
|
|
3,910.2
|
|
3,986.6
|
|
|
3,910.3
|
|
3,925.8
|
|
3,975.8
|
|
3,975.4
|
|
||||||||
Share price
(c)
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
High
|
$
|
37.54
|
|
$
|
42.55
|
|
$
|
47.80
|
|
$
|
48.36
|
|
|
$
|
43.12
|
|
$
|
41.70
|
|
$
|
48.20
|
|
$
|
46.05
|
|
Low
|
27.85
|
|
28.53
|
|
39.24
|
|
42.65
|
|
|
36.21
|
|
35.16
|
|
36.51
|
|
37.03
|
|
||||||||
Close
|
33.25
|
|
30.12
|
|
40.94
|
|
46.10
|
|
|
42.42
|
|
38.06
|
|
36.61
|
|
44.75
|
|
||||||||
Market capitalization
|
125,442
|
|
114,422
|
|
160,083
|
|
183,783
|
|
|
165,875
|
|
149,418
|
|
145,554
|
|
177,897
|
|
||||||||
Financial ratios
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Return on common equity
|
8
|
%
|
9
|
%
|
12
|
%
|
13
|
%
|
|
11
|
%
|
10
|
%
|
12
|
%
|
8
|
%
|
||||||||
Return on tangible common equity
|
11
|
|
13
|
|
17
|
|
18
|
|
|
16
|
|
15
|
|
17
|
|
12
|
|
||||||||
Return on assets
|
0.65
|
|
0.76
|
|
0.99
|
|
1.07
|
|
|
0.92
|
|
0.86
|
|
0.94
|
|
0.66
|
|
||||||||
Overhead ratio
|
68
|
|
65
|
|
63
|
|
63
|
|
|
61
|
|
60
|
|
58
|
|
58
|
|
||||||||
Deposits-to-loans ratio
|
156
|
|
157
|
|
152
|
|
145
|
|
|
134
|
|
131
|
|
127
|
|
130
|
|
||||||||
Tier 1 capital ratio
|
12.3
|
|
12.1
|
|
12.4
|
|
12.3
|
|
|
12.1
|
|
11.9
|
|
12.1
|
|
11.5
|
|
||||||||
Total capital ratio
|
15.4
|
|
15.3
|
|
15.7
|
|
15.6
|
|
|
15.5
|
|
15.4
|
|
15.8
|
|
15.1
|
|
||||||||
Tier 1 leverage ratio
|
6.8
|
|
6.8
|
|
7.0
|
|
7.2
|
|
|
7.0
|
|
7.1
|
|
6.9
|
|
6.6
|
|
||||||||
Tier 1 common capital ratio
(d)
|
10.1
|
|
9.9
|
|
10.1
|
|
10.0
|
|
|
9.8
|
|
9.5
|
|
9.6
|
|
9.1
|
|
||||||||
Selected balance sheet data (period-end)
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Trading assets
|
$
|
443,963
|
|
$
|
461,531
|
|
$
|
458,722
|
|
$
|
501,148
|
|
|
$
|
489,892
|
|
$
|
475,515
|
|
$
|
397,508
|
|
$
|
426,128
|
|
Securities
|
364,793
|
|
339,349
|
|
324,741
|
|
334,800
|
|
|
316,336
|
|
340,168
|
|
312,013
|
|
344,376
|
|
||||||||
Loans
|
723,720
|
|
696,853
|
|
689,736
|
|
685,996
|
|
|
692,927
|
|
690,531
|
|
699,483
|
|
713,799
|
|
||||||||
Total assets
|
2,265,792
|
|
2,289,240
|
|
2,246,764
|
|
2,198,161
|
|
|
2,117,605
|
|
2,141,595
|
|
2,014,019
|
|
2,135,796
|
|
||||||||
Deposits
|
1,127,806
|
|
1,092,708
|
|
1,048,685
|
|
995,829
|
|
|
930,369
|
|
903,138
|
|
887,805
|
|
925,303
|
|
||||||||
Long-term debt
(f)
|
256,775
|
|
273,688
|
|
279,228
|
|
269,616
|
|
|
270,653
|
|
271,495
|
|
260,442
|
|
278,685
|
|
||||||||
Common stockholders’ equity
|
175,773
|
|
174,487
|
|
175,079
|
|
172,798
|
|
|
168,306
|
|
166,030
|
|
162,968
|
|
156,569
|
|
||||||||
Total stockholders’ equity
|
183,573
|
|
182,287
|
|
182,879
|
|
180,598
|
|
|
176,106
|
|
173,830
|
|
171,120
|
|
164,721
|
|
||||||||
Headcount
|
260,157
|
|
256,663
|
|
250,095
|
|
242,929
|
|
|
239,831
|
|
236,810
|
|
232,939
|
|
226,623
|
|
JPMorgan Chase & Co./2011 Annual Report
|
|
305
|
(Table continued from previous page)
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
As of or for the period ended
|
2011
|
|
2010
|
||||||||||||||||||||||
(in millions, except ratio data)
|
4th quarter
|
3rd quarter
|
2nd quarter
|
1st quarter
|
|
4th quarter
|
3rd quarter
|
2nd quarter
|
1st quarter
|
||||||||||||||||
Credit quality metrics
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Allowance for credit losses
|
$
|
28,282
|
|
$
|
29,036
|
|
$
|
29,146
|
|
$
|
30,438
|
|
|
$
|
32,983
|
|
$
|
35,034
|
|
$
|
36,748
|
|
$
|
39,126
|
|
Allowance for loan losses to total retained loans
|
3.84
|
%
|
4.09
|
%
|
4.16
|
%
|
4.40
|
%
|
|
4.71
|
%
|
4.97
|
%
|
5.15
|
%
|
5.40
|
%
|
||||||||
Allowance for loan losses to retained loans excluding purchased credit-impaired loans
(g)
|
3.35
|
|
3.74
|
|
3.83
|
|
4.10
|
|
|
4.46
|
|
5.12
|
|
5.34
|
|
5.64
|
|
||||||||
Nonperforming assets
|
$
|
11,036
|
|
$
|
12,194
|
|
$
|
13,240
|
|
$
|
14,986
|
|
|
$
|
16,557
|
|
$
|
17,656
|
|
$
|
18,156
|
|
$
|
19,019
|
|
Net charge-offs
(h)
|
2,907
|
|
2,507
|
|
3,103
|
|
3,720
|
|
|
5,104
|
|
4,945
|
|
5,714
|
|
7,910
|
|
||||||||
Net charge-off rate
(h)
|
1.64
|
%
|
1.44
|
%
|
1.83
|
%
|
2.22
|
%
|
|
2.95
|
%
|
2.84
|
%
|
3.28
|
%
|
4.46
|
%
|
(a)
|
Pre-provision profit is total net revenue less noninterest expense. The Firm believes that this financial measure is useful in assessing the ability of a lending institution to generate income in excess of its provision for credit losses.
|
(b)
|
On March 18, 2011, the Board of Directors increased the Firm's quarterly stock dividend from $0.05 to $0.25 per share.
|
(c)
|
Share prices shown for JPMorgan Chase’s common stock are from the New York Stock Exchange. JPMorgan Chase’s common stock is also listed and traded on the London Stock Exchange and the Tokyo Stock Exchange.
|
(d)
|
Tier 1 common capital ratio (“Tier 1 common ratio”) is Tier 1 common capital (“Tier 1 common”) divided by risk-weighted assets. The Firm uses Tier 1 common capital along with the other capital measures to assess and monitor its capital position. For further discussion of Tier 1 common ratio, see Regulatory capital on pages 119–122 of this Annual Report.
|
(f)
|
Effective January 1, 2011, the long-term portion of advances from FHLBs was reclassified from other borrowed funds to long-term debt. Prior periods have been revised to conform with the current presentation.
|
(g)
|
Excludes the impact of residential real estate PCI loans. For further discussion, see Allowance for credit losses on pages 155–157 of this Annual Report.
|
(h)
|
Net charge-offs and net charge-off rates for the fourth quarter of 2010 include the effect of $632 million of charge-offs related to the estimated net realizable value of the collateral underlying delinquent residential home loans. Because these losses were previously recognized in the provision and allowance for loan losses, this adjustment had no impact on the Firm's net income.
|
306
|
|
JPMorgan Chase & Co./2011 Annual Report
|
As of or for the year ended December 31, (in millions, except rates)
|
2011
|
|
2010
|
|
2009
|
||||||
Federal funds purchased and securities loaned or sold under repurchase agreements:
|
|
|
|
|
|
||||||
Balance at year-end
|
$
|
213,532
|
|
|
$
|
276,644
|
|
|
$
|
261,413
|
|
Average daily balance during the year
|
256,283
|
|
|
278,603
|
|
|
275,862
|
|
|||
Maximum month-end balance
|
289,835
|
|
|
314,161
|
|
|
310,802
|
|
|||
Weighted-average rate at December 31
|
0.16
|
%
|
|
0.18
|
%
|
|
0.04
|
%
|
|||
Weighted-average rate during the year
|
0.21
|
|
|
(0.07
|
)
|
(d)
|
0.21
|
|
|||
|
|
|
|
|
|
||||||
Commercial paper:
|
|
|
|
|
|
||||||
Balance at year-end
|
$
|
51,631
|
|
|
$
|
35,363
|
|
|
$
|
41,794
|
|
Average daily balance during the year
|
42,653
|
|
|
36,000
|
|
|
39,055
|
|
|||
Maximum month-end balance
|
51,631
|
|
|
50,554
|
|
|
53,920
|
|
|||
Weighted-average rate at December 31
|
0.12
|
%
|
|
0.21
|
%
|
|
0.18
|
%
|
|||
Weighted-average rate during the year
|
0.17
|
|
|
0.20
|
|
|
0.28
|
|
|||
|
|
|
|
|
|
||||||
Other borrowed funds:
(a)(b)
|
|
|
|
|
|
||||||
Balance at year-end
|
$
|
88,626
|
|
|
$
|
111,272
|
|
|
$
|
97,838
|
|
Average daily balance during the year
|
107,543
|
|
|
104,951
|
|
|
99,785
|
|
|||
Maximum month-end balance
|
127,517
|
|
|
120,437
|
|
|
155,693
|
|
|||
Weighted-average rate at December 31
|
1.60
|
%
|
|
5.71
|
%
|
|
3.92
|
%
|
|||
Weighted-average rate during the year
|
2.50
|
|
|
2.89
|
|
|
2.83
|
|
|||
|
|
|
|
|
|
||||||
Short-term beneficial interests
:
(c)
|
|
|
|
|
|
||||||
Commercial paper and other borrowed funds:
|
|
|
|
|
|
||||||
Balance at year-end
|
$
|
26,243
|
|
|
$
|
25,095
|
|
|
$
|
4,787
|
|
Average daily balance during the year
|
25,125
|
|
|
21,853
|
|
|
3,275
|
|
|||
Maximum month-end balance
|
26,780
|
|
|
25,095
|
|
|
7,751
|
|
|||
Weighted-average rate at December 31
|
0.18
|
%
|
|
0.25
|
%
|
|
0.17
|
%
|
|||
Weighted-average rate during the year
|
0.23
|
|
|
0.27
|
|
|
0.24
|
|
(a)
|
Includes securities sold but not yet purchased.
|
(b)
|
Effective January 1, 2011, $23.0 billion of long-term advances from FHLBs were reclassified from other borrowed funds to long-term debt. The prior periods have been revised to conform with the current presentation.
|
(c)
|
Included o
n the Consolidated Balance Sheets in beneficial interests issued by consolidated variable interest entities.
|
(d)
|
Reflects a benefit from the favorable market environments for U.S. dollar-roll financings.
|
JPMorgan Chase & Co./2011 Annual Report
|
|
307
|
308
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
309
|
310
|
|
JPMorgan Chase & Co./2011 Annual Report
|
JPMorgan Chase & Co./2011 Annual Report
|
|
311
|
(Table continued on next page)
|
2011
|
||||||||||
Year ended December 31,
(Taxable-equivalent interest and rates; in millions, except rates)
|
Average
balance
|
|
Interest
|
|
Average
rate
|
||||||
Assets
|
|
|
|
|
|
|
|||||
Deposits with banks
|
$
|
79,783
|
|
|
$
|
599
|
|
|
0.75
|
%
|
|
Federal funds sold and securities purchased under resale agreements
|
211,800
|
|
|
2,523
|
|
|
1.19
|
|
|
||
Securities borrowed
|
128,777
|
|
|
110
|
|
|
0.09
|
|
|
||
Trading assets – debt instruments
|
264,941
|
|
|
11,309
|
|
|
4.27
|
|
|
||
Securities
|
337,894
|
|
|
9,462
|
|
|
2.80
|
|
(f)
|
||
Loans
|
693,523
|
|
|
37,214
|
|
(e)
|
5.37
|
|
|
||
Other assets
(a)
|
44,637
|
|
|
606
|
|
|
1.36
|
|
|
||
Total interest-earning assets
|
1,761,355
|
|
|
61,823
|
|
|
3.51
|
|
|
||
Allowance for loan losses
|
(29,483
|
)
|
|
|
|
|
|
||||
Cash and due from banks
|
40,725
|
|
|
|
|
|
|
||||
Trading assets – equity instruments
|
128,949
|
|
|
|
|
|
|
||||
Trading assets – derivative receivables
|
90,003
|
|
|
|
|
|
|
||||
Goodwill
|
48,632
|
|
|
|
|
|
|
||||
Other intangible assets:
|
|
|
|
|
|
|
|||||
Mortgage servicing rights
|
11,249
|
|
|
|
|
|
|
||||
Purchased credit card relationships
|
744
|
|
|
|
|
|
|
||||
Other intangibles
|
2,889
|
|
|
|
|
|
|
||||
Other assets
|
143,135
|
|
|
|
|
|
|
||||
Total assets
|
2,198,198
|
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
|
|
|||||
Interest-bearing deposits
|
$
|
733,683
|
|
|
$
|
3,855
|
|
|
0.53
|
%
|
|
Federal funds purchased and securities loaned or sold under repurchase agreements
|
256,283
|
|
|
534
|
|
|
0.21
|
|
|
||
Commercial paper
|
42,653
|
|
|
73
|
|
|
0.17
|
|
|
||
Trading liabilities – debt, short-term and other liabilities
(b)(c)
|
206,531
|
|
|
2,266
|
|
|
1.10
|
|
|
||
Beneficial interests issued by consolidated VIEs
|
68,523
|
|
|
767
|
|
|
1.12
|
|
|
||
Long-term debt
(c)
|
272,985
|
|
|
6,109
|
|
|
2.24
|
|
|
||
Total interest-bearing liabilities
|
1,580,658
|
|
|
13,604
|
|
|
0.86
|
|
|
||
Noninterest-bearing deposits
|
278,307
|
|
|
|
|
|
|
||||
Trading liabilities – equity instruments
|
5,316
|
|
|
|
|
|
|
||||
Trading liabilities – derivative payables
|
71,539
|
|
|
|
|
|
|
||||
All other liabilities, including the allowance for lending-related commitments
|
81,312
|
|
|
|
|
|
|
||||
Total liabilities
|
2,017,132
|
|
|
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
|
|
|
|||||
Preferred stock
|
7,800
|
|
|
|
|
|
|
||||
Common stockholders’ equity
|
173,266
|
|
|
|
|
|
|
||||
Total stockholders’ equity
|
181,066
|
|
(d)
|
|
|
|
|
||||
Total liabilities and stockholders’ equity
|
$
|
2,198,198
|
|
|
|
|
|
|
|||
Interest rate spread
|
|
|
|
|
2.65
|
%
|
|
||||
Net interest income and net yield on interest-earning assets
|
|
|
$
|
48,219
|
|
|
2.74
|
|
|
(a)
|
Includes margin loans and, in 2009, the Firm’s investment in asset-backed commercial paper under the Federal Reserve Bank of Boston’s Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (“AML facility”).
|
(b)
|
Includes brokerage customer payables.
|
(c)
|
Effective January 1, 2011, long-term advances from Federal Home Loan Banks (“FHLBs”) were reclassified from other borrowed funds to long-term debt. Prior-year periods have been revised to conform with the current presentation; average long-term FHLBs advances for the years ended December 31, 2010 and 2009, were
$17.0 billion
and
$31.0 billion
, respectively.
|
(d)
|
The ratio of average stockholders’ equity to average assets was
8.2%
for
2011
,
8.3%
for 2010, and
8.1%
for
2009
. The return on average stockholders’ equity, based on net income, was
10.5%
for 2011,
10.2%
for
2010
, and
7.1%
for
2009
.
|
(e)
|
Fees and commissions on loans included in loan interest amounted to
$1.2 billion
in
2011
,
$1.5 billion
in
2010
, and
$2.0 billion
in
2009
.
|
(f)
|
The annualized rate for available-for-sale securities based on amortized cost was
2.84%
in
2011
,
3.00%
in
2010
, and
3.66%
in
2009
, and does not give effect to changes in fair value that are reflected in accumulated other comprehensive income/(loss).
|
(g)
|
Reflects a benefit from the favorable market environments for dollar-roll financings.
|
312
|
|
|
(Table continued from previous page)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2010
|
|
2009
|
||||||||||||||||||||
Average
balance
|
|
Interest
|
|
Average
rate
|
|
Average
balance
|
|
Interest
|
|
Average
rate
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
$
|
47,611
|
|
|
$
|
345
|
|
|
0.72
|
%
|
|
|
$
|
67,015
|
|
|
$
|
938
|
|
|
1.40
|
%
|
|
188,394
|
|
|
1,786
|
|
|
0.95
|
|
|
|
152,926
|
|
|
1,750
|
|
|
1.14
|
|
|
||||
117,416
|
|
|
175
|
|
|
0.15
|
|
|
|
124,462
|
|
|
4
|
|
|
—
|
|
|
||||
254,898
|
|
|
11,128
|
|
|
4.37
|
|
|
|
251,035
|
|
|
12,283
|
|
|
4.89
|
|
|
||||
330,166
|
|
|
9,729
|
|
|
2.95
|
|
(f)
|
|
342,655
|
|
|
12,506
|
|
|
3.65
|
|
(f)
|
||||
703,540
|
|
|
40,481
|
|
(e)
|
5.75
|
|
|
|
682,885
|
|
|
38,720
|
|
(e)
|
5.67
|
|
|
||||
35,496
|
|
|
541
|
|
|
1.52
|
|
|
|
29,510
|
|
|
479
|
|
|
1.62
|
|
|
||||
1,677,521
|
|
|
64,185
|
|
|
3.83
|
|
|
|
1,650,488
|
|
|
66,680
|
|
|
4.04
|
|
|
||||
(36,588
|
)
|
|
|
|
|
|
|
(27,635
|
)
|
|
|
|
|
|
||||||||
30,318
|
|
|
|
|
|
|
|
24,873
|
|
|
|
|
|
|
||||||||
99,543
|
|
|
|
|
|
|
|
67,028
|
|
|
|
|
|
|
||||||||
84,676
|
|
|
|
|
|
|
|
110,457
|
|
|
|
|
|
|
||||||||
48,618
|
|
|
|
|
|
|
|
48,254
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
12,896
|
|
|
|
|
|
|
|
12,898
|
|
|
|
|
|
|
||||||||
1,061
|
|
|
|
|
|
|
|
1,436
|
|
|
|
|
|
|
||||||||
3,117
|
|
|
|
|
|
|
|
3,659
|
|
|
|
|
|
|
||||||||
132,089
|
|
|
|
|
|
|
|
132,743
|
|
|
|
|
|
|
||||||||
$
|
2,053,251
|
|
|
|
|
|
|
|
$
|
2,024,201
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
$
|
668,640
|
|
|
$
|
3,424
|
|
|
0.51
|
%
|
|
|
$
|
684,016
|
|
|
$
|
4,826
|
|
|
0.71
|
%
|
|
278,603
|
|
|
(192
|
)
|
(g)
|
(0.07
|
)
|
(g)
|
|
275,862
|
|
|
573
|
|
|
0.21
|
|
|
||||
36,000
|
|
|
72
|
|
|
0.20
|
|
|
|
39,055
|
|
|
108
|
|
|
0.28
|
|
|
||||
186,059
|
|
|
2,484
|
|
|
1.34
|
|
|
|
170,200
|
|
|
2,105
|
|
|
1.24
|
|
|
||||
87,493
|
|
|
1,145
|
|
|
1.31
|
|
|
|
14,930
|
|
|
218
|
|
|
1.46
|
|
|
||||
273,074
|
|
|
5,848
|
|
|
2.14
|
|
|
|
299,220
|
|
|
7,368
|
|
|
2.46
|
|
|
||||
1,529,869
|
|
|
12,781
|
|
|
0.84
|
|
|
|
1,483,283
|
|
|
15,198
|
|
|
1.02
|
|
|
||||
212,414
|
|
|
|
|
|
|
|
197,989
|
|
|
|
|
|
|
||||||||
6,172
|
|
|
|
|
|
|
|
11,694
|
|
|
|
|
|
|
||||||||
65,714
|
|
|
|
|
|
|
|
77,901
|
|
|
|
|
|
|
||||||||
69,539
|
|
|
|
|
|
|
|
88,377
|
|
|
|
|
|
|
||||||||
1,883,708
|
|
|
|
|
|
|
|
1,859,244
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
8,023
|
|
|
|
|
|
|
|
19,054
|
|
|
|
|
|
|
||||||||
161,520
|
|
|
|
|
|
|
|
145,903
|
|
|
|
|
|
|
||||||||
169,543
|
|
(d)
|
|
|
|
|
|
164,957
|
|
(d)
|
|
|
|
|
||||||||
$
|
2,053,251
|
|
|
|
|
|
|
|
$
|
2,024,201
|
|
|
|
|
|
|
||||||
|
|
|
|
2.99
|
%
|
|
|
|
|
|
|
3.02
|
%
|
|
||||||||
|
|
$
|
51,404
|
|
|
3.06
|
|
|
|
|
|
$
|
51,482
|
|
|
3.12
|
|
|
|
|
313
|
(Table continued on next page)
|
|
|
|
|
|
|||||
|
2011
|
|||||||||
Year ended December 31,
(Taxable-equivalent interest and rates; in millions, except rates)
|
Average balance
|
Interest
|
|
Average rate
|
||||||
Interest-earning assets
|
|
|
|
|
|
|||||
Deposits with banks, primarily U.S.
|
$
|
79,783
|
|
$
|
599
|
|
|
0.75
|
%
|
|
Federal funds sold and securities purchased under resale agreements:
|
|
|
|
|
|
|||||
U.S.
|
106,927
|
|
690
|
|
|
0.65
|
|
|
||
Non-U.S.
|
104,873
|
|
1,833
|
|
|
1.75
|
|
|
||
Securities borrowed:
|
|
|
|
|
|
|||||
U.S.
|
65,702
|
|
(358
|
)
|
|
(0.54
|
)
|
|
||
Non-U.S.
|
63,075
|
|
468
|
|
|
0.74
|
|
|
||
Trading assets – debt instruments:
|
|
|
|
|
|
|||||
U.S.
|
123,078
|
|
5,071
|
|
|
4.12
|
|
|
||
Non-U.S.
|
141,863
|
|
6,238
|
|
|
4.40
|
|
|
||
Securities:
|
|
|
|
|
|
|||||
U.S.
|
183,692
|
|
5,761
|
|
|
3.14
|
|
|
||
Non-U.S.
|
154,202
|
|
3,701
|
|
|
2.40
|
|
|
||
Loans:
|
|
|
|
|
|
|||||
U.S.
|
611,057
|
|
34,625
|
|
|
5.67
|
|
|
||
Non-U.S.
|
82,466
|
|
2,589
|
|
|
3.14
|
|
|
||
Other assets, primarily U.S.
|
44,637
|
|
606
|
|
|
1.36
|
|
|
||
Total interest-earning assets
|
1,761,355
|
|
61,823
|
|
|
3.51
|
|
|
||
Interest-bearing liabilities
|
|
|
|
|
|
|||||
Interest-bearing deposits:
|
|
|
|
|
|
|||||
U.S.
|
472,645
|
|
1,680
|
|
|
0.36
|
|
|
||
Non-U.S.
|
261,038
|
|
2,175
|
|
|
0.83
|
|
|
||
Federal funds purchased and securities loaned or sold under repurchase agreements:
|
|
|
|
|
|
|||||
U.S.
|
203,899
|
|
(92
|
)
|
(b)
|
(0.05
|
)
|
(b)
|
||
Non-U.S.
|
52,384
|
|
626
|
|
|
1.20
|
|
|
||
Trading liabilities – debt, short-term and other liabilities:
|
|
|
|
|
|
|||||
U.S.
|
171,667
|
|
352
|
|
|
0.21
|
|
|
||
Non-U.S.
|
77,517
|
|
1,987
|
|
|
2.56
|
|
|
||
Beneficial interests issued by consolidated VIEs, primarily U.S.
|
68,523
|
|
767
|
|
|
1.12
|
|
|
||
Long-term debt:
|
|
|
|
|
|
|||||
U.S.
|
252,506
|
|
6,041
|
|
|
2.39
|
|
|
||
Non-U.S.
|
20,479
|
|
68
|
|
|
0.33
|
|
|
||
Intracompany funding:
|
|
|
|
|
|
|||||
U.S.
|
(190,282
|
)
|
(600
|
)
|
|
—
|
|
|
||
Non-U.S.
|
190,282
|
|
600
|
|
|
—
|
|
|
||
Total interest-bearing liabilities
|
1,580,658
|
|
13,604
|
|
|
0.86
|
|
|
||
Noninterest-bearing liabilities
(a)
|
180,697
|
|
|
|
|
|
||||
Total investable funds
|
$
|
1,761,355
|
|
$
|
13,604
|
|
|
0.77
|
%
|
|
Net interest income and net yield:
|
|
$
|
48,219
|
|
|
2.74
|
%
|
|
||
U.S.
|
|
38,399
|
|
|
3.25
|
|
|
|||
Non-U.S.
|
|
9,820
|
|
|
1.69
|
|
|
|||
Percentage of total assets and liabilities attributable to non-U.S. operations:
|
|
|
|
|
|
|||||
Assets
|
|
|
|
36.3
|
|
|
||||
Liabilities
|
|
|
|
24.9
|
|
|
(a)
|
Represents the amount of noninterest-bearing liabilities funding interest-earning assets.
|
(b)
|
Reflects a benefit from the favorable market environments for dollar-roll financings.
|
314
|
|
|
|
|
315
|
|
2011 versus 2010
|
|
2010 versus 2009
|
||||||||||||||||||||
|
Increase/(decrease) due to change in:
|
|
|
|
Increase/(decrease) due to change in:
|
|
|
||||||||||||||||
Year ended December 31,
(On a taxable-equivalent basis: in millions)
|
Volume
|
|
Rate
|
|
Net
change
|
|
Volume
|
|
Rate
|
|
Net
change
|
||||||||||||
Interest-earning assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Deposits with banks, primarily U.S.
|
$
|
240
|
|
|
$
|
14
|
|
|
$
|
254
|
|
|
$
|
(137
|
)
|
|
$
|
(456
|
)
|
|
$
|
(593
|
)
|
Federal funds sold and securities purchased under resale agreements:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S.
|
111
|
|
|
(251
|
)
|
|
(140
|
)
|
|
153
|
|
|
(320
|
)
|
|
(167
|
)
|
||||||
Non-U.S.
|
107
|
|
|
770
|
|
|
877
|
|
|
179
|
|
|
24
|
|
|
203
|
|
||||||
Securities borrowed:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S.
|
6
|
|
|
(127
|
)
|
|
(121
|
)
|
|
27
|
|
|
90
|
|
|
117
|
|
||||||
Non-U.S.
|
96
|
|
|
(40
|
)
|
|
56
|
|
|
10
|
|
|
44
|
|
|
54
|
|
||||||
Trading assets – debt instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S.
|
144
|
|
|
(586
|
)
|
|
(442
|
)
|
|
(511
|
)
|
|
(718
|
)
|
|
(1,229
|
)
|
||||||
Non-U.S.
|
285
|
|
|
338
|
|
|
623
|
|
|
616
|
|
|
(542
|
)
|
|
74
|
|
||||||
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S.
|
(1,336
|
)
|
|
(113
|
)
|
|
(1,449
|
)
|
|
(1,573
|
)
|
|
(2,232
|
)
|
|
(3,805
|
)
|
||||||
Non-U.S.
|
1,213
|
|
|
(31
|
)
|
|
1,182
|
|
|
887
|
|
|
141
|
|
|
1,028
|
|
||||||
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S.
|
(1,919
|
)
|
|
(2,256
|
)
|
|
(4,175
|
)
|
|
1,455
|
|
|
869
|
|
|
2,324
|
|
||||||
Non-U.S.
|
737
|
|
|
171
|
|
|
908
|
|
|
(91
|
)
|
|
(472
|
)
|
|
(563
|
)
|
||||||
Other assets, primarily U.S.
|
122
|
|
|
(57
|
)
|
|
65
|
|
|
92
|
|
|
(30
|
)
|
|
62
|
|
||||||
Change in interest income
|
(194
|
)
|
|
(2,168
|
)
|
|
(2,362
|
)
|
|
1,107
|
|
|
(3,602
|
)
|
|
(2,495
|
)
|
||||||
Interest-bearing liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest-bearing deposits:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S.
|
131
|
|
|
(607
|
)
|
|
(476
|
)
|
|
(40
|
)
|
|
(1,585
|
)
|
|
(1,625
|
)
|
||||||
Non-U.S.
|
224
|
|
|
683
|
|
|
907
|
|
|
(45
|
)
|
|
268
|
|
|
223
|
|
||||||
Federal funds purchased and securities loaned or sold under repurchase agreements:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S.
|
33
|
|
|
510
|
|
|
543
|
|
|
—
|
|
|
(931
|
)
|
|
(931
|
)
|
||||||
Non-U.S.
|
66
|
|
|
117
|
|
|
183
|
|
|
92
|
|
|
74
|
|
|
166
|
|
||||||
Trading liabilities - debt, short-term and other liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S.
|
48
|
|
|
(378
|
)
|
|
(330
|
)
|
|
(121
|
)
|
|
357
|
|
|
236
|
|
||||||
Non-U.S.
|
29
|
|
|
84
|
|
|
113
|
|
|
915
|
|
|
(808
|
)
|
|
107
|
|
||||||
Beneficial interests issued by consolidated VIEs, primarily U.S.
|
(212
|
)
|
|
(166
|
)
|
|
(378
|
)
|
|
949
|
|
|
(22
|
)
|
|
927
|
|
||||||
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S.
|
116
|
|
|
173
|
|
|
289
|
|
|
(263
|
)
|
|
(1,195
|
)
|
|
(1,458
|
)
|
||||||
Non-U.S.
|
(15
|
)
|
|
(13
|
)
|
|
(28
|
)
|
|
(54
|
)
|
|
(8
|
)
|
|
(62
|
)
|
||||||
Intracompany funding:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S.
|
(320
|
)
|
|
79
|
|
|
(241
|
)
|
|
(182
|
)
|
|
333
|
|
|
151
|
|
||||||
Non-U.S.
|
320
|
|
|
(79
|
)
|
|
241
|
|
|
182
|
|
|
(333
|
)
|
|
(151
|
)
|
||||||
Change in interest expense
|
420
|
|
|
403
|
|
|
823
|
|
|
1,433
|
|
|
(3,850
|
)
|
|
(2,417
|
)
|
||||||
Change in net interest income
|
$
|
(614
|
)
|
|
$
|
(2,571
|
)
|
|
$
|
(3,185
|
)
|
|
$
|
(326
|
)
|
|
$
|
248
|
|
|
$
|
(78
|
)
|
316
|
|
|
|
|
317
|
December 31, (in millions)
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
||||||||||
U.S. wholesale loans
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
65,958
|
|
|
$
|
50,912
|
|
|
$
|
51,113
|
|
|
$
|
74,153
|
|
|
$
|
70,081
|
|
Real estate
|
53,230
|
|
|
51,734
|
|
|
54,970
|
|
|
61,890
|
|
|
15,977
|
|
|||||
Financial institutions
|
8,489
|
|
|
12,120
|
|
|
13,557
|
|
|
20,953
|
|
|
15,113
|
|
|||||
Government agencies
|
7,236
|
|
|
6,408
|
|
|
5,634
|
|
|
5,919
|
|
|
5,770
|
|
|||||
Other
|
52,126
|
|
|
38,298
|
|
|
23,811
|
|
|
23,861
|
|
|
26,312
|
|
|||||
Total U.S. wholesale loans
|
187,039
|
|
|
159,472
|
|
|
149,085
|
|
|
186,776
|
|
|
133,253
|
|
|||||
Non-U.S. wholesale loans
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
31,108
|
|
|
19,053
|
|
|
20,188
|
|
|
35,291
|
|
|
33,829
|
|
|||||
Real estate
|
1,748
|
|
|
1,973
|
|
|
2,270
|
|
|
2,811
|
|
|
3,632
|
|
|||||
Financial institutions
|
30,262
|
|
|
20,043
|
|
|
11,848
|
|
|
17,552
|
|
|
17,245
|
|
|||||
Government agencies
|
583
|
|
|
870
|
|
|
1,707
|
|
|
602
|
|
|
720
|
|
|||||
Other
|
32,276
|
|
|
26,222
|
|
|
19,077
|
|
|
19,012
|
|
|
24,397
|
|
|||||
Total non-U.S. wholesale loans
|
95,977
|
|
|
68,161
|
|
|
55,090
|
|
|
75,268
|
|
|
79,823
|
|
|||||
Total wholesale loans
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
97,066
|
|
|
69,965
|
|
|
71,301
|
|
|
109,444
|
|
|
103,910
|
|
|||||
Real estate
|
54,978
|
|
|
53,707
|
|
|
57,240
|
|
|
64,701
|
|
|
19,609
|
|
|||||
Financial institutions
|
38,751
|
|
|
32,163
|
|
|
25,405
|
|
|
38,505
|
|
|
32,358
|
|
|||||
Government agencies
|
7,819
|
|
|
7,278
|
|
|
7,341
|
|
|
6,521
|
|
|
6,490
|
|
|||||
Other
|
84,402
|
|
|
64,520
|
|
|
42,888
|
|
|
42,873
|
|
|
50,709
|
|
|||||
Total wholesale loans
|
283,016
|
|
|
227,633
|
|
|
204,175
|
|
|
262,044
|
|
|
213,076
|
|
|||||
Total consumer loans
|
|
|
|
|
|
|
|
|
|
||||||||||
Home equity
|
100,497
|
|
|
112,844
|
|
|
127,945
|
|
|
142,890
|
|
|
94,832
|
|
|||||
Mortgage
|
128,709
|
|
|
134,284
|
|
|
143,129
|
|
|
157,078
|
|
|
56,031
|
|
|||||
Auto
|
47,426
|
|
|
48,367
|
|
|
46,031
|
|
|
42,603
|
|
|
42,350
|
|
|||||
Credit card
|
132,277
|
|
|
137,676
|
|
|
78,786
|
|
|
104,746
|
|
|
84,352
|
|
|||||
Other
|
31,795
|
|
|
32,123
|
|
|
33,392
|
|
|
35,537
|
|
|
28,733
|
|
|||||
Total consumer loans
|
440,704
|
|
|
465,294
|
|
|
429,283
|
|
|
482,854
|
|
|
306,298
|
|
|||||
Total loans
(a)
|
$
|
723,720
|
|
|
$
|
692,927
|
|
|
$
|
633,458
|
|
|
$
|
744,898
|
|
|
$
|
519,374
|
|
Memo:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans held-for-sale
|
$
|
2,626
|
|
|
$
|
5,453
|
|
|
$
|
4,876
|
|
|
$
|
8,287
|
|
|
$
|
18,899
|
|
Loans at fair value
|
2,097
|
|
|
1,976
|
|
|
1,364
|
|
|
7,696
|
|
|
8,739
|
|
|||||
Total loans held-for-sale and loans at fair value
|
$
|
4,723
|
|
|
$
|
7,429
|
|
|
$
|
6,240
|
|
|
$
|
15,983
|
|
|
$
|
27,638
|
|
(a)
|
Loans (other than purchased credit-impaired loans and those for which the fair value option have been elected) are presented net of unearned income, unamortized discounts and premiums, and net deferred loan costs of
$2.7 billion
,
$1.9 billion
,
$1.4 billion
,
$2.0 billion
and
$1.3 billion
at
December 31, 2011
,
2010
,
2009
,
2008
and
2007
, respectively.
|
318
|
|
|
December 31, 2011 (in millions)
|
Within
1 year
(a)
|
|
1-5
years
|
|
After 5
years
|
|
Total
|
||||||||
U.S.
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial
|
$
|
14,527
|
|
|
$
|
38,967
|
|
|
$
|
12,464
|
|
|
$
|
65,958
|
|
Real estate
|
5,216
|
|
|
10,822
|
|
|
37,192
|
|
|
53,230
|
|
||||
Financial institutions
|
3,427
|
|
|
4,021
|
|
|
1,041
|
|
|
8,489
|
|
||||
Government agencies
|
1,882
|
|
|
1,810
|
|
|
3,544
|
|
|
7,236
|
|
||||
Other
|
25,167
|
|
|
23,092
|
|
|
3,867
|
|
|
52,126
|
|
||||
Total U.S.
|
50,219
|
|
|
78,712
|
|
|
58,108
|
|
|
187,039
|
|
||||
Non-U.S.
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial
|
13,264
|
|
|
11,806
|
|
|
6,038
|
|
|
31,108
|
|
||||
Real estate
|
771
|
|
|
882
|
|
|
95
|
|
|
1,748
|
|
||||
Financial institutions
|
27,179
|
|
|
2,971
|
|
|
112
|
|
|
30,262
|
|
||||
Government agencies
|
461
|
|
|
57
|
|
|
65
|
|
|
583
|
|
||||
Other
|
22,218
|
|
|
9,049
|
|
|
1,009
|
|
|
32,276
|
|
||||
Total non-U.S.
|
63,893
|
|
|
24,765
|
|
|
7,319
|
|
|
95,977
|
|
||||
Total wholesale loans
|
$
|
114,112
|
|
|
$
|
103,477
|
|
|
$
|
65,427
|
|
|
$
|
283,016
|
|
Loans at fixed interest rates
|
|
|
$
|
10,211
|
|
|
$
|
41,127
|
|
|
|
||||
Loans at variable interest rates
|
|
|
93,266
|
|
|
24,300
|
|
|
|
||||||
Total wholesale loans
|
|
|
$
|
103,477
|
|
|
$
|
65,427
|
|
|
|
(a)
|
Includes demand loans and overdrafts.
|
|
|
319
|
December 31, (in millions)
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
||||||||||
Nonperforming assets
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. nonaccrual loans:
|
|
|
|
|
|
|
|
|
|
||||||||||
Wholesale:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
936
|
|
|
$
|
1,745
|
|
|
$
|
2,182
|
|
|
$
|
1,052
|
|
|
$
|
63
|
|
Real estate
|
886
|
|
|
2,390
|
|
|
2,647
|
|
|
806
|
|
|
216
|
|
|||||
Financial institutions
|
76
|
|
|
111
|
|
|
663
|
|
|
60
|
|
|
10
|
|
|||||
Government agencies
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
1
|
|
|||||
Other
|
234
|
|
|
267
|
|
|
348
|
|
|
205
|
|
|
200
|
|
|||||
Consumer
|
7,412
|
|
|
8,835
|
|
|
10,660
|
|
|
6,571
|
|
|
2,768
|
|
|||||
Total U.S. nonaccrual loans
|
9,544
|
|
|
13,348
|
|
|
16,504
|
|
|
8,694
|
|
|
3,258
|
|
|||||
Non-U.S. nonaccrual loans:
|
|
|
|
|
|
|
|
|
|
||||||||||
Wholesale:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
79
|
|
|
234
|
|
|
281
|
|
|
45
|
|
|
14
|
|
|||||
Real estate
|
—
|
|
|
585
|
|
|
241
|
|
|
—
|
|
|
—
|
|
|||||
Financial institutions
|
—
|
|
|
30
|
|
|
118
|
|
|
115
|
|
|
8
|
|
|||||
Government agencies
|
16
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
354
|
|
|
622
|
|
|
420
|
|
|
99
|
|
|
2
|
|
|||||
Consumer
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total non-U.S. nonaccrual loans
|
449
|
|
|
1,493
|
|
|
1,060
|
|
|
259
|
|
|
24
|
|
|||||
Total nonaccrual loans
|
9,993
|
|
|
14,841
|
|
|
17,564
|
|
|
8,953
|
|
|
3,282
|
|
|||||
Derivative receivables
|
18
|
|
|
34
|
|
|
529
|
|
|
1,079
|
|
|
29
|
|
|||||
Assets acquired in loan satisfactions
|
1,025
|
|
|
1,682
|
|
|
1,648
|
|
|
2,682
|
|
|
622
|
|
|||||
Nonperforming assets
|
$
|
11,036
|
|
|
$
|
16,557
|
|
|
$
|
19,741
|
|
|
$
|
12,714
|
|
|
$
|
3,933
|
|
Memo:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans held-for-sale
|
$
|
110
|
|
|
$
|
341
|
|
|
$
|
234
|
|
|
$
|
12
|
|
|
$
|
45
|
|
Loans at fair value
|
73
|
|
|
155
|
|
|
111
|
|
|
20
|
|
|
5
|
|
|||||
Total loans held-for-sale and loans at fair value
|
$
|
183
|
|
|
$
|
496
|
|
|
$
|
345
|
|
|
$
|
32
|
|
|
$
|
50
|
|
Contractually past-due assets
(a)
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. loans:
|
|
|
|
|
|
|
|
|
|
||||||||||
Wholesale:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
23
|
|
|
$
|
30
|
|
|
$
|
7
|
|
Real estate
|
84
|
|
|
109
|
|
|
114
|
|
|
76
|
|
|
34
|
|
|||||
Financial institutions
|
2
|
|
|
2
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|||||
Government agencies
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
6
|
|
|
171
|
|
|
75
|
|
|
54
|
|
|
28
|
|
|||||
Consumer
|
2,418
|
|
|
3,640
|
|
|
3,985
|
|
|
3,084
|
|
|
1,945
|
|
|||||
Total U.S. loans
|
2,510
|
|
|
3,929
|
|
|
4,203
|
|
|
3,244
|
|
|
2,014
|
|
|||||
Non-U.S. loans:
|
|
|
|
|
|
|
|
|
|
||||||||||
Wholesale:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|||||
Real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Financial institutions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Government agencies
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
8
|
|
|
70
|
|
|
109
|
|
|
3
|
|
|
6
|
|
|||||
Consumer
|
36
|
|
|
38
|
|
|
38
|
|
|
28
|
|
|
23
|
|
|||||
Total non-U.S. loans
|
44
|
|
|
108
|
|
|
152
|
|
|
31
|
|
|
29
|
|
|||||
Total
|
$
|
2,554
|
|
|
$
|
4,037
|
|
|
$
|
4,355
|
|
|
$
|
3,275
|
|
|
$
|
2,043
|
|
Accruing restructured loans
(b)
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S.:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
68
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
Real estate
|
48
|
|
|
76
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|||||
Financial institutions
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Consumer
(c)
|
14,524
|
|
|
14,261
|
|
|
8,405
|
|
|
4,029
|
|
|
1,867
|
|
|||||
Total U.S.
|
14,648
|
|
|
14,337
|
|
|
8,410
|
|
|
4,029
|
|
|
1,875
|
|
|||||
Non-U.S.:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
48
|
|
|
49
|
|
|
31
|
|
|
5
|
|
|
—
|
|
|||||
Real estate
|
—
|
|
|
—
|
|
|
582
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Consumer
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total non-U.S.
|
48
|
|
|
49
|
|
|
613
|
|
|
5
|
|
|
—
|
|
|||||
Total
|
$
|
14,696
|
|
|
$
|
14,386
|
|
|
$
|
9,023
|
|
|
$
|
4,034
|
|
|
$
|
1,875
|
|
(a)
|
Represents accruing loans past-due 90 days or more as to principal and interest, which are not characterized as nonaccrual loans.
|
(b)
|
Represents performing loans modified in troubled debt restructurings in which an economic concession was granted by the Firm and the borrower has demonstrated its ability to repay the loans according to the terms of the restructuring. As defined in accounting principles generally accepted in the United States of America (“U.S. GAAP”), concessions include the reduction of interest rates or the deferral of interest or principal payments, resulting from deterioration in the borrowers’ financial condition. Excludes nonaccrual assets and contractually past-due assets, which are included in the sections above.
|
(c)
|
Includes credit card loans that have been modified in a troubled debt restructuring.
|
320
|
|
|
(a)
|
Predominantly real estate-related.
|
|
|
321
|
•
|
the benefit of collateral received for securities financing exposures;
|
•
|
the netting of cash and marketable securities received for lending exposures. The FFIEC guidelines require risk
|
•
|
the netting of long and short positions across issuers in the same country; and
|
•
|
the netting of credit derivative protection purchased and sold. The FFIEC guidelines require the reporting of the gross notional of credit derivative protection sold and does not permit netting for credit derivatives protection on the same underlying reference entity.
|
(a)
|
Excluded from the table are $657.2 billion, $503.5 billion and $532.0 billion, at December 31, 2011, 2010 and 2009, respectively, substantially all of which represent notional amounts related to credit protection sold on indices representing baskets of exposures from multiple European countries, which had previously been reported within the United Kingdom. Based on regulatory guidance, credit protection sold on indices representing baskets of exposures from multiple countries should be disclosed in the aggregate as “other” rather than as a single country. Prior periods have been revised to conform with the current presentation.
|
(b)
|
Consists primarily of commercial and industrial.
|
(c)
|
Outstandings includes loans and accrued interest receivable, interest-bearing deposits with banks, acceptances, resale agreements, other monetary assets, cross-border trading debt and equity instruments, mark-to-market exposure of foreign exchange and derivative contracts, and local country assets, net of local country liabilities. The amounts associated with foreign exchange and derivative contracts are presented after taking into account the impact of legally enforceable master netting agreements.
|
(d)
|
Commitments include outstanding letters of credit, undrawn commitments to extend credit, and the notional value of credit derivatives where
JPMorgan Chase
is a protection seller.
|
322
|
|
|
(a)
|
The 2008 amount relates to the Washington Mutual transaction.
|
(b)
|
Effective January 1, 2010, the Firm adopted accounting guidance related to variable interest entities (“VIEs”). Upon adoption of the guidance, the Firm consolidated its Firm-sponsored credit card securitization trusts, its Firm-administered multi-seller conduits and certain other consumer loan securitization entities, primarily mortgage-related. As a result,
$7.4 billion
,
$14 million
and
$127 million
, respectively, of allowance for loan losses were recorded on-balance sheet with the consolidation of these entities. For further discussion, see Note 16 on pages 256—267.
|
(c)
|
Predominantly includes a reclassification in 2009 related to the issuance and retention of securities from the Chase Issuance Trust.
|
|
|
323
|
Year ended December 31, (in millions)
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
||||||||||
Balance at beginning of year
|
$
|
717
|
|
|
$
|
939
|
|
|
$
|
659
|
|
|
$
|
850
|
|
|
$
|
524
|
|
Addition resulting from mergers and acquisitions
(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
66
|
|
|
—
|
|
|||||
Provision for lending-related commitments
|
(38
|
)
|
|
(183
|
)
|
|
280
|
|
|
(258
|
)
|
|
326
|
|
|||||
Net charge-offs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Change in accounting principles
(b)
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
(6
|
)
|
|
(21
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|||||
Balance at year-end
|
$
|
673
|
|
|
$
|
717
|
|
|
$
|
939
|
|
|
$
|
659
|
|
|
$
|
850
|
|
(a)
|
The 2008 amount relates to the Washington Mutual transaction.
|
(b)
|
Relates to the adoption of the new accounting guidance related to VIEs.
|
Loan loss analysis
|
|
|
|
|
|
|
|
|
|
||||||||||
As of or for the year ended December 31,
(in millions, except ratios)
|
2011
|
|
2010
|
|
2009
|
|
2008
(c)
|
|
2007
|
||||||||||
Balances
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans – average
|
$
|
693,523
|
|
|
$
|
703,540
|
|
|
$
|
682,885
|
|
|
$
|
588,801
|
|
|
$
|
479,679
|
|
Loans – year-end
|
723,720
|
|
|
692,927
|
|
|
633,458
|
|
|
744,898
|
|
|
519,374
|
|
|||||
Net charge-offs
(a)
|
12,237
|
|
|
23,673
|
|
|
22,965
|
|
|
9,835
|
|
|
4,538
|
|
|||||
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S.
|
26,621
|
|
|
31,111
|
|
|
29,802
|
|
|
21,830
|
|
|
8,454
|
|
|||||
Non-U.S.
|
988
|
|
|
1,155
|
|
|
1,800
|
|
|
1,334
|
|
|
780
|
|
|||||
Total allowance for loan losses
|
27,609
|
|
|
32,266
|
|
|
31,602
|
|
|
23,164
|
|
|
9,234
|
|
|||||
Nonaccrual loans
|
9,993
|
|
|
14,841
|
|
|
17,564
|
|
|
8,953
|
|
|
3,282
|
|
|||||
Ratios
|
|
|
|
|
|
|
|
|
|
||||||||||
Net charge-offs to:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans retained – average
|
1.78
|
%
|
|
3.39
|
%
|
|
3.42
|
%
|
|
1.73
|
%
|
|
1.00
|
%
|
|||||
Allowance for loan losses
|
44.32
|
|
|
73.37
|
|
|
72.67
|
|
|
42.46
|
|
|
49.14
|
|
|||||
Allowance for loan losses to:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans retained – year-end
(b)
|
3.84
|
|
|
4.71
|
|
|
5.04
|
|
|
3.18
|
|
|
1.88
|
|
|||||
Nonaccrual loans retained
|
281
|
|
|
225
|
|
|
184
|
|
|
260
|
|
|
286
|
|
(a)
|
There were no net charge-offs/(recoveries) on lending-related commitments in
2011
,
2010
,
2009
,
2008
or
2007
.
|
(b)
|
The allowance for loan losses as a percentage of retained loans declined from
2009
to
2011
, due to an improvement in credit quality of the wholesale and consumer credit portfolios. Deteriorating credit conditions from
2007
to
2009
, primarily within consumer lending, resulted in increasing losses and correspondingly higher loan loss provisions for those periods. For a more detailed discussion of the 2009 through 2011 provision for credit losses, see Provision for credit losses on page 157.
|
(c)
|
On September 25, 2008,
JPMorgan Chase
acquired the banking operations of Washington Mutual Bank. On May 30, 2008, the Bear Stearns merger was consummated. Each of these transactions was accounted for as a purchase, and their respective results of operations are included in the Firm’s results from each respective transaction.
|
324
|
|
|
Year ended December 31,
|
Average balances
|
|
Average interest rates
|
|||||||||||||||||
(in millions, except interest rates)
|
2011
|
|
2010
|
|
2009
|
|
2011
|
|
2010
|
|
2009
|
|||||||||
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Noninterest-bearing
|
$
|
265,522
|
|
|
$
|
202,459
|
|
|
$
|
190,195
|
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Interest-bearing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Demand
|
39,177
|
|
|
18,881
|
|
|
14,873
|
|
|
0.08
|
|
|
0.04
|
|
|
0.44
|
|
|||
Savings
|
349,425
|
|
|
312,118
|
|
|
276,296
|
|
|
0.23
|
|
|
0.27
|
|
|
0.33
|
|
|||
Time
|
84,043
|
|
|
102,228
|
|
|
149,157
|
|
|
1.00
|
|
|
1.27
|
|
|
1.88
|
|
|||
Total interest-bearing deposits
|
472,645
|
|
|
433,227
|
|
|
440,326
|
|
|
0.36
|
|
|
0.50
|
|
|
0.86
|
|
|||
Total U.S. deposits
|
738,167
|
|
|
635,686
|
|
|
630,521
|
|
|
0.23
|
|
|
0.34
|
|
|
0.60
|
|
|||
Non-U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Noninterest-bearing
|
12,785
|
|
|
9,955
|
|
|
7,794
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Interest-bearing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Demand
|
190,092
|
|
|
163,550
|
|
|
163,512
|
|
|
0.66
|
|
|
0.35
|
|
|
0.25
|
|
|||
Savings
|
637
|
|
|
605
|
|
|
559
|
|
|
0.14
|
|
|
0.28
|
|
|
0.18
|
|
|||
Time
|
70,309
|
|
|
71,258
|
|
|
79,619
|
|
|
1.32
|
|
|
0.97
|
|
|
0.80
|
|
|||
Total interest-bearing deposits
|
261,038
|
|
|
235,413
|
|
|
243,690
|
|
|
0.83
|
|
|
0.54
|
|
|
0.43
|
|
|||
Total non-U.S. deposits
|
273,823
|
|
|
245,368
|
|
|
251,484
|
|
|
0.79
|
|
|
0.52
|
|
|
0.42
|
|
|||
Total deposits
|
$
|
1,011,990
|
|
|
$
|
881,054
|
|
|
$
|
882,005
|
|
|
0.38
|
%
|
|
0.39
|
%
|
|
0.55
|
%
|
By remaining maturity at
December 31, 2011 (in millions)
|
Three months
or less
|
|
Over three months
but within six months
|
|
Over six months
but within 12 months
|
|
Over 12 months
|
|
Total
|
||||||||||
U.S. time certificates of deposit ($100,000 or more)
|
$
|
4,801
|
|
|
$
|
3,016
|
|
|
$
|
3,930
|
|
|
$
|
5,372
|
|
|
$
|
17,119
|
|
|
|
325
|
|
JPMorgan Chase & Co.
(Registrant)
|
|
By: /s/ JAMES DIMON
|
|
(James Dimon
Chairman and Chief Executive Officer)
|
|
February 29, 2012
|
|
|
Capacity
|
|
Date
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/s/ JAMES DIMON
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Director, Chairman and Chief Executive Officer
(Principal Executive Officer)
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(James Dimon)
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/s/ JAMES A. BELL
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Director
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(James A. Bell)
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/s/ CRANDALL C. BOWLES
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Director
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(Crandall C. Bowles)
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/s/ STEPHEN B. BURKE
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Director
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(Stephen B. Burke)
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/s/ DAVID M. COTE
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Director
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(David M. Cote)
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/s/ JAMES S. CROWN
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Director
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February 29, 2012
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(James S. Crown)
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/s/ ELLEN V. FUTTER
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Director
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(Ellen V. Futter)
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/s/ WILLIAM H. GRAY, III
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Director
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(William H. Gray, III)
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/s/ LABAN P. JACKSON, JR.
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Director
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(Laban P. Jackson, Jr.)
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/s/ DAVID C. NOVAK
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Director
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(David C. Novak)
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/s/ LEE R. RAYMOND
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Director
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(Lee R. Raymond)
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/s/ WILLIAM C. WELDON
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Director
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(William C. Weldon)
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/s/ DOUGLAS L. BRAUNSTEIN
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Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
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(Douglas L. Braunstein)
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/s/ SHANNON S. WARREN
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Managing Director and Corporate Controller
(Principal Accounting Officer)
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(Shannon S. Warren)
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326
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Exhibit 10.24
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF JANUARY 19, 2011
STOCK APPRECIATION RIGHTS
NONOPERATING COMMITTEE
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of January 19, 2011 (Grant Date) awarding Stock Appreciation Rights pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Stock Appreciation Rights represent the right, following exercise, to receive (without payment), a number of shares of JPMorgan Chase Common Stock, the Fair Market Value of which, as of the date of exercise, is equal to the excess of the Fair Market Value of one share of such Common Stock on such exercise date over the Exercise Price, multiplied by the number of Stock Appreciation Rights being exercised. The Firm will retain from each distribution the number of shares of Common Stock required to satisfy tax and other withholding obligations.
The purpose of this award is, in part, to motivate your future performance and to align your interests with those of the Firm and its shareholders. Your prior performance was considered to determine if you were eligible for your award. |
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Exercisable Dates/Expiration Date | This award will become exercisable on the Exercisable Dates set forth in your Award Agreement, provided that you are continuously employed by the Firm from the date of grant through the relevant Exercisable Date or you meet the requirements to allow your award to remain outstanding upon termination of employment as described below. | |
Your award will remain exercisable until the earlier of the tenth anniversary of the Grant Date (the Expiration Date) or the date the award is cancelled pursuant to this Award Agreement. Notwithstanding any provision herein, including but not limited to those provisions governing Job Elimination, Full Career Eligibility, Death, and Total Disability, no Stock Appreciation Right may be exercised after its Expiration Date. | ||
Termination of Employment |
Except as explicitly set forth below under Job Elimination, Full Career Eligibility, and Death or Total Disability, any Stock Appreciation Rights outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason.
Job Elimination :
For the one year period commencing with the date of termination of your employment (or if longer the 90 day period commencing with the Exercisable Date occurring during such one year period), any Stock Appreciation Right that is exercisable on your termination date or becomes exercisable during such period may be exercised by you in the event that:
the Director Human Resources of the Firm or nominee in his/her sole discretion determines that the Firm terminated your employment because your job was eliminated, and
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certifications Requirement set forth below. |
Full Career Eligibility :
For the two year period commencing with the date of termination of your employment (or if longer the 90 day period commencing with the last Exercisable Date occurring during such two year period), any Stock Appreciation Right that is exercisable on your termination date or becomes exercisable during such period may be exercised by you in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the exercise period, you do not, to the fullest extent enforceable under applicable law, (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during the 90-day period or shorten the length of the 90-day notice period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements.
Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.)
You must notify JPMorgan Chase in advance in writing if you are to perform services for any party or if you are self-employed following the date of your termination of employment. Failure to provide such notification could impact your right to exercise.
Death or Total Disability :
If you die while employed by the Firm, your designated beneficiary on file with the Human Resources Department (or if no beneficiary is on file or survives you, then your estate) may exercise for a two year period measured from date of your death (or if longer the 90 day period commencing with the last Exercisable Date occurring during such two year period) (i) any Stock Appreciation Rights that were exercisable as of that date and (ii) any Stock Appreciation Rights that would have become exercisable had you remained employed during such 2 year period.
If your employment terminates as a result of your permanent and total disability as defined in the JPMorgan Chase & Co. Long Term Disability Plan (or for non-U.S. employees the equivalent local country plan), then you may exercise for a two year period measured from the date that your employment terminate any Stock Appreciation Rights that were exercisable as of the date of your termination. In the case of your total disability, you must notify JPMorgan Chase in advance in writing if you are to perform services for any party or if you are self-employed following the date of your termination of employment.
Cancellation after the Two Year Period or Ninety Day Period
Any Stock Appreciation Rights that are not exercised within the applicable two year period or ninety day period described above will be cancelled.
Release/Certification Requirements You will be required to timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify, to have all or any portion of your award remain exercisable after the termination of your employment. If you fail to return the required release within the specified deadline, your award will be cancelled. You also must certify compliance with the above requirements relevant to you pursuant to procedures established by the Firm in connection with an exercise. |
Termination for Cause
If your employment is terminated for Cause (as defined below), or if the Firm determines after the termination of your employment that your employment could have been terminated for Cause, any outstanding Stock Appreciation Rights as of your termination date will be cancelled and you may be required to return to the Firm the value of certain shares previously delivered to you. See Remedies for additional information. |
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Restriction on Disposition of Shares Derived from an Exercise Under this Award | If you exercise any part of your award before the fifth anniversary of the Grant Date, then you may not sell, assign, transfer, pledge or encumber the net number of shares of Common Stock derived from such exercise until the fifth anniversary of the Grant Date. Prior to the fifth anniversary of the Grant Date and prior to any exercise date thereafter, JPMorgan Chase may impose, for such date and up to 30 days following such date, such restrictions on the Common Stock to be issued to you as it may deem appropriate, including, but not limited to, restricting the sale, assignment, transfer, pledge or encumbrance of such Common Stock. The imposition of such restrictions shall not be deemed an amendment of your Award Agreement subject to your consent. In the Firms discretion, such shares may be held in an account with the Firms stock transfer agent. Notwithstanding the foregoing, this restriction on disposition and transfer of shares shall not apply to your beneficiary in the event of your death. | |
Your Obligations | In consideration of the grant of this award, you agree to comply with and be bound by the following: | |
Non-Solicitation of Employees and Customers |
During your employment by the Firm and for one year following the termination of your employment (or if longer, the exercise period), you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit, induce or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere, (ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated more than six months before the date of hire or because his or her job was eliminated, or (iii) to the fullest extent enforceable under applicable law, solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information.
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. |
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Confidential Information |
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information that is intended to, or reasonably could be foreseen to, embarrass or criticize the Firm or its employees, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. | |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation or governmental proceeding with respect to which you may have knowledge or information), subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Special Notice Period |
If you are subject to a notice period, whether by contract or by policy, that requires you to provide advance written notice of your intention to terminate your employment (Special Notice Period), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy.
After receipt of your notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
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Remedies
Cancellation |
In addition to the cancellation of the award as provided for in Termination of Employment and Termination for Cause, if the Firm in its sole discretion determines that (i) you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment, (ii) you have not returned the applicable release of claims or other documents specified above within the specified deadline, (iii) you violated any of the provisions as set forth above in Your Obligations, or (iv) cancellation is appropriate pursuant to Additional Award Conditions below, outstanding Stock Appreciation Rights under your award may be immediately cancelled. |
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Recovery |
In addition, if you received shares under this award resulting from an exercise:
during the one year prior to the violation of any of the provisions as set forth above in Your Obligations, or
following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the exercise period,;
prior to the termination of your employment for Cause as described under Termination for Cause, including a later determination by the Firm that your employment could have been terminated for Cause (in which case the one year will be measured from your actual termination date), or
within one year following the applicable Exercisable Date, if the Firm determines that recovery of the shares is appropriate pursuant to Additional Award Conditions below, you may be required to pay the Firm an amount equal to the gain on each such exercise less withholding taxes. Payment may be made in shares of Common Stock or in cash and may be deducted by the Firm from any shares that are subject to restriction on disposition as described above.
You agree that this payment represents recovery of shares to which you were not entitled under this Award Agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. |
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Bonus Recoupment | In consideration of the grant of this award, you agree that you are subject to the JPMorgan Chase Bonus Recoupment Policy (Attachment A), as it applies both to the cash incentive compensation awarded to you for 2010 and to this award of Stock Appreciation Rights. |
Additional Award Conditions |
Notwithstanding any terms of this Award Agreement to the contrary, JPMorgan Chase reserves the right in its sole discretion to cancel outstanding Stock Appreciation Rights under this award within one year after the applicable Exercisable Date and/or to recover from you the net gain realized by you on any exercise of Stock Appreciation Rights under this award within one year after the applicable Exercisable Date:
If you engaged in conduct detrimental to the Firm, insofar as it causes material financial or reputational harm to the Firm or one of its business activities, or
If this award was based on materially inaccurate performance metrics, whether or not you were responsible for the inaccuracy, or
If this award was based on a material misrepresentation by you. |
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Administrative Provisions |
Binding Agreement: The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment: Nothing contained herein constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future.
Exercise Procedures/Withholding Taxes : The exercise of Stock Appreciation Rights shall be in accordance with the Firms procedures for exercises of such awards. The date of exercise shall be the date when the properly completed notice of exercise is received and accepted by the Firm or its designee in accordance with the Firms procedures.
Following each exercise, the Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). If, according to local country tax regulations, a withholding tax liability arises at a time after the date of exercise, JPMorgan Chase may implement any procedures necessary to ensure that the withholding obligation is fully satisfied, including, but not limited to, restricting transferability of the shares.
Assignment or Transfer: Except as otherwise provided in this Award Agreement, Stock Appreciation Rights shall not be assignable or transferable or subject to any lien, obligation or liability. You may make a gift of unexpired, unexercised Stock Appreciation Rights, subject to the Firms prior consent, to an immediate family member or a trust (or similar vehicle) for the benefit of these immediate family members (or beneficiaries) as defined below. JPMorgan Chase may condition its prior consent to receipt of an agreement by you and proposed transferee containing such terms and conditions and undertakings as JPMorgan Chase deems appropriate in its sole and absolute discretion. No attempted transfer will be valid without the Firms prior consent. Immediate family members include your parents, parents-in-law, children (including adopted children), grandchildren, and siblings or a trust exclusively for the benefit of one or more of these immediate family members. Your spouse is an Immediate Family Member but only if Stock Appreciation Rights are transferred to a trust (or similar vehicle) for the benefit of such spouse, which trust includes one or more other Immediate Family Members as beneficiaries.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities otherwise payable to you pursuant to this award to satisfy any obligation or debt that you owe to the Firm. Other than in the case of forfeiture, cancellation or recovery of an award, the Firm may not retain such funds or securities until such time as they would otherwise be distributable to you in accordance with the Award Agreement.
Cancellation/Substitution : JPMorgan Chase may, in its sole discretion and for any reason, cancel outstanding unexercised Stock Appreciation Rights and substitute an equal number of non-qualified stock options to purchase the same number of shares of common stock of JPMorgan Chase represented by the cancelled Stock Appreciation Rights. Such substituted options shall have the same exercise price, Expiration Date and other terms and conditions that were applicable to the Stock Appreciation Rights; provided that the method of exercise and the payment of exercise price, as well as the method of payment of withholding taxes, may be changed by JPMorgan Chase. |
Change in Outstanding Shares: In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Committee will make an equitable substitution or proportionate adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Stock Appreciation Rights (including but not to limited to their Exercise Price) outstanding under this award for such corporate events.
Interpretation/Administration: The Director Human Resources of the Firm or his/her delegate has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement; (ii) determine the reason for termination of employment and application of the post-employment obligations; (iii) determine application of the cancellation and recovery provisions, (iv) decide all claims arising with respect to this Award; and (v) delegate such authority as he/she deems appropriate. Any determination by the Director Human Resources or his/her delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Firm by action of its Director Human Resource or his/her delegate shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan.
This Award is intended to be exempt from the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (Section 409A) and shall be interpreted accordingly. Notwithstanding anything else herein or in the Plan, no action described herein or in the Plan shall be permitted if the Firm determines such action would result in the imposition of additional tax under Section 409A.
Amendment: The Firm through its Director Human Resources reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Director Human Resources or his/her delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled Exercisable Date shall not be deemed to materially adversely affect your rights under this Award Agreement and shall not require your written consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources JPMorgan Chase.
Severability: If any portion of the Award Agreement is found to be unenforceable, any court of competent jurisdiction may reform the restrictions (e.g. as to length of service, geographical area or scope) to the extent required to make the provision enforceable under applicable law.
Governing Law: This award shall be governed by and construed in accordance with the laws of the state of New York, without regard to conflict of law principles.
Choice of Forum: By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum.
Waiver of Jury Trial/Class Claims: By accepting this award, you agree (i) to waive the right to a jury trial; and (ii) that any judicial proceeding or arbitration claim brought in connection with this award or the Plan will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action. |
Definitions |
Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than an immaterial and inadvertent violation or misconduct), (v) inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is or might reasonably be expected to be injurious to the interests of the Firm or its relationship with a customer, client or employee.
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards,
insurance, including but not limited to, guaranteeing against loss, harm damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments,
advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c) (3) of the Internal Revenue Code. Section 501(c) (3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
Attachment A
Bonus Recoupment Policy
In the event of a material restatement of the Firms financial results, the Board believes it would be appropriate to review the circumstances that caused the restatement and consider issues of accountability for those who bore responsibility for the events, including whether anyone responsible engaged in misconduct. As part of that review, consideration would also be given to any appropriate action regarding compensation that may have been awarded to such persons. In particular, it would be appropriate to consider whether any compensation was awarded on the basis of having achieved specified performance targets, whether an officer engaged in misconduct that contributed to the restatement and whether such compensation would have been reduced had the financial results been properly reported. Misconduct includes violation of the Firms Code of Conduct or policies or any act or failure to act that could reasonably be expected to cause financial or reputational harm to the Firm.
Depending on the outcome of that review, appropriate action could include actions such as termination, reducing compensation in the year the restatement was made, seeking repayment of any bonus received for the period restated or any gains realized as a result of exercising an option awarded for the period restated, or canceling any unvested equity compensation awarded for the period restated. Consideration may also be given to whether or not any one or more of such actions should be extended to employees who did not engage in misconduct that contributed to the restatement.
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF JANUARY 19, 2011
STOCK APPRECIATION RIGHTS
NONOPERATING COMMITTEE
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of January 19, 2011 (Grant Date) awarding Stock Appreciation Rights pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Stock Appreciation Rights represent the right, following exercise, to receive (without payment), a number of shares of JPMorgan Chase Common Stock, the Fair Market Value of which, as of the date of exercise, is equal to the excess of the Fair Market Value of one share of such Common Stock on such exercise date over the Exercise Price, multiplied by the number of Stock Appreciation Rights being exercised. The Firm will retain from each distribution the number of shares of Common Stock required to satisfy tax and other withholding obligations.
The purpose of this award is, in part, to motivate your future performance and to align your interests with those of the Firm and its shareholders. Your prior performance was considered to determine if you were eligible for your award. |
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Exercisable Dates/Expiration Date |
This award will become exercisable on the Exercisable Dates set forth in your Award Agreement, provided that you are continuously employed by the Firm from the date of grant through the relevant Exercisable Date or you meet the requirements to allow your award to remain outstanding upon termination of employment as described below. | |
Your award will remain exercisable until the earlier of the tenth anniversary of the Grant Date (the Expiration Date) or the date the award is cancelled pursuant to this Award Agreement. Notwithstanding any provision herein, including but not limited to those provisions governing Job Elimination, Full Career Eligibility, Death, and Total Disability, no Stock Appreciation Right may be exercised after its Expiration Date. | ||
Termination of Employment |
Except as explicitly set forth below under Job Elimination, Full Career Eligibility, and Death or Total Disability, any Stock Appreciation Rights outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason.
Job Elimination :
For the one year period commencing with the date of termination of your employment (or if longer the 90 day period commencing with the Exercisable Date occurring during such one year period), any Stock Appreciation Right that is exercisable on your termination date or becomes exercisable during such period may be exercised by you in the event that:
the Director Human Resources of the Firm or nominee in his/her sole discretion determines that the Firm terminated your employment because your job was eliminated, and
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certifications Requirement set forth below. |
Full Career Eligibility :
For the two year period commencing with the date of termination of your employment (or if longer the 90 day period commencing with the last Exercisable Date occurring during such two year period), any Stock Appreciation Right that is exercisable on your termination date or becomes exercisable during such period may be exercised by you in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the exercise period, you do not, to the fullest extent enforceable under applicable law, (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during the 90-day period or shorten the length of the 90-day notice period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements.
Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.)
You must notify JPMorgan Chase in advance in writing if you are to perform services for any party or if you are self-employed following the date of your termination of employment. Failure to provide such notification could impact your right to exercise.
Death or Total Disability :
If you die while employed by the Firm, your designated beneficiary on file with the Human Resources Department (or if no beneficiary is on file or survives you, then your estate) may exercise for a two year period measured from date of your death (or if longer the 90 day period commencing with the last Exercisable Date occurring during such two year period) (i) any Stock Appreciation Rights that were exercisable as of that date and (ii) any Stock Appreciation Rights that would have become exercisable had you remained employed during such 2 year period.
If your employment terminates as a result of your permanent and total disability as defined in the JPMorgan Chase & Co. Long Term Disability Plan (or for non-U.S. employees the equivalent local country plan), then you may exercise for a two year period measured from the date that your employment terminate any Stock Appreciation Rights that were exercisable as of the date of your termination. In the case of your total disability, you must notify JPMorgan Chase in advance in writing if you are to perform services for any party or if you are self-employed following the date of your termination of employment.
Cancellation after the Two Year Period or Ninety Day Period
Any Stock Appreciation Rights that are not exercised within the applicable two year period or ninety day period described above will be cancelled.
Release/Certification Requirements You will be required to timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify, to have all or any portion of your award remain exercisable after the termination of your employment. If you fail to return the required release within the specified deadline, your award will be cancelled. You also must certify compliance with the above requirements relevant to you pursuant to procedures established by the Firm in connection with an exercise. |
Termination for Cause
If your employment is terminated for Cause (as defined below), or if the Firm determines after the termination of your employment that your employment could have been terminated for Cause, any outstanding Stock Appreciation Rights as of your termination date will be cancelled and you may be required to return to the Firm the value of certain shares previously delivered to you. See Remedies for additional information. |
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Restriction on Disposition of Shares Derived from an Exercise Under this Award | If you exercise any part of your award before the fifth anniversary of the Grant Date, then you may not sell, assign, transfer, pledge or encumber the net number of shares of Common Stock derived from such exercise until the fifth anniversary of the Grant Date. Prior to the fifth anniversary of the Grant Date and prior to any exercise date thereafter, JPMorgan Chase may impose, for such date and up to 30 days following such date, such restrictions on the Common Stock to be issued to you as it may deem appropriate, including, but not limited to, restricting the sale, assignment, transfer, pledge or encumbrance of such Common Stock. The imposition of such restrictions shall not be deemed an amendment of your Award Agreement subject to your consent. In the Firms discretion, such shares may be held in an account with the Firms stock transfer agent. Notwithstanding the foregoing, this restriction on disposition and transfer of shares shall not apply to your beneficiary in the event of your death. | |
Your Obligations | In consideration of the grant of this award, you agree to comply with and be bound by the following: | |
Non-Solicitation of Employees and Customers |
During your employment by the Firm and for one year following the termination of your employment (or if longer, the exercise period), you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit, induce or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere, (ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated more than six months before the date of hire or because his or her job was eliminated, or (iii) to the fullest extent enforceable under applicable law, solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information.
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. |
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Confidential Information |
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information that is intended to, or reasonably could be foreseen to, embarrass or criticize the Firm or its employees, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. | |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation or governmental proceeding with respect to which you may have knowledge or information), subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Special Notice Period |
If you are subject to a notice period, whether by contract or by policy, that requires you to provide advance written notice of your intention to terminate your employment (Special Notice Period), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy.
After receipt of your notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
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Remedies
Cancellation |
In addition to the cancellation of the award as provided for in Termination of Employment and Termination for Cause, if the Firm in its sole discretion determines that (i) you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment, (ii) you have not returned the applicable release of claims or other documents specified above within the specified deadline, (iii) you violated any of the provisions as set forth above in Your Obligations, or (iv) cancellation is appropriate pursuant to Additional Award Conditions below, outstanding Stock Appreciation Rights under your award may be immediately cancelled. |
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Recovery |
In addition, if you received shares under this award resulting from an exercise:
during the one year prior to the violation of any of the provisions as set forth above in Your Obligations, or
following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the exercise period,;
prior to the termination of your employment for Cause as described under Termination for Cause, including a later determination by the Firm that your employment could have been terminated for Cause (in which case the one year will be measured from your actual termination date), or
within one year following the applicable Exercisable Date, if the Firm determines that recovery of the shares is appropriate pursuant to Additional Award Conditions below, you may be required to pay the Firm an amount equal to the gain on each such exercise less withholding taxes. Payment may be made in shares of Common Stock or in cash and may be deducted by the Firm from any shares that are subject to restriction on disposition as described above.
You agree that this payment represents recovery of shares to which you were not entitled under this Award Agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. |
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Bonus Recoupment | In consideration of the grant of this award, you agree that you are subject to the JPMorgan Chase Bonus Recoupment Policy (Attachment A), as it applies both to the cash incentive compensation awarded to you for 2010 and to this award of Stock Appreciation Rights. |
Additional Award Conditions |
Notwithstanding any terms of this Award Agreement to the contrary, JPMorgan Chase reserves the right in its sole discretion to cancel outstanding Stock Appreciation Rights under this award within one year after the applicable Exercisable Date and/or to recover from you the net gain realized by you on any exercise of Stock Appreciation Rights under this award within one year after the applicable Exercisable Date:
If you engaged in conduct detrimental to the Firm, insofar as it causes material financial or reputational harm to the Firm or one of its business activities, or
If this award was based on materially inaccurate performance metrics, whether or not you were responsible for the inaccuracy, or
If this award was based on a material misrepresentation by you; or
If you failed to properly identify, raise or assess, in a timely manner and as reasonably expected, risks and/or concerns with respect to risks material to the Firm or its business activities. |
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Administrative Provisions |
Binding Agreement: The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment: Nothing contained herein constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future.
Exercise Procedures/Withholding Taxes : The exercise of Stock Appreciation Rights shall be in accordance with the Firms procedures for exercises of such awards. The date of exercise shall be the date when the properly completed notice of exercise is received and accepted by the Firm or its designee in accordance with the Firms procedures.
Following each exercise, the Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). If, according to local country tax regulations, a withholding tax liability arises at a time after the date of exercise, JPMorgan Chase may implement any procedures necessary to ensure that the withholding obligation is fully satisfied, including, but not limited to, restricting transferability of the shares.
Assignment or Transfer: Except as otherwise provided in this Award Agreement, Stock Appreciation Rights shall not be assignable or transferable or subject to any lien, obligation or liability. You may make a gift of unexpired, unexercised Stock Appreciation Rights, subject to the Firms prior consent, to an immediate family member or a trust (or similar vehicle) for the benefit of these immediate family members (or beneficiaries) as defined below. JPMorgan Chase may condition its prior consent to receipt of an agreement by you and proposed transferee containing such terms and conditions and undertakings as JPMorgan Chase deems appropriate in its sole and absolute discretion. No attempted transfer will be valid without the Firms prior consent. Immediate family members include your parents, parents-in-law, children (including adopted children), grandchildren, and siblings or a trust exclusively for the benefit of one or more of these immediate family members. Your spouse is an Immediate Family Member but only if Stock Appreciation Rights are transferred to a trust (or similar vehicle) for the benefit of such spouse, which trust includes one or more other Immediate Family Members as beneficiaries.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities otherwise payable to you pursuant to this award to satisfy any obligation or debt that you owe to the Firm. Other than in the case of forfeiture, cancellation or recovery of an award, the Firm may not retain such funds or securities until such time as they would otherwise be distributable to you in accordance with the Award Agreement.
Cancellation/Substitution : JPMorgan Chase may, in its sole discretion and for any reason, cancel outstanding unexercised Stock Appreciation Rights and substitute an equal number of non-qualified stock options to purchase the same number of shares of common stock of JPMorgan Chase represented by the cancelled Stock Appreciation Rights. Such substituted |
options shall have the same exercise price, Expiration Date and other terms and conditions that were applicable to the Stock Appreciation Rights; provided that the method of exercise and the payment of exercise price, as well as the method of payment of withholding taxes, may be changed by JPMorgan Chase.
Change in Outstanding Shares: In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Committee will make an equitable substitution or proportionate adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Stock Appreciation Rights (including but not to limited to their Exercise Price) outstanding under this award for such corporate events.
Interpretation/Administration: The Director Human Resources of the Firm or his/her delegate has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement; (ii) determine the reason for termination of employment and application of the post-employment obligations; (iii) determine application of the cancellation and recovery provisions, (iv) decide all claims arising with respect to this Award; and (v) delegate such authority as he/she deems appropriate. Any determination by the Director Human Resources or his/her delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Firm by action of its Director Human Resource or his/her delegate shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan.
This Award is intended to be exempt from the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (Section 409A) and shall be interpreted accordingly. Notwithstanding anything else herein or in the Plan, no action described herein or in the Plan shall be permitted if the Firm determines such action would result in the imposition of additional tax under Section 409A.
Amendment: The Firm through its Director Human Resources reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Director Human Resources or his/her delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled Exercisable Date shall not be deemed to materially adversely affect your rights under this Award Agreement and shall not require your written consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources JPMorgan Chase.
Severability: If any portion of the Award Agreement is found to be unenforceable, any court of competent jurisdiction may reform the restrictions (e.g. as to length of service, geographical area or scope) to the extent required to make the provision enforceable under applicable law.
Governing Law: This award shall be governed by and construed in accordance with the laws of the state of New York, without regard to conflict of law principles.
Choice of Forum : By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum. |
Waiver of Jury Trial/Class Claims: By accepting this award, you agree (i) to waive the right to a jury trial; and (ii) that any judicial proceeding or arbitration claim brought in connection with this award or the Plan will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action. | ||
Definitions |
Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than an immaterial and inadvertent violation or misconduct), (v) inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is or might reasonably be expected to be injurious to the interests of the Firm or its relationship with a customer, client or employee.
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards,
insurance, including but not limited to, guaranteeing against loss, harm damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments,
advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c) (3) of the Internal Revenue Code. Section 501(c) (3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
Attachment A
Bonus Recoupment Policy
In the event of a material restatement of the Firms financial results, the Board believes it would be appropriate to review the circumstances that caused the restatement and consider issues of accountability for those who bore responsibility for the events, including whether anyone responsible engaged in misconduct. As part of that review, consideration would also be given to any appropriate action regarding compensation that may have been awarded to such persons. In particular, it would be appropriate to consider whether any compensation was awarded on the basis of having achieved specified performance targets, whether an officer engaged in misconduct that contributed to the restatement and whether such compensation would have been reduced had the financial results been properly reported. Misconduct includes violation of the Firms Code of Conduct or policies or any act or failure to act that could reasonably be expected to cause financial or reputational harm to the Firm.
Depending on the outcome of that review, appropriate action could include actions such as termination, reducing compensation in the year the restatement was made, seeking repayment of any bonus received for the period restated or any gains realized as a result of exercising an option awarded for the period restated, or canceling any unvested equity compensation awarded for the period restated. Consideration may also be given to whether or not any one or more of such actions should be extended to employees who did not engage in misconduct that contributed to the restatement.
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF JANUARY 19, 2011
STOCK APPRECIATION RIGHTS
OPERATING COMMITTEE
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of January 19, 2011 (Grant Date) awarding Stock Appreciation Rights pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Stock Appreciation Rights represent the right, following exercise, to receive (without payment), a number of shares of JPMorgan Chase Common Stock, the Fair Market Value of which, as of the date of exercise, is equal to the excess of the Fair Market Value of one share of such Common Stock on such exercise date over the Exercise Price, multiplied by the number of Stock Appreciation Rights being exercised. The Firm will retain from each distribution the number of shares of Common Stock required to satisfy tax and other withholding obligations.
The purpose of this award is, in part, to motivate your future performance and to align your interests with those of the Firm and its shareholders. Your prior performance was considered to determine if you were eligible for your award. |
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Exercisable Dates/ Expiration Date |
This award is intended and expected to become exercisable on the Exercisable Dates set forth in your Award Agreement, provided that you are continuously employed by the Firm from the date of grant through the relevant Exercisable Date or you meet the requirements to allow your award to remain outstanding upon termination of employment as described below. However, the number of Stock Appreciation Rights that have not yet become exercisable may be reduced (and therefore may be forfeited) or Exercisable Dates may be deferred (but not beyond the Expiration Date), in the event that the Chief Executive Officer (CEO) of JPMorgan Chase determines that your performance in relation to the priorities for your position or the Firms performance in relation to the priorities for which you share responsibility as a member of the Operating Committee has been unsatisfactory for a sustained period of time. Among the factors the CEO may consider in assessing the Firms financial performance are net income, net revenue, return on equity, earnings per share and capital ratios, both on an absolute basis and, as appropriate, relative to peer firms. Such a determination is subject to ratification by the Compensation and Management Development Committee of the Board of Directors of JPMorgan Chase (Committee). In the case of an award to the CEO, such a determination shall be made by the Committee. | |
Your award will remain exercisable until the earlier of the tenth anniversary of the Grant Date (the Expiration Date) or the date the award is cancelled pursuant to this Award Agreement. Notwithstanding any provision herein, including but not limited to those provisions governing Job Elimination, Full Career Eligibility, Death, and Total Disability, no Stock Appreciation Right may be exercised after its Expiration Date. | ||
Termination of Employment |
Except as explicitly set forth below under Job Elimination, Full Career Eligibility, and Death or Total Disability, any Stock Appreciation Rights outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason.
Job Elimination :
For the one year period commencing with the date of termination of your employment (or if longer the 90 day period commencing with the Exercisable Date occurring during such one year period), any Stock Appreciation Right that is exercisable on your termination date or becomes exercisable during such period may be exercised by you in the event that:
the Director Human Resources of the Firm or nominee in his/her sole discretion determines that the Firm terminated your employment because your job was eliminated, and |
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certifications Requirement set forth below.
Full Career Eligibility :
For the two year period commencing with the date of termination of your employment (or if longer the 90 day period commencing with the last Exercisable Date occurring during such two year period), any Stock Appreciation Right that is exercisable on your termination date or becomes exercisable during such period may be exercised by you in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the exercise period, you do not, to the fullest extent enforceable under applicable law, (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during the 90-day period or shorten the length of the 90-day notice period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements.
Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.)
You must notify JPMorgan Chase in advance in writing if you are to perform services for any party or if you are self-employed following the date of your termination of employment. Failure to provide such notification could impact your right to exercise.
Death or Total Disability :
If you die while employed by the Firm, your designated beneficiary on file with the Human Resources Department (or if no beneficiary is on file or survives you, then your estate) may exercise for a two year period measured from date of your death (or if longer the 90 day period commencing with the last Exercisable Date occurring during such two year period) (i) any Stock Appreciation Rights that were exercisable as of that date and (ii) any Stock Appreciation Rights that would have become exercisable had you remained employed during such 2 year period.
If your employment terminates as a result of your permanent and total disability as defined in the JPMorgan Chase & Co. Long Term Disability Plan (or for non-U.S. employees the equivalent local country plan), then you may exercise for a two year period measured from the date that your employment terminate any Stock Appreciation Rights that were exercisable as of the date of your termination. In the case of your total disability, you must notify JPMorgan Chase in advance in writing if you are to perform services for any party or if you are self-employed following the date of your termination of employment.
Cancellation after the Two Year Period or Ninety Day Period
Any Stock Appreciation Rights that are not exercised within the applicable two year period or ninety day period described above will be cancelled.
Release/Certification Requirements
You will be required to timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify, to have all or any portion of your award remain exercisable after the termination of your employment. If you fail to return the required release within the specified deadline, your award will be cancelled. You also must certify compliance with the above requirements relevant to you pursuant to procedures established by the Firm in connection with an exercise. |
Termination for Cause
If your employment is terminated for Cause (as defined below), or if the Firm determines after the termination of your employment that your employment could have been terminated for Cause, any outstanding Stock Appreciation Rights as of your termination date will be cancelled and you may be required to return to the Firm the value of certain shares previously delivered to you. See Remedies for additional information. |
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Restriction on Disposition of Shares Derived from an Exercise Under this Award | If you exercise any part of your award before the fifth anniversary of the Grant Date, then you may not sell, assign, transfer, pledge or encumber the net number of shares of Common Stock derived from such exercise until the fifth anniversary of the Grant Date. Prior to the fifth anniversary of the Grant Date and prior to any exercise date thereafter, JPMorgan Chase may impose, for such date and up to 30 days following such date, such restrictions on the Common Stock to be issued to you as it may deem appropriate, including, but not limited to, restricting the sale, assignment, transfer, pledge or encumbrance of such Common Stock. The imposition of such restrictions shall not be deemed an amendment of your Award Agreement subject to your consent. In the Firms discretion, such shares may be held in an account with the Firms stock transfer agent. Notwithstanding the foregoing, this restriction on disposition and transfer of shares shall not apply to your beneficiary in the event of your death. | |
Your Obligations | In consideration of the grant of this award, you agree to comply with and be bound by the following: | |
Non-Solicitation of Employees and Customers |
During your employment by the Firm and for one year following the termination of your employment (or if longer, the exercise period), you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit, induce or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere, (ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated more than six months before the date of hire or because his or her job was eliminated, or (iii) to the fullest extent enforceable under applicable law, solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information.
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. |
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Confidential Information |
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information that is intended to, or reasonably could be foreseen to, embarrass or criticize the Firm or its employees, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. | |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation or governmental proceeding with respect to which you may have knowledge or information), subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Special Notice Period |
If you are subject to a notice period, whether by contract or by policy, that requires you to provide advance written notice of your intention to terminate your employment (Special Notice Period), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy.
After receipt of your notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
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Remedies
Cancellation |
In addition to the cancellation of the award as provided for in Termination of Employment and Termination for Cause, if the Firm in its sole discretion determines that (i) you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment, (ii) you have not returned the applicable release of claims or other documents specified above within the specified deadline, (iii) you violated any of the provisions as set forth above in Your Obligations, or (iv) cancellation is appropriate pursuant to Additional Award Conditions below, outstanding Stock Appreciation Rights under your award may be immediately cancelled. |
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Recovery |
In addition, if you received shares under this award resulting from an exercise:
during the one year prior to the violation of any of the provisions as set forth above in Your Obligations, or
following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the exercise period,;
prior to the termination of your employment for Cause as described under Termination for Cause, including a later determination by the Firm that your employment could have been terminated for Cause (in which case the one year will be measured from your actual termination date), or
within one year following the applicable Exercisable Date, if the Firm determines that recovery of the shares is appropriate pursuant to Additional Award Conditions below,
you may be required to pay the Firm an amount equal to the gain on each such exercise less withholding taxes. Payment may be made in shares of Common Stock or in cash and may be deducted by the Firm from any shares that are subject to restriction on disposition as described above.
You agree that this payment represents recovery of shares to which you were not entitled under this Award Agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. |
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Bonus Recoupment | In consideration of the grant of this award, you agree that you are subject to the JPMorgan Chase Bonus Recoupment Policy (Attachment A), as it applies both to the cash incentive compensation awarded to you for 2010 and to this award of Stock Appreciation Rights. | |
Additional Award Conditions |
Notwithstanding any terms of this Award Agreement to the contrary, JPMorgan Chase reserves the right in its sole discretion to cancel outstanding Stock Appreciation Rights under this award within one year after the applicable Exercisable Date and/or to recover from you the net gain realized by you on any exercise of Stock Appreciation Rights under this award within one year after the applicable Exercisable Date:
If you engaged in conduct detrimental to the Firm, insofar as it causes material financial or reputational harm to the Firm or one of its business activities, or |
If this award was based on materially inaccurate performance metrics, whether or not you were responsible for the inaccuracy, or
If this award was based on a material misrepresentation by you, or
If you failed to properly identify, raise or assess, in a timely manner and as reasonably expected, risks and/or concerns with respect to risks material to the Firm or its business activities. |
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Administrative Provisions |
Binding Agreement: The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment: Nothing contained herein constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future.
Exercise Procedures/Withholding Taxes : The exercise of Stock Appreciation Rights shall be in accordance with the Firms procedures for exercises of such awards. The date of exercise shall be the date when the properly completed notice of exercise is received and accepted by the Firm or its designee in accordance with the Firms procedures.
Following each exercise, the Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). If, according to local country tax regulations, a withholding tax liability arises at a time after the date of exercise, JPMorgan Chase may implement any procedures necessary to ensure that the withholding obligation is fully satisfied, including, but not limited to, restricting transferability of the shares.
Assignment or Transfer: Except as otherwise provided in this Award Agreement, Stock Appreciation Rights shall not be assignable or transferable or subject to any lien, obligation or liability. You may make a gift of unexpired, unexercised Stock Appreciation Rights, subject to the Firms prior consent, to an immediate family member or a trust (or similar vehicle) for the benefit of these immediate family members (or beneficiaries) as defined below. JPMorgan Chase may condition its prior consent to receipt of an agreement by you and proposed transferee containing such terms and conditions and undertakings as JPMorgan Chase deems appropriate in its sole and absolute discretion. No attempted transfer will be valid without the Firms prior consent. Immediate family members include your parents, parents-in-law, children (including adopted children), grandchildren, and siblings or a trust exclusively for the benefit of one or more of these immediate family members. Your spouse is an Immediate Family Member but only if Stock Appreciation Rights are transferred to a trust (or similar vehicle) for the benefit of such spouse, which trust includes one or more other Immediate Family Members as beneficiaries.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities otherwise payable to you pursuant to this award to satisfy any obligation or debt that you owe to the Firm. Other than in the case of forfeiture, cancellation or recovery of an award, the Firm may not retain such funds or securities until such time as they would otherwise be distributable to you in accordance with the Award Agreement.
Cancellation/Substitution : JPMorgan Chase may, in its sole discretion and for any reason, cancel outstanding unexercised Stock Appreciation Rights and substitute an equal number of non-qualified stock options to purchase the same number of shares of common stock of JPMorgan Chase represented by the cancelled Stock Appreciation Rights. Such substituted options shall have the same exercise price, Expiration Date and other terms and conditions that were applicable to the Stock Appreciation Rights; provided that the method of exercise and the payment of exercise price, as well as the method of payment of withholding taxes, may be changed by JPMorgan Chase.
Change in Outstanding Shares: In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Committee will make an equitable substitution or proportionate |
adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Stock Appreciation Rights (including but not to limited to their Exercise Price) outstanding under this award for such corporate events.
Interpretation/Administration: The Committee has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement; (ii) determine the reason for termination of employment and application of the post-employment obligations; (iii) determine application of the cancellation and recovery provisions, (iv) decide all claims arising with respect to this Award; and (v) delegate such authority as it deems appropriate. Any determination by the Committee or its delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Firm shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan.
This Award is intended to be exempt from the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (Section 409A) and shall be interpreted accordingly. Notwithstanding anything else herein or in the Plan, no action described herein or in the Plan shall be permitted if the Firm determines such action would result in the imposition of additional tax under Section 409A.
Amendment: The Committee or its delegate reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Committee or its delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled Exercisable Date shall not be deemed to materially adversely affect your rights under this Award Agreement and shall not require your written consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources JPMorgan Chase.
Severability: If any portion of the Award Agreement is found to be unenforceable, any court of competent jurisdiction may reform the restrictions (e.g. as to length of service, geographical area or scope) to the extent required to make the provision enforceable under applicable law.
Governing Law: This award shall be governed by and construed in accordance with the laws of the state of New York, without regard to conflict of law principles.
Choice of Forum : By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum.
Waiver of Jury Trial/Class Claims: By accepting this award, you agree (i) to waive the right to a jury trial; and (ii) that any judicial proceeding or arbitration claim brought in connection with this award or the Plan will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action. |
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Definitions | Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than an immaterial and inadvertent violation or misconduct), (v) inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is or might reasonably be expected to be injurious to the interests of the Firm or its relationship with a customer, client or employee. |
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards,
insurance, including but not limited to, guaranteeing against loss, harm damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments,
advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c) (3) of the Internal Revenue Code. Section 501(c) (3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
Attachment A
Bonus Recoupment Policy
In the event of a material restatement of the Firms financial results, the Board believes it would be appropriate to review the circumstances that caused the restatement and consider issues of accountability for those who bore responsibility for the events, including whether anyone responsible engaged in misconduct. As part of that review, consideration would also be given to any appropriate action regarding compensation that may have been awarded to such persons. In particular, it would be appropriate to consider whether any compensation was awarded on the basis of having achieved specified performance targets, whether an officer engaged in misconduct that contributed to the restatement and whether such compensation would have been reduced had the financial results been properly reported. Misconduct includes violation of the Firms Code of Conduct or policies or any act or failure to act that could reasonably be expected to cause financial or reputational harm to the Firm.
Depending on the outcome of that review, appropriate action could include actions such as termination, reducing compensation in the year the restatement was made, seeking repayment of any bonus received for the period restated or any gains realized as a result of exercising an option awarded for the period restated, or canceling any unvested equity compensation awarded for the period restated. Consideration may also be given to whether or not any one or more of such actions should be extended to employees who did not engage in misconduct that contributed to the restatement.
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF FEBRUARY 16, 2011
STOCK APPRECIATION RIGHTS
CHIEF EXECUTIVE OFFICER
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of February 16, 2011 (Grant Date) awarding Stock Appreciation Rights pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Stock Appreciation Rights represent the right, following exercise, to receive (without payment), a number of shares of JPMorgan Chase Common Stock, the Fair Market Value of which, as of the date of exercise, is equal to the excess of the Fair Market Value of one share of such Common Stock on such exercise date over the Exercise Price, multiplied by the number of Stock Appreciation Rights being exercised. The Firm will retain from each distribution the number of shares of Common Stock required to satisfy tax and other withholding obligations.
The purpose of this award is, in part, to motivate your future performance and to align your interests with those of the Firm and its shareholders. Your prior performance was considered to determine if you were eligible for your award. |
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Exercisable Dates/ Expiration Date | This award is intended and expected to become exercisable on the Exercisable Dates set forth in your Award Agreement, provided that you are continuously employed by the Firm from the date of grant through the relevant Exercisable Date or you meet the requirements to allow your award to remain outstanding upon termination of employment as described below. However, the number of Stock Appreciation Rights that have not yet become exercisable may be reduced (and therefore may be forfeited) or Exercisable Dates may be deferred (but not beyond the Expiration Date), in the event that the Chief Executive Officer (CEO) of JPMorgan Chase determines that your performance in relation to the priorities for your position or the Firms performance in relation to the priorities for which you share responsibility as a member of the Operating Committee has been unsatisfactory for a sustained period of time. Among the factors the CEO may consider in assessing the Firms financial performance are net income, net revenue, return on equity, earnings per share and capital ratios, both on an absolute basis and, as appropriate, relative to peer firms. Such a determination is subject to ratification by the Compensation and Management Development Committee of the Board of Directors of JPMorgan Chase (Committee). In the case of an award to the CEO, such a determination shall be made by the Committee. | |
Your award will remain exercisable until the earlier of the tenth anniversary of the Grant Date (the Expiration Date) or the date the award is cancelled pursuant to this Award Agreement. Notwithstanding any provision herein, including but not limited to those provisions governing Job Elimination, Full Career Eligibility, Death, and Total Disability, no Stock Appreciation Right may be exercised after its Expiration Date. | ||
Termination of Employment | Except as explicitly set forth below under Job Elimination, Full Career Eligibility, and Death or Total Disability, any Stock Appreciation Rights outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason. |
Job Elimination :
For the one year period commencing with the date of termination of your employment (or if longer the 90 day period commencing with the Exercisable Date occurring during such one year period), any Stock Appreciation Right that is exercisable on your termination date or becomes exercisable during such period may be exercised by you in the event that:
the Director Human Resources of the Firm or nominee in his/her sole discretion determines that the Firm terminated your employment because your job was eliminated, and
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certifications Requirement set forth below.
Full Career Eligibility :
For the two year period commencing with the date of termination of your employment (or if longer the 90 day period commencing with the last Exercisable Date occurring during such two year period), any Stock Appreciation Right that is exercisable on your termination date or becomes exercisable during such period may be exercised by you in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the exercise period, you do not, to the fullest extent enforceable under applicable law, (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during the 90-day period or shorten the length of the 90-day notice period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements.
Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.)
You must notify JPMorgan Chase in advance in writing if you are to perform services for any party or if you are self-employed following the date of your termination of employment. Failure to provide such notification could impact your right to exercise.
Death or Total Disability :
If you die while employed by the Firm, your designated beneficiary on file with the Human Resources Department (or if no beneficiary is on file or survives you, then your estate) may exercise for a two year period measured from date of your death (or if longer the 90 day period commencing with the last Exercisable Date occurring during such two year period) (i) any Stock Appreciation Rights that were exercisable as of that date and (ii) any Stock Appreciation Rights that would have become exercisable had you remained employed during such 2 year period.
If your employment terminates as a result of your permanent and total disability as defined in the JPMorgan Chase & Co. Long Term Disability Plan (or for non-U.S. employees the equivalent local country plan), then you may exercise for a two year period measured from the date that your employment terminate any Stock Appreciation Rights that were exercisable as of the date of your termination. In the case of your total disability, you must notify JPMorgan Chase in advance in writing if you are to perform services for any party or if you are self-employed following the date of your termination of employment.
Cancellation after the Two Year Period or Ninety Day Period
Any Stock Appreciation Rights that are not exercised within the applicable two year period or ninety day period described above will be cancelled. |
Release/Certification Requirements
You will be required to timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify, to have all or any portion of your award remain exercisable after the termination of your employment. If you fail to return the required release within the specified deadline, your award will be cancelled. You also must certify compliance with the above requirements relevant to you pursuant to procedures established by the Firm in connection with an exercise.
Termination for Cause
If your employment is terminated for Cause (as defined below), or if the Firm determines after the termination of your employment that your employment could have been terminated for Cause, any outstanding Stock Appreciation Rights as of your termination date will be cancelled and you may be required to return to the Firm the value of certain shares previously delivered to you. See Remedies for additional information. |
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Restriction on Disposition of Shares Derived from an Exercise Under this Award | If you exercise any part of your award before the fifth anniversary of the Grant Date, then you may not sell, assign, transfer, pledge or encumber the net number of shares of Common Stock derived from such exercise until the fifth anniversary of the Grant Date. Prior to the fifth anniversary of the Grant Date and prior to any exercise date thereafter, JPMorgan Chase may impose, for such date and up to 30 days following such date, such restrictions on the Common Stock to be issued to you as it may deem appropriate, including, but not limited to, restricting the sale, assignment, transfer, pledge or encumbrance of such Common Stock. The imposition of such restrictions shall not be deemed an amendment of your Award Agreement subject to your consent. In the Firms discretion, such shares may be held in an account with the Firms stock transfer agent. Notwithstanding the foregoing, this restriction on disposition and transfer of shares shall not apply to your beneficiary in the event of your death. | |
Your Obligations | In consideration of the grant of this award, you agree to comply with and be bound by the following: | |
Non-Solicitation of Employees and Customers |
During your employment by the Firm and for one year following the termination of your employment (or if longer, the exercise period), you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit, induce or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere, (ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated more than six months before the date of hire or because his or her job was eliminated, or (iii) to the fullest extent enforceable under applicable law, solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information.
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. |
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Confidential Information |
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information that is intended to, or reasonably could be foreseen to, embarrass or criticize the Firm or its employees, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. | |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation or governmental proceeding with respect to which you may have knowledge or information), subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Special Notice Period |
If you are subject to a notice period, whether by contract or by policy, that requires you to provide advance written notice of your intention to terminate your employment (Special Notice Period), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy.
After receipt of your notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
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Remedies Cancellation |
In addition to the cancellation of the award as provided for in Termination of Employment and Termination for Cause, if the Firm in its sole discretion determines that (i) you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment, (ii) you have not returned the applicable release of claims or other documents specified above within the specified deadline, (iii) you violated any of the provisions as set forth above in Your Obligations, or (iv) cancellation is appropriate pursuant to Additional Award Conditions below, outstanding Stock Appreciation Rights under your award may be immediately cancelled. |
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Recovery |
In addition, if you received shares under this award resulting from an exercise:
during the one year prior to the violation of any of the provisions as set forth above in Your Obligations, or
following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the exercise period,;
prior to the termination of your employment for Cause as described under Termination for Cause, including a later determination by the Firm that your employment could have been terminated for Cause (in which case the one year will be measured from your actual termination date), or
within one year following the applicable Exercisable Date, if the Firm determines that recovery of the shares is appropriate pursuant to Additional Award Conditions below,
you may be required to pay the Firm an amount equal to the gain on each such exercise less withholding taxes. Payment may be made in shares of Common Stock or in cash and may be deducted by the Firm from any shares that are subject to restriction on disposition as described above.
You agree that this payment represents recovery of shares to which you were not entitled under this Award Agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. |
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Bonus Recoupment | In consideration of the grant of this award, you agree that you are subject to the JPMorgan Chase Bonus Recoupment Policy (Attachment A), as it applies both to the cash incentive compensation awarded to you for 2010 and to this award of Stock Appreciation Rights. |
Additional Award Conditions |
Notwithstanding any terms of this Award Agreement to the contrary, JPMorgan Chase reserves the right in its sole discretion to cancel outstanding Stock Appreciation Rights under this award within one year after the applicable Exercisable Date and/or to recover from you the net gain realized by you on any exercise of Stock Appreciation Rights under this award within one year after the applicable Exercisable Date:
If you engaged in conduct detrimental to the Firm, insofar as it causes material financial or reputational harm to the Firm or one of its business activities, or
If this award was based on materially inaccurate performance metrics, whether or not you were responsible for the inaccuracy, or
If this award was based on a material misrepresentation by you; or
If you failed to properly identify, raise or assess, in a timely manner and as reasonably expected, risks and/or concerns with respect to risks material to the Firm or its business activities. |
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Administrative Provisions |
Binding Agreement: The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment: Nothing contained herein constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future.
Exercise Procedures/Withholding Taxes : The exercise of Stock Appreciation Rights shall be in accordance with the Firms procedures for exercises of such awards. The date of exercise shall be the date when the properly completed notice of exercise is received and accepted by the Firm or its designee in accordance with the Firms procedures.
Following each exercise, the Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). If, according to local country tax regulations, a withholding tax liability arises at a time after the date of exercise, JPMorgan Chase may implement any procedures necessary to ensure that the withholding obligation is fully satisfied, including, but not limited to, restricting transferability of the shares.
Assignment or Transfer: Except as otherwise provided in this Award Agreement, Stock Appreciation Rights shall not be assignable or transferable or subject to any lien, obligation or liability. You may make a gift of unexpired, unexercised Stock Appreciation Rights, subject to the Firms prior consent, to an immediate family member or a trust (or similar vehicle) for the benefit of these immediate family members (or beneficiaries) as defined below. JPMorgan Chase may condition its prior consent to receipt of an agreement by you and proposed transferee containing such terms and conditions and undertakings as JPMorgan Chase deems appropriate in its sole and absolute discretion. No attempted transfer will be valid without the Firms prior consent. Immediate family members include your parents, parents-in-law, children (including adopted children), grandchildren, and siblings or a trust exclusively for the benefit of one or more of these immediate family members. Your spouse is an Immediate Family Member but only if Stock Appreciation Rights are transferred to a trust (or similar vehicle) for the benefit of such spouse, which trust includes one or more other Immediate Family Members as beneficiaries.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities otherwise payable to you pursuant to this award to satisfy any obligation or debt that you owe to the Firm. Other than in the case of forfeiture, cancellation or recovery of an award, the Firm may not retain such funds or securities until such time as they would otherwise be distributable to you in accordance with the Award Agreement.
Cancellation/Substitution : JPMorgan Chase may, in its sole discretion and for any reason, cancel outstanding unexercised Stock Appreciation Rights and substitute an equal number of non-qualified stock options to purchase the same number of shares of common stock of JPMorgan Chase represented by the cancelled Stock Appreciation Rights. Such substituted options shall have the same exercise price, Expiration Date and other terms and conditions that were applicable to the Stock Appreciation Rights; provided that the method of exercise and the payment of exercise price, as well as the method of payment of withholding taxes, may be changed by JPMorgan Chase. |
Change in Outstanding Shares: In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Committee will make an equitable substitution or proportionate adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Stock Appreciation Rights (including but not to limited to their Exercise Price) outstanding under this award for such corporate events.
Interpretation/Administration: The Committee has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement; (ii) determine the reason for termination of employment and application of the post-employment obligations; (iii) determine application of the cancellation and recovery provisions, (iv) decide all claims arising with respect to this Award; and (v) delegate such authority as it deems appropriate. Any determination by the Committee or its delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Firm shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan.
This Award is intended to be exempt from the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (Section 409A) and shall be interpreted accordingly. Notwithstanding anything else herein or in the Plan, no action described herein or in the Plan shall be permitted if the Firm determines such action would result in the imposition of additional tax under Section 409A.
Amendment: The Committee or its delegate reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Committee or its delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled Exercisable Date shall not be deemed to materially adversely affect your rights under this Award Agreement and shall not require your written consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources JPMorgan Chase.
Severability: If any portion of the Award Agreement is found to be unenforceable, any court of competent jurisdiction may reform the restrictions (e.g. as to length of service, geographical area or scope) to the extent required to make the provision enforceable under applicable law.
Governing Law: This award shall be governed by and construed in accordance with the laws of the state of New York, without regard to conflict of law principles.
Choice of Forum : By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum.
Waiver of Jury Trial/Class Claims: By accepting this award, you agree (i) to waive the right to a jury trial; and (ii) that any judicial proceeding or arbitration claim brought in connection with this award or the Plan will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action.
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Definitions | Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than an immaterial and inadvertent violation or misconduct), (v) |
inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is or might reasonably be expected to be injurious to the interests of the Firm or its relationship with a customer, client or employee.
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards,
insurance, including but not limited to, guaranteeing against loss, harm damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments,
advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c) (3) of the Internal Revenue Code. Section 501(c) (3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
Attachment A
Bonus Recoupment Policy
In the event of a material restatement of the Firms financial results, the Board believes it would be appropriate to review the circumstances that caused the restatement and consider issues of accountability for those who bore responsibility for the events, including whether anyone responsible engaged in misconduct. As part of that review, consideration would also be given to any appropriate action regarding compensation that may have been awarded to such persons. In particular, it would be appropriate to consider whether any compensation was awarded on the basis of having achieved specified performance targets, whether an officer engaged in misconduct that contributed to the restatement and whether such compensation would have been reduced had the financial results been properly reported. Misconduct includes violation of the Firms Code of Conduct or policies or any act or failure to act that could reasonably be expected to cause financial or reputational harm to the Firm.
Depending on the outcome of that review, appropriate action could include actions such as termination, reducing compensation in the year the restatement was made, seeking repayment of any bonus received for the period restated or any gains realized as a result of exercising an option awarded for the period restated, or canceling any unvested equity compensation awarded for the period restated. Consideration may also be given to whether or not any one or more of such actions should be extended to employees who did not engage in misconduct that contributed to the restatement.
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF JANUARY 19, 2011
RESTRICTED STOCK UNIT AWARD
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of January 19, 2011 (Grant Date) awarding restricted stock units pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Each restricted stock unit represents a non-transferable right to receive one share of Common Stock following the applicable vesting date.
The purpose of this award is, in part, to motivate your future performance for services to be provided during the vesting periods and to align your interests with those of the Firm and its shareholders. Your prior performance was considered to determine if you were eligible for your award. |
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Dividend Equivalents | If dividends are paid on Common Stock while restricted stock units under this award are outstanding, you will be paid an amount equal to the dividend paid on one share of Common Stock, multiplied by the number of restricted stock units outstanding to you under this award. | |
Vesting Dates | This award will vest according to the schedule on your Award Agreement, provided that you are continuously employed by the Firm, or you meet the requirements for continued vesting described below, through the relevant vesting date. | |
Vesting Periods | The period from the Grant Date to each vesting date will be a separate vesting period. | |
Termination of Employment | Except as explicitly set forth below under Job Elimination, Full Career Eligibility, Total Disability, Government Office and Death, any restricted stock units outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason. | |
Job Elimination, Full Career Eligibility, Government Office, Total Disability |
Subject to Vesting Dates and the terms and conditions of this Award Agreement (including without limitation Your Obligations), you will be eligible to continue to vest in your outstanding restricted stock units under this award following the termination of your employment if one of the following circumstances applies to you.
Job Elimination :
This award will continue to vest on the original schedule following termination of employment in the event that:
the Director Human Resources of the Firm or nominee in his or her sole discretion determines that the Firm terminated your employment because your job was eliminated, and
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certification Requirements set forth below. |
Full Career Eligibility :
This award will continue to vest on the original schedule, subject to the prior written consent of the Firm, following termination of employment in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the remainder of the relevant vesting period, you do not, to the fullest extent enforceable under applicable law, (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during such 90-day period or shorten the length of the 90-day period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements. The foregoing clause dealing with Full Career Eligibility has no application to any United States taxpayer who is or becomes subject to Section 457A of the United States Internal Revenue Code (Code).
Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.)
Government Office:
All or a portion of this award may continue to vest on the original schedule if you voluntarily resign to accept a Government Office or become a candidate for an elective Government Office, as described at the end of these terms and conditions under the section entitled Government Office. |
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Total Disability :
In the event your employment terminates as a result of your permanent and total disability as defined in the JPMorgan Chase & Co. Long Term Disability Plan (or for non-U.S. employees the equivalent local country plan), your outstanding units will continue to vest on the original schedule during such period of disability provided that you remain unemployed for such period and you satisfy the Release /Certification requirements set forth below.
For both Full Career Eligibility and Total Disability, you must notify JPMorgan Chase in writing in advance if you plan to perform services for any party or if you will be self-employed during the vesting periods. Failure to provide such notification could impact award vesting. |
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Release/Certification |
In order to qualify for continued vesting after termination of your employment under any of the foregoing circumstances:
you must timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify,
with respect to Full Career Eligibility, prior to the termination of your employment, you must confirm with management that you meet the eligibility criteria (including providing at least 90 days advance written notification) and advise that you are seeking to be treated as an individual eligible for Full Career Eligibility, and
except in the case of a job elimination, it is your responsibility to take the appropriate steps to certify to the Firm prior to each vesting date on the authorized form of the Firm that you have complied with the employment restrictions applicable to you (as described above) throughout the vesting period and otherwise complied with all other terms of the Award Agreement. (See Your Obligations.) |
Death | If you die while you are eligible to vest in your outstanding units under this award, the units will immediately vest and will be distributed in shares of Common Stock (after applicable tax withholding) to your designated beneficiary on file with the Firms Stock Administration Department, or if no beneficiary has been designated or survives you, then to your estate. Any shares will be distributed by the later of the end of the calendar year in which you die or the 15 th day of the third month following your date of death. | |
Termination for Cause | If your employment is terminated for Cause (as defined below), or if the Firm determines after the termination of your employment that your employment could have been terminated for Cause, your outstanding restricted stock units shall be forfeited. In addition, you may be required to return to the Firm the value of certain shares delivered to you prior to or after your termination. See Remedies for additional information. | |
Your Obligations | In consideration of the grant of this award, you agree to comply with and be bound by the following: | |
Non-Solicitation of Employees and Customers |
During your employment by the Firm and for one year following the termination of your employment, or if longer, during all remaining vesting periods if you continue to vest after your employment with the Firm terminates, you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit, induce or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere, (ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated more than six months before the date of hire or because his or her job was eliminated, or (iii) to the fullest extent enforceable under applicable law, solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information.
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. |
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Confidential Information |
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information that is intended to, or reasonably could be foreseen to, embarrass or criticize the Firm or its employees, officers, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. | |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation, investigation or governmental proceeding) with respect to which you may have knowledge or information, subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. | |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Special Notice Period: |
If you are subject to a notice period, whether by contract or by policy, that requires you to provide advance written notice of your intention to terminate your employment (Special Notice Period), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy. |
After receipt of your notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
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Remedies
Cancellation |
In addition to the provisions described under Termination of Employment and Termination for Cause, your outstanding restricted stock units under this award may be cancelled if:
the Firm in its sole discretion determines that you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment, or
you fail to return the required forms specified under Release/Certification within the specified deadline, including the certification required immediately prior to a vesting date under Full Career Eligibility and Total Disability, or
you violate any of the provisions as set forth above in Your Obligations, or
the Firm determines that cancellation is appropriate pursuant to Additional Award Conditions below. |
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Recovery |
In addition, you may be required to pay the Firm an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares of Common Stock distributed to you under this award as follows:
shares distributed within the one year period prior to your violation of any of the provisions as set forth above in Your Obligations; or
shares distributed at any time following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the vesting period; or
shares distributed within the one year period immediately preceding and any time after your termination of employment if your employment was terminated or the Firm determines that your employment could have been terminated for Cause (as described under Termination for Cause), or
for a period up to one year after shares are distributed under this award, the Firm may recover such shares to the extent that the Firm determines appropriate pursuant to Additional Award Conditions below.
Payment may be made in shares of Common Stock or in cash. You agree that this repayment will be a recovery of shares to which you were not entitled under this agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. |
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Bonus Recoupment Policy | In consideration of the grant of this award, you agree that you are subject to the JPMorgan Chase Bonus Recoupment Policy (Attachment A) as it applies both to the cash incentive compensation awarded to you for 2010 and to this award. |
Additional Award Conditions |
Notwithstanding any terms of this Award Agreement to the contrary, JPMorgan Chase reserves the right in its sole discretion to cancel your outstanding restricted stock units under this award and/or to recover from you an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares distributed to you under this award within the preceding one year:
If you engaged in conduct detrimental to the Firm insofar as it causes material financial or reputational harm to the Firm or its business activities, or
If this award was based on materially inaccurate performance metrics, whether or not you were responsible for the inaccuracy, or
If this award was based on a material misrepresentation by you. |
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Purpose of Remedies, Bonus Recoupment Policy and Additional Award Conditions | The Firms right to cancel and/or recover value of this award (or any cash bonus) under the JPMorgan Chase Bonus Recoupment Policy and the Additional Award Conditions, as well as under Cancellation and Recovery provisions set forth above, relate to the organizational goals of the Firm as that term is defined by Section 409A of the Code. | |
Administrative Provisions |
Withholding Taxes: The Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). For United States tax purposes, dividend equivalents are treated as wages and subject to tax withholding when paid. If, according to local country tax regulations, a withholding tax liability arises at a time after the date of distribution of shares or dividend equivalents, JPMorgan Chase may implement any procedures necessary to ensure that the withholding obligation is fully satisfied, including but not limited to, restricting transferability of the shares.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities otherwise payable to you pursuant to this award to satisfy any obligation or debt that you owe to the Firm. The Firm may not retain such funds or securities until such time as they would otherwise be distributable to you in accordance with the Award Agreement.
No Ownership Rights : Restricted stock units do not convey the rights of ownership of Common Stock and do not carry voting rights. No shares of Common Stock will be issued to you until after the restricted stock units have vested and all applicable restrictions have lapsed. Prior to any vesting date, JPMorgan Chase may impose, as of such vesting date and for up to 30 days following such date, such restrictions on the Common Stock to be issued to you as it may deem appropriate, including, but not limited to, restricting the sale, transfer, pledge, assignment or encumbrance of such shares of Common Stock . The imposition of such restrictions shall not be deemed an amendment of your Award Agreement subject to your consent. Shares will be issued in accordance with JPMorgan Chases procedures for issuing stock. JPMorgan Chases obligation hereunder is unfunded.
Binding Agreement : The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment : Nothing contained in the Award Agreement constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future.
Section 409A Compliance : To the extent that Section 409A of the Code is applicable to an award, distributions of shares and cash thereunder are intended to comply with Section 409A of the Code, and the Agreement Award shall be interpreted in a manner consistent with such intent.
Notwithstanding anything herein to the contrary, if you (i) are subject to taxation under the Code, (ii) are a specified employee as defined in the JPMorgan Chase 2005 Deferred Compensation Plan and (iii) have incurred a separation from service (as defined In that Plan) and if any units/ shares under this award represent deferred compensation as defined in Section 409A and such shares are distributable to you as a result your separation from service, then those shares will be delivered to you on first business day of the first calendar month after the expiration of six full months from date of your separation from service. Further, if prior to any vesting date, your award is not subject to a substantial risk of forfeiture as defined by Section 409A of the Code, then the remainder of each calendar year immediately following (i) each vesting date shall be a payment date for purposes of distributing the vested portion of the award and (ii) each date that JPMorgan Chase specifies for payment of dividends declared on its common stock shall be the payment date(s) for purposes of dividend equivalent payments. |
Change in Outstanding Shares : In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Compensation & Management Development Committee of the Board will make an equitable substitution or proportionate adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Restricted Stock Units outstanding under this award for such corporate events.
Interpretation/Administration : The Director Human Resources of the Firm has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement; (ii) determine the reason for termination of employment; (iii) determine application of the post-employment obligations and cancellation and recovery provisions; (iv) decide all claims arising with respect to this Award; and (v) delegate such authority as he/she deems appropriate. Any determination by the Director Human Resources or his/her delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Firm by action of its Director Human Resource or his/her delegate shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan. |
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Amendment : The Firm through its Director Human Resources reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided, however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Director Human Resources or his/her delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled vesting date and any restrictions imposed with respect to shares of Common Stock that are issued to you as set forth in under the No Ownership Rights shall not be deemed to materially adversely affect your rights under this Award Agreement requiring your consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources of JPMorgan Chase.
Severability : If any portion of the Award Agreement is determined by the Firm to be unenforceable in any jurisdiction, any court of competent jurisdiction or the Director Human Resources may reform the relevant provisions (e.g., as to length of service, time, geographical area or scope) to the extent the Firm considers necessary to make the provision enforceable under applicable law.
Governing Law : This award shall be governed by and construed in accordance with the laws of the state of New York, without regard to conflict of law principles.
Choice of Forum : By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum.
Waiver of Jury Trial/Class Claims: By accepting this award, you agree (i) to waive the right to a jury trial; and (ii) that any judicial proceeding or arbitration claim brought in connection with this award or the Plan will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action. |
Definitions | Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than immaterial and inadvertent violations or misconduct); (v) inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is injurious to the interests of the Firm or its relationship with a customer, client or employee. | |
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards,
insurance , including but not limited to, guaranteeing against loss, harm damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments; advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Government Office means (i) a full-time position in an elected or appointed office in local, state, or federal government (including equivalent positions outside the U.S. or in a supranational organization), not reasonably anticipated to be a full-career position, or (ii) conducting a bona fide full-time campaign for such an elective public office after formally filing for candidacy, where it is customary and reasonably necessary to campaign full-time for the office.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c)(3) of the Code. Section 501(c)(3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
Government Office
You may be eligible to continue vesting in all or part of your award if you voluntarily resign to accept a Government Office (as defined below) or to become a candidate for an elective Government Office.
Eligibility
Eligibility for continued vesting is conditioned on your providing the Firm:
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At least 60 days advance written notice and such evidence as the Firm may request of your intention to resign to accept or pursue a Government Office, during which period you must perform in a cooperative and professional manner services requested by the Firm and not provide services for any other employer. The Firm may elect to shorten this notice period at the Firms discretion. |
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Confirmation, in a form satisfactory to the Firm, that vesting in this award pursuant to this provision would not violate any applicable law, regulation or rule. |
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Documentation in a form satisfactory to the Firm that your resignation is for the purpose of accepting or becoming a candidate for a Government Office. |
Continued vesting
Subject to the conditions below, the percentage of your outstanding awards with respect to each vesting date that will continue to vest in accordance with this awards original schedule will be based on your years of continuous service completed with the Firm immediately preceding your termination date, as follows:
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50% if you have at least 3 but less than 4 years of continuous service,; |
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75% if you have at least 4 but less than 5 years of continuous service or |
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100% if you have 5 or more years of continuous service. |
Restricted stock units that are not subject to continued vesting will be cancelled on the date your employment terminates.
Conditions for continuing vesting
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You must remain in a non-elective Government Office for two or more years after your employment with the Firm terminates. |
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In the case of resignation from the Firm to campaign for an elective Government Office, your name must be on the primary or final public ballot for the election. (If you are not elected, see below for employment restrictions.) |
If you do not satisfy the above conditions for continued vesting, this award will be immediately cancelled, and you will be required to repay the Fair Market Value determined as of the date the shares were distributed, of any shares that would have been outstanding but for the accelerated distribution of shares (as described below).
If service in Government Office ends during vesting period
You must notify JPMorgan Chase in writing in advance if you plan to accept employment or if you will be self-employed following service in the Government Office during the vesting period.
If your service in a Government Office ends two years or more after your employment with the Firm terminates, or in the case of resignation from the Firm to campaign for a Government Office, your name is on the primary or final public ballot for the election and you are not elected, any awards then outstanding and any awards that would have then been outstanding but for an accelerated distribution of shares (as set forth below) will be subject for the remainder of the applicable vesting period to the same terms and conditions of this Award Agreement as if you had resigned from the Firm having met the requirements for Full Career Eligibility.
Accelerated distribution for ethics or conflict reasons
If applicable United States federal, state, local, foreign or supranational ethics or conflict of interest laws or regulations require you to divest your interest in JPMorgan Chase restricted stock units, the Firm will, upon receipt of satisfactory evidence of such requirements, accelerate the distribution effective as of the date your employment terminates, of the percentage of your outstanding award determined above; provided that no accelerated distribution shall occur if the Firm determines that such acceleration will violate Section 409A of the Code. Notwithstanding such accelerated distribution, you will remain subject to the applicable terms of this Award Agreement as if your award had remained outstanding for the duration of the original vesting period, including the employment restrictions, and you will be required to repay the Fair Market Value, determined as of the date the shares were distributed, of any shares that would not otherwise have vested during that period.
Applicable to other Awards
Outstanding awards of restricted stock units have been amended to include this provision on Government Office.
Attachment A
Bonus Recoupment Policy
In the event of a material restatement of the Firms financial results, the Board believes it would be appropriate to review the circumstances that caused the restatement and consider issues of accountability for those who bore responsibility for the events, including whether anyone responsible engaged in misconduct. As part of that review, consideration would also be given to any appropriate action regarding compensation that may have been awarded to such persons. In particular, it would be appropriate to consider whether any compensation was awarded on the basis of having achieved specified performance targets, whether an officer engaged in misconduct that contributed to the restatement and whether such compensation would have been reduced had the financial results been properly reported. Misconduct includes violation of the Firms Code of Conduct or policies or any act or failure to act that could reasonably be expected to cause financial or reputational harm to the Firm.
Depending on the outcome of that review, appropriate action could include actions such as termination, reducing compensation in the year the restatement was made, seeking repayment of any bonus received for the period restated or any gains realized as a result of exercising an option awarded for the period restated, or canceling any unvested equity compensation awarded for the period restated. Consideration may also be given to whether or not any one or more of such actions should be extended to employees who did not engage in misconduct that contributed to the restatement.
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF JANUARY 19, 2011
RESTRICTED STOCK UNIT AWARD
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of January 19, 2011 (Grant Date) awarding restricted stock units pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date . If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Each restricted stock unit represents a non-transferable right to receive one share of Common Stock following the applicable vesting date.
The purpose of this award is, in part, to motivate your future performance for services to be provided during the vesting periods and to align your interests with those of the Firm and its shareholders. Your prior performance was considered to determine if you were eligible for your award. |
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Dividend Equivalents | If dividends are paid on Common Stock while restricted stock units under this award are outstanding, you will be paid an amount equal to the dividend paid on one share of Common Stock, multiplied by the number of restricted stock units outstanding to you under this award. | |
Vesting Dates | This award will vest according to the schedule on your Award Agreement, provided that you are continuously employed by the Firm, or you meet the requirements for continued vesting described below, through the relevant vesting date. | |
Vesting Periods | The period from the Grant Date to each vesting date will be a separate vesting period. | |
Termination of Employment | Except as explicitly set forth below under Job Elimination, Full Career Eligibility, Total Disability, Government Office and Death, any restricted stock units outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason. | |
Job Elimination, Full Career Eligibility, Government Office, Total Disability |
Subject to Vesting Dates and the terms and conditions of this Award Agreement (including without limitation Your Obligations), you will be eligible to continue to vest in your outstanding restricted stock units under this award following the termination of your employment if one of the following circumstances applies to you.
Job Elimination :
This award will continue to vest on the original schedule following termination of employment in the event that:
the Director Human Resources of the Firm or nominee in his or her sole discretion determines that the Firm terminated your employment because your job was eliminated, and
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certification Requirements set forth below. |
Full Career Eligibility :
This award will continue to vest on the original schedule, subject to the prior written consent of the Firm, following termination of employment in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the remainder of the relevant vesting period, you do not, to the fullest extent enforceable under applicable law, (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during such 90-day period or shorten the length of the 90-day period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements. The foregoing clause dealing with Full Career Eligibility has no application to any United States taxpayer who is or becomes subject to Section 457A of the United States Internal Revenue Code (Code).
Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.)
Government Office :
All or a portion of this award may continue to vest on the original schedule if you voluntarily resign to accept a Government Office or become a candidate for an elective Government Office, as described at the end of these terms and conditions under the section entitled Government Office. |
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Total Disability :
In the event your employment terminates as a result of your permanent and total disability as defined in the JPMorgan Chase & Co. Long Term Disability Plan (or for non-U.S. employees the equivalent local country plan), your outstanding units will continue to vest on the original schedule during such period of disability provided that you remain unemployed for such period and you satisfy the Release /Certification requirements set forth below.
For both Full Career Eligibility and Total Disability, you must notify JPMorgan Chase in writing in advance if you plan to perform services for any party or if you will be self-employed during the vesting periods. Failure to provide such notification could impact award vesting. |
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Release/Certification |
In order to qualify for continued vesting after termination of your employment under any of the foregoing circumstances:
you must timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify,
with respect to Full Career Eligibility, prior to the termination of your employment, you must confirm with management that you meet the eligibility criteria (including providing at least 90 days advance written notification) and advise that you are seeking to be treated as an individual eligible for Full Career Eligibility, and
except in the case of a job elimination, it is your responsibility to take the appropriate steps to certify to the Firm prior to each vesting date on the authorized form of the Firm that you have complied with the employment restrictions applicable to you (as described above) throughout the vesting period and otherwise complied with all other terms of the Award Agreement. (See Your Obligations.) |
Death | If you die while you are eligible to vest in your outstanding units under this award, the units will immediately vest and will be distributed in shares of Common Stock (after applicable tax withholding) to your designated beneficiary on file with the Firms Stock Administration Department, or if no beneficiary has been designated or survives you, then to your estate. Any shares will be distributed by the later of the end of the calendar year in which you die or the 15 th day of the third month following your date of death. | |
Termination for Cause | If your employment is terminated for Cause (as defined below), or if the Firm determines after the termination of your employment that your employment could have been terminated for Cause, your outstanding restricted stock units shall be forfeited. In addition, you may be required to return to the Firm the value of certain shares delivered to you prior to or after your termination. See Remedies for additional information. | |
Your Obligations | In consideration of the grant of this award, you agree to comply with and be bound by the following: | |
Non-Solicitation of Employees and Customers |
During your employment by the Firm and for one year following the termination of your employment, or if longer, during all remaining vesting periods if you continue to vest after your employment with the Firm terminates, you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit, induce or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere, (ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated more than six months before the date of hire or because his or her job was eliminated, or (iii) to the fullest extent enforceable under applicable law, solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information.
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. |
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Confidential Information |
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information that is intended to, or reasonably could be foreseen to, embarrass or criticize the Firm or its employees, officers, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. | |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation, investigation or governmental proceeding) with respect to which you may have knowledge or information, subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. | |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Special Notice Period: |
If you are subject to a notice period, whether by contract or by policy, that requires you to provide advance written notice of your intention to terminate your employment (Special Notice Period), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy. |
After receipt of your notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
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Remedies | ||
Cancellation |
In addition to the provisions described under Termination of Employment and Termination for Cause, your outstanding restricted stock units under this award may be cancelled if:
the Firm in its sole discretion determines that you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment, or
you fail to return the required forms specified under Release/Certification within the specified deadline, including the certification required immediately prior to a vesting date under Full Career Eligibility and Total Disability, or
you violate any of the provisions as set forth above in Your Obligations, or
the Firm determines that cancellation is appropriate pursuant to Additional Award Conditions below. |
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Recovery |
In addition, you may be required to pay the Firm an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares of Common Stock distributed to you under this award as follows:
shares distributed within the one year period prior to your violation of any of the provisions as set forth above in Your Obligations; or
shares distributed at any time following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the vesting period; or
shares distributed within the one year period immediately preceding and any time after your termination of employment if your employment was terminated or the Firm determines that your employment could have been terminated for Cause (as described under Termination for Cause), or
for a period up to one year after shares are distributed under this award, the Firm may recover such shares to the extent that the Firm determines appropriate pursuant to Additional Award Conditions below.
Payment may be made in shares of Common Stock or in cash. You agree that this repayment will be a recovery of shares to which you were not entitled under this agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. |
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Bonus Recoupment Policy | In consideration of the grant of this award, you agree that you are subject to the JPMorgan Chase Bonus Recoupment Policy (Attachment A) as it applies both to the cash incentive compensation awarded to you for 2010 and to this award. | |
Additional Award Conditions |
Notwithstanding any terms of this Award Agreement to the contrary, JPMorgan Chase reserves the right in its sole discretion to cancel your outstanding restricted stock units under this award and/or to recover from you an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares distributed to you under this award within the preceding one year:
If you engaged in conduct detrimental to the Firm insofar as it causes material financial or reputational harm to the Firm or its business activities, or |
If this award was based on materially inaccurate performance metrics, whether or not you were responsible for the inaccuracy, or
If this award was based on a material misrepresentation by you, or
If you failed to properly identify, raise or assess, in a timely manner and as reasonably expected, risks and/or concerns with respect to risks material to the Firm or its business activities. |
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Purpose of Remedies, Bonus Recoupment Policy and Additional Award Conditions | The Firms right to cancel and/or recover value of this award (or any cash bonus) under the JPMorgan Chase Bonus Recoupment Policy and the Additional Award Conditions, as well as under Cancellation and Recovery provisions set forth above, relate to the organizational goals of the Firm as that term is defined by Section 409A of the Code. | |
Administrative Provisions |
Withholding Taxes: The Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). For United States tax purposes, dividend equivalents are treated as wages and subject to tax withholding when paid. If, according to local country tax regulations, a withholding tax liability arises at a time after the date of distribution of shares or dividend equivalents, JPMorgan Chase may implement any procedures necessary to ensure that the withholding obligation is fully satisfied, including but not limited to, restricting transferability of the shares.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities otherwise payable to you pursuant to this award to satisfy any obligation or debt that you owe to the Firm. The Firm may not retain such funds or securities until such time as they would otherwise be distributable to you in accordance with the Award Agreement.
No Ownership Rights : Restricted stock units do not convey the rights of ownership of Common Stock and do not carry voting rights. No shares of Common Stock will be issued to you until after the restricted stock units have vested and all applicable restrictions have lapsed. Prior to any vesting date, JPMorgan Chase may impose, as of such vesting date and for up to 30 days following such date, such restrictions on the Common Stock to be issued to you as it may deem appropriate, including, but not limited to, restricting the sale, transfer, pledge, assignment or encumbrance of such shares of Common Stock . The imposition of such restrictions shall not be deemed an amendment of your Award Agreement subject to your consent. Shares will be issued in accordance with JPMorgan Chases procedures for issuing stock. JPMorgan Chases obligation hereunder is unfunded.
Binding Agreement : The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment : Nothing contained in the Award Agreement constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future.
Section 409A Compliance : To the extent that Section 409A of the Code is applicable to an award, distributions of shares and cash thereunder are intended to comply with Section 409A of the Code, and the Agreement Award shall be interpreted in a manner consistent with such intent.
Notwithstanding anything herein to the contrary, if you (i) are subject to taxation under the Code, (ii) are a specified employee as defined in the JPMorgan Chase 2005 Deferred Compensation Plan and (iii) have incurred a separation from service (as defined In that Plan) and if any units/ shares under this award represent deferred compensation as defined in Section 409A and such shares are distributable to you as a result your separation from service, then those shares will be delivered to you on first business day of the first calendar month after the expiration of six full months from date of your separation from service. Further, if prior to any vesting date, your |
award is not subject to a substantial risk of forfeiture as defined by Section 409A of the Code, then the remainder of each calendar year immediately following (i) each vesting date shall be a payment date for purposes of distributing the vested portion of the award and (ii) each date that JPMorgan Chase specifies for payment of dividends declared on its common stock shall be the payment date(s) for purposes of dividend equivalent payments.
Change in Outstanding Shares : In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Compensation & Management Development Committee of the Board will make an equitable substitution or proportionate adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Restricted Stock Units outstanding under this award for such corporate events.
Interpretation/Administration : The Director Human Resources of the Firm has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement; (ii) determine the reason for termination of employment; (iii) determine application of the post-employment obligations and cancellation and recovery provisions; (iv) decide all claims arising with respect to this Award; and (v) delegate such authority as he/she deems appropriate. Any determination by the Director Human Resources or his/her delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Firm by action of its Director Human Resource or his/her delegate shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan.
Amendment : The Firm through its Director Human Resources reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided, however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Director Human Resources or his/her delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled vesting date and any restrictions imposed with respect to shares of Common Stock that are issued to you as set forth in under the No Ownership Rights shall not be deemed to materially adversely affect your rights under this Award Agreement requiring your consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources of JPMorgan Chase.
Severability : If any portion of the Award Agreement is determined by the Firm to be unenforceable in any jurisdiction, any court of competent jurisdiction or the Director Human Resources may reform the relevant provisions (e.g., as to length of service, time, geographical area or scope) to the extent the Firm considers necessary to make the provision enforceable under applicable law.
Governing Law : This award shall be governed by and construed in accordance with the laws of the state of New York, without regard to conflict of law principles.
Choice of Forum : By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum. |
Waiver of Jury Trial/Class Claims: By accepting this award, you agree (i) to waive the right to a jury trial; and (ii) that any judicial proceeding or arbitration claim brought in connection with this award or the Plan will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action. | ||
Definitions | Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than immaterial and inadvertent violations or misconduct); (v) inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is injurious to the interests of the Firm or its relationship with a customer, client or employee. | |
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards,
insurance , including but not limited to, guaranteeing against loss, harm damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments; advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Government Office means (i) a full-time position in an elected or appointed office in local, state, or federal government (including equivalent positions outside the U.S. or in a supranational organization), not reasonably anticipated to be a full-career position, or (ii) conducting a bona fide full-time campaign for such an elective public office after formally filing for candidacy, where it is customary and reasonably necessary to campaign full-time for the office.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c)(3) of the Code. Section 501(c)(3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
Government Office
You may be eligible to continue vesting in all or part of your award if you voluntarily resign to accept a Government Office (as defined below) or to become a candidate for an elective Government Office.
Eligibility
Eligibility for continued vesting is conditioned on your providing the Firm:
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At least 60 days advance written notice and such evidence as the Firm may request of your intention to resign to accept or pursue a Government Office, during which period you must perform in a cooperative and professional manner services requested by the Firm and not provide services for any other employer. The Firm may elect to shorten this notice period at the Firms discretion. |
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Confirmation, in a form satisfactory to the Firm, that vesting in this award pursuant to this provision would not violate any applicable law, regulation or rule. |
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Documentation in a form satisfactory to the Firm that your resignation is for the purpose of accepting or becoming a candidate for a Government Office. |
Continued vesting
Subject to the conditions below, the percentage of your outstanding awards with respect to each vesting date that will continue to vest in accordance with this awards original schedule will be based on your years of continuous service completed with the Firm immediately preceding your termination date, as follows:
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50% if you have at least 3 but less than 4 years of continuous service,; |
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75% if you have at least 4 but less than 5 years of continuous service or |
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100% if you have 5 or more years of continuous service. |
Restricted stock units that are not subject to continued vesting will be cancelled on the date your employment terminates.
Conditions for continuing vesting
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You must remain in a non-elective Government Office for two or more years after your employment with the Firm terminates. |
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In the case of resignation from the Firm to campaign for an elective Government Office, your name must be on the primary or final public ballot for the election. (If you are not elected, see below for employment restrictions.) |
If you do not satisfy the above conditions for continued vesting, this award will be immediately cancelled, and you will be required to repay the Fair Market Value determined as of the date the shares were distributed, of any shares that would have been outstanding but for the accelerated distribution of shares (as described below).
If service in Government Office ends during vesting period
You must notify JPMorgan Chase in writing in advance if you plan to accept employment or if you will be self-employed following service in the Government Office during the vesting period.
If your service in a Government Office ends two years or more after your employment with the Firm terminates, or in the case of resignation from the Firm to campaign for a Government Office, your name is on the primary or final public ballot for the election and you are not elected, any awards then outstanding and any awards that would have then been outstanding but for an accelerated distribution of shares (as set forth below) will be subject for the remainder of the applicable vesting period to the same terms and conditions of this Award Agreement as if you had resigned from the Firm having met the requirements for Full Career Eligibility.
Accelerated distribution for ethics or conflict reasons
If applicable United States federal, state, local, foreign or supranational ethics or conflict of interest laws or regulations require you to divest your interest in JPMorgan Chase restricted stock units, the Firm will, upon receipt of satisfactory evidence of such requirements, accelerate the distribution effective as of the date your employment terminates, of the percentage of your outstanding award determined above; provided that no accelerated distribution shall occur if the Firm determines that such acceleration will violate Section 409A of the Code. Notwithstanding such accelerated distribution, you will remain subject to the applicable terms of this Award Agreement as if your award had remained outstanding for the duration of the original vesting period, including the employment restrictions, and you will be required to repay the Fair Market Value, determined as of the date the shares were distributed, of any shares that would not otherwise have vested during that period.
Applicable to other Awards
Outstanding awards of restricted stock units have been amended to include this provision on Government Office.
Attachment A
Bonus Recoupment Policy
In the event of a material restatement of the Firms financial results, the Board believes it would be appropriate to review the circumstances that caused the restatement and consider issues of accountability for those who bore responsibility for the events, including whether anyone responsible engaged in misconduct. As part of that review, consideration would also be given to any appropriate action regarding compensation that may have been awarded to such persons. In particular, it would be appropriate to consider whether any compensation was awarded on the basis of having achieved specified performance targets, whether an officer engaged in misconduct that contributed to the restatement and whether such compensation would have been reduced had the financial results been properly reported. Misconduct includes violation of the Firms Code of Conduct or policies or any act or failure to act that could reasonably be expected to cause financial or reputational harm to the Firm.
Depending on the outcome of that review, appropriate action could include actions such as termination, reducing compensation in the year the restatement was made, seeking repayment of any bonus received for the period restated or any gains realized as a result of exercising an option awarded for the period restated, or canceling any unvested equity compensation awarded for the period restated. Consideration may also be given to whether or not any one or more of such actions should be extended to employees who did not engage in misconduct that contributed to the restatement.
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF JANUARY 19, 2011
RESTRICTED STOCK UNIT AWARD
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of January 19, 2011 (Grant Date) awarding restricted stock units pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Each restricted stock unit represents a non-transferable right to receive one share of Common Stock following the applicable vesting date.
The purpose of this award is, in part, to motivate your future performance for services to be provided during the vesting periods and to align your interests with those of the Firm and its shareholders. Your prior performance was considered to determine if you were eligible for your award. |
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Dividend Equivalents | If dividends are paid on Common Stock while restricted stock units under this award are outstanding, you will be paid an amount equal to the dividend paid on one share of Common Stock, multiplied by the number of restricted stock units outstanding to you under this award. | |
Vesting Dates | This award will vest according to the schedule on your Award Agreement, provided that you are continuously employed by the Firm, or you meet the requirements for continued vesting described below, through the relevant vesting date. | |
Vesting Periods | The period from the Grant Date to each vesting date will be a separate vesting period. | |
Termination of Employment | Except as explicitly set forth below under Job Elimination, Full Career Eligibility, Total Disability, Government Office and Death, any restricted stock units outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason. | |
Job Elimination, Full Career Eligibility, Government Office, Total Disability |
Subject to Vesting Dates and the terms and conditions of this Award Agreement (including without limitation Your Obligations), you will be eligible to continue to vest in your outstanding restricted stock units under this award following the termination of your employment if one of the following circumstances applies to you.
Job Elimination :
This award will continue to vest on the original schedule following termination of employment in the event that:
the Director Human Resources of the Firm or nominee in his or her sole discretion determines that the Firm terminated your employment because your job was eliminated, and
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certification Requirements set forth below. |
Full Career Eligibility :
This award will continue to vest on the original schedule, subject to the prior written consent of the Firm, following termination of employment in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the remainder of the relevant vesting period, you do not, to the fullest extent enforceable under applicable law, (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during such 90-day period or shorten the length of the 90-day period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements. The foregoing clause dealing with Full Career Eligibility has no application to any United States taxpayer who is or becomes subject to Section 457A of the United States Internal Revenue Code (Code).
Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.)
Government Office:
All or a portion of this award may continue to vest on the original schedule if you voluntarily resign to accept a Government Office or become a candidate for an elective Government Office, as described at the end of these terms and conditions under the section entitled Government Office. |
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Total Disability :
In the event your employment terminates as a result of your permanent and total disability as defined in the JPMorgan Chase & Co. Long Term Disability Plan (or for non-U.S. employees the equivalent local country plan), your outstanding units will continue to vest on the original schedule during such period of disability provided that you remain unemployed for such period and you satisfy the Release /Certification requirements set forth below.
For both Full Career Eligibility and Total Disability, you must notify JPMorgan Chase in writing in advance if you plan to perform services for any party or if you will be self-employed during the vesting periods. Failure to provide such notification could impact award vesting. |
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Release/Certification |
In order to qualify for continued vesting after termination of your employment under any of the foregoing circumstances:
you must timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify,
with respect to Full Career Eligibility, prior to the termination of your employment, you must confirm with management that you meet the eligibility criteria (including providing at least 90 days advance written notification) and advise that you are seeking to be treated as an individual eligible for Full Career Eligibility, and
except in the case of a job elimination, it is your responsibility to take the appropriate steps to certify to the Firm prior to each vesting date on the authorized form of the Firm that you have complied with the employment restrictions applicable to you (as described above) throughout the vesting period and otherwise complied with all other terms of the Award Agreement. (See Your Obligations.) |
Death | If you die while you are eligible to vest in your outstanding units under this award, the units will immediately vest and will be distributed in shares of Common Stock (after applicable tax withholding) to your designated beneficiary on file with the Firms Stock Administration Department, or if no beneficiary has been designated or survives you, then to your estate. Any shares will be distributed by the later of the end of the calendar year in which you die or the 15 th day of the third month following your date of death. | |
Termination for Cause | If your employment is terminated for Cause (as defined below), or if the Firm determines after the termination of your employment that your employment could have been terminated for Cause, your outstanding restricted stock units shall be forfeited. In addition, you may be required to return to the Firm the value of certain shares delivered to you prior to or after your termination. See Remedies for additional information. | |
Your Obligations | In consideration of the grant of this award, you agree to comply with and be bound by the following: | |
Non-Solicitation of Employees and Customers |
During your employment by the Firm and for one year following the termination of your employment, or if longer, during all remaining vesting periods if you continue to vest after your employment with the Firm terminates, you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit, induce or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere, (ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated more than six months before the date of hire or because his or her job was eliminated, or (iii) to the fullest extent enforceable under applicable law, solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information.
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. |
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Confidential Information |
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information that is intended to, or reasonably could be foreseen to, embarrass or criticize the Firm or its employees, officers, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. | |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation, investigation or governmental proceeding) with respect to which you may have knowledge or information, subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. | |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Special Notice Period: |
If you are subject to a notice period, whether by contract or by policy, that requires you to provide advance written notice of your intention to terminate your employment (Special Notice Period), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy. |
After receipt of your notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
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Remedies
Cancellation |
In addition to the provisions described under Termination of Employment and Termination for Cause, your outstanding restricted stock units under this award may be cancelled if:
the Firm in its sole discretion determines that you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment, or
you fail to return the required forms specified under Release/Certification within the specified deadline, including the certification required immediately prior to a vesting date under Full Career Eligibility and Total Disability, or
you violate any of the provisions as set forth above in Your Obligations, or
the Firm determines that cancellation is appropriate pursuant to Additional Award Conditions below. |
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Recovery |
In addition, you may be required to pay the Firm an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares of Common Stock distributed to you under this award as follows:
shares distributed within the one year period prior to your violation of any of the provisions as set forth above in Your Obligations; or
shares distributed at any time following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the vesting period; or
shares distributed within the one year period immediately preceding and any time after your termination of employment if your employment was terminated or the Firm determines that your employment could have been terminated for Cause (as described under Termination for Cause), or
for a period up to one year after shares are distributed under this award, the Firm may recover such shares to the extent that the Firm determines appropriate pursuant to Additional Award Conditions below.
Payment may be made in shares of Common Stock or in cash. You agree that this repayment will be a recovery of shares to which you were not entitled under this agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. |
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Bonus Recoupment Policy | In consideration of the grant of this award, you agree that you are subject to the JPMorgan Chase Bonus Recoupment Policy (Attachment A) as it applies both to the cash incentive compensation awarded to you for 2010 and to this award. | |
Additional Award Conditions |
Notwithstanding any terms of this Award Agreement to the contrary, JPMorgan Chase reserves the right in its sole discretion to cancel your outstanding restricted stock units under this award and/or to recover from you an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares distributed to you under this award within the preceding one year:
If you engaged in conduct detrimental to the Firm insofar as it causes material financial or reputational harm to the Firm or its business activities, or |
If this award was based on materially inaccurate performance metrics, whether or not you were responsible for the inaccuracy, or
If this award was based on a material misrepresentation by you, or
If you failed to properly identify, raise or assess, in a timely manner and as reasonably expected, risks and/or concerns with respect to risks material to the Firm or its business activities. |
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Purpose of Remedies, Bonus Recoupment Policy and Additional Award Conditions | The Firms right to cancel and/or recover value of this award (or any cash bonus) under the JPMorgan Chase Bonus Recoupment Policy and the Additional Award Conditions, as well as under Cancellation and Recovery provisions set forth above, relate to the organizational goals of the Firm as that term is defined by Section 409A of the Code. | |
Administrative Provisions |
Withholding Taxes: The Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). For United States tax purposes, dividend equivalents are treated as wages and subject to tax withholding when paid. If, according to local country tax regulations, a withholding tax liability arises at a time after the date of distribution of shares or dividend equivalents, JPMorgan Chase may implement any procedures necessary to ensure that the withholding obligation is fully satisfied, including but not limited to, restricting transferability of the shares.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities otherwise payable to you pursuant to this award to satisfy any obligation or debt that you owe to the Firm. The Firm may not retain such funds or securities until such time as they would otherwise be distributable to you in accordance with the Award Agreement.
No Ownership Rights : Restricted stock units do not convey the rights of ownership of Common Stock and do not carry voting rights. No shares of Common Stock will be issued to you until after the restricted stock units have vested and all applicable restrictions have lapsed. Prior to any vesting date, JPMorgan Chase may impose, as of such vesting date and for up to 30 days following such date, such restrictions on the Common Stock to be issued to you as it may deem appropriate, including, but not limited to, restricting the sale, transfer, pledge, assignment or encumbrance of such shares of Common Stock. The imposition of such restrictions shall not be deemed an amendment of your Award Agreement subject to your consent. Shares will be issued in accordance with JPMorgan Chases procedures for issuing stock. JPMorgan Chases obligation hereunder is unfunded.
Binding Agreement : The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment : Nothing contained in the Award Agreement constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future.
Section 409A Compliance : To the extent that Section 409A of the Code is applicable to an award, distributions of shares and cash thereunder are intended to comply with Section 409A of the Code, and the Agreement Award shall be interpreted in a manner consistent with such intent.
Notwithstanding anything herein to the contrary, if you (i) are subject to taxation under the Code, (ii) are a specified employee as defined in the JPMorgan Chase 2005 Deferred Compensation Plan and (iii) have incurred a separation from service (as defined In that Plan) and if any units/ shares under this award represent deferred compensation as defined in Section 409A and such shares are distributable to you as a result your separation from service, then those shares will be delivered to you on first business day of the first calendar month after the expiration of six full months from date of your separation from service. Further, if prior to any vesting date, your |
award is not subject to a substantial risk of forfeiture as defined by Section 409A of the Code, then the remainder of each calendar year immediately following (i) each vesting date shall be a payment date for purposes of distributing the vested portion of the award and (ii) each date that JPMorgan Chase specifies for payment of dividends declared on its common stock shall be the payment date(s) for purposes of dividend equivalent payments.
Change in Outstanding Shares : In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Compensation & Management Development Committee of the Board will make an equitable substitution or proportionate adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Restricted Stock Units outstanding under this award for such corporate events.
Interpretation/Administration : The Committee has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement; (ii) determine the reason for termination of employment; (iii) determine application of the post-employment obligations and cancellation and recovery provisions; (iv) decide all claims arising with respect to this Award; and (v) delegate such authority as it deems appropriate. Any determination by the Committee or its delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms and the Committees determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Committee and the Firm shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan.
Amendment : The Committee or its delegate reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided, however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Committee or its delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled vesting date and any restrictions imposed with respect to shares of Common Stock that are issued to you as set forth in under the No Ownership Rights shall not be deemed to materially adversely affect your rights under this Award Agreement requiring your consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources of JPMorgan Chase.
Severability : If any portion of the Award Agreement is determined by the Firm to be unenforceable in any jurisdiction, any court of competent jurisdiction or the Director Human Resources may reform the relevant provisions (e.g., as to length of service, time, geographical area or scope) to the extent the Firm considers necessary to make the provision enforceable under applicable law.
Governing Law : This award shall be governed by and construed in accordance with the laws of the state of New York, without regard to conflict of law principles.
Choice of Forum : By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum. |
Waiver of Jury Trial/Class Claims: By accepting this award, you agree (i) to waive the right to a jury trial; and (ii) that any judicial proceeding or arbitration claim brought in connection with this award or the Plan will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action. | ||
Definitions | Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than immaterial and inadvertent violations or misconduct); (v) inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is injurious to the interests of the Firm or its relationship with a customer, client or employee. | |
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards,
insurance , including but not limited to, guaranteeing against loss, harm damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments; advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Government Office means (i) a full-time position in an elected or appointed office in local, state, or federal government (including equivalent positions outside the U.S. or in a supranational organization), not reasonably anticipated to be a full-career position, or (ii) conducting a bona fide full-time campaign for such an elective public office after formally filing for candidacy, where it is customary and reasonably necessary to campaign full-time for the office.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c)(3) of the Code. Section 501(c)(3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
Government Office
You may be eligible to continue vesting in all or part of your award if you voluntarily resign to accept a Government Office (as defined below) or to become a candidate for an elective Government Office.
Eligibility
Eligibility for continued vesting is conditioned on your providing the Firm:
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At least 60 days advance written notice and such evidence as the Firm may request of your intention to resign to accept or pursue a Government Office, during which period you must perform in a cooperative and professional manner services requested by the Firm and not provide services for any other employer. The Firm may elect to shorten this notice period at the Firms discretion. |
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Confirmation, in a form satisfactory to the Firm, that vesting in this award pursuant to this provision would not violate any applicable law, regulation or rule. |
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Documentation in a form satisfactory to the Firm that your resignation is for the purpose of accepting or becoming a candidate for a Government Office. |
Continued vesting
Subject to the conditions below, the percentage of your outstanding awards with respect to each vesting date that will continue to vest in accordance with this awards original schedule will be based on your years of continuous service completed with the Firm immediately preceding your termination date, as follows:
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50% if you have at least 3 but less than 4 years of continuous service,; |
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75% if you have at least 4 but less than 5 years of continuous service or |
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100% if you have 5 or more years of continuous service. |
Restricted stock units that are not subject to continued vesting will be cancelled on the date your employment terminates.
Conditions for continuing vesting
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You must remain in a non-elective Government Office for two or more years after your employment with the Firm terminates. |
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In the case of resignation from the Firm to campaign for an elective Government Office, your name must be on the primary or final public ballot for the election. (If you are not elected, see below for employment restrictions.) |
If you do not satisfy the above conditions for continued vesting, this award will be immediately cancelled, and you will be required to repay the Fair Market Value determined as of the date the shares were distributed, of any shares that would have been outstanding but for the accelerated distribution of shares (as described below).
If service in Government Office ends during vesting period
You must notify JPMorgan Chase in writing in advance if you plan to accept employment or if you will be self-employed following service in the Government Office during the vesting period.
If your service in a Government Office ends two years or more after your employment with the Firm terminates, or in the case of resignation from the Firm to campaign for a Government Office, your name is on the primary or final public ballot for the election and you are not elected, any awards then outstanding and any awards that would have then been outstanding but for an accelerated distribution of shares (as set forth below) will be subject for the remainder of the applicable vesting period to the same terms and conditions of this Award Agreement as if you had resigned from the Firm having met the requirements for Full Career Eligibility.
Accelerated distribution for ethics or conflict reasons
If applicable United States federal, state, local, foreign or supranational ethics or conflict of interest laws or regulations require you to divest your interest in JPMorgan Chase restricted stock units, the Firm will, upon receipt of satisfactory evidence of such requirements, accelerate the distribution effective as of the date your employment terminates, of the percentage of your outstanding award determined above; provided that no accelerated distribution shall occur if the Firm determines that such acceleration will violate Section 409A of the Code. Notwithstanding such accelerated distribution, you will remain subject to the applicable terms of this Award Agreement as if your award had remained outstanding for the duration of the original vesting period, including the employment restrictions, and you will be required to repay the Fair Market Value, determined as of the date the shares were distributed, of any shares that would not otherwise have vested during that period.
Applicable to other Awards
Outstanding awards of restricted stock units have been amended to include this provision on Government Office.
Attachment A
Bonus Recoupment Policy
In the event of a material restatement of the Firms financial results, the Board believes it would be appropriate to review the circumstances that caused the restatement and consider issues of accountability for those who bore responsibility for the events, including whether anyone responsible engaged in misconduct. As part of that review, consideration would also be given to any appropriate action regarding compensation that may have been awarded to such persons. In particular, it would be appropriate to consider whether any compensation was awarded on the basis of having achieved specified performance targets, whether an officer engaged in misconduct that contributed to the restatement and whether such compensation would have been reduced had the financial results been properly reported. Misconduct includes violation of the Firms Code of Conduct or policies or any act or failure to act that could reasonably be expected to cause financial or reputational harm to the Firm.
Depending on the outcome of that review, appropriate action could include actions such as termination, reducing compensation in the year the restatement was made, seeking repayment of any bonus received for the period restated or any gains realized as a result of exercising an option awarded for the period restated, or canceling any unvested equity compensation awarded for the period restated. Consideration may also be given to whether or not any one or more of such actions should be extended to employees who did not engage in misconduct that contributed to the restatement.
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF JANUARY 19, 2011
RESTRICTED STOCK UNIT AWARD
OPERATING COMMITTEE (Performance Provision)
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of January 19, 2011 (Grant Date) awarding restricted stock units pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Each restricted stock unit represents a non-transferable right to receive one share of Common Stock following the applicable vesting date.
The purpose of this award is, in part, to motivate your future performance for services to be provided during the vesting periods and to align your interests with those of the Firm and its shareholders. Your prior performance was considered to determine if you were eligible for your award. |
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Dividend Equivalents | If dividends are paid on Common Stock while restricted stock units under this award are outstanding, you will be paid an amount equal to the dividend paid on one share of Common Stock, multiplied by the number of restricted stock units outstanding to you under this award. | |
Vesting Dates | This award is intended and expected to vest according to the schedule on your Award Agreement, provided that you are continuously employed by the Firm, or you meet the requirements for continued vesting described below, through the relevant vesting date. However, the number of restricted stock units awarded hereunder may be reduced (and therefore may be forfeited) or (to the extent permitted under Section 409A of the United States Internal Revenue Code (Code) ) vesting dates may be deferred, in the event that the Chief Executive Officer (CEO) of JPMorgan Chase determines that your performance in relation to the priorities for your position or the Firms performance in relation to the priorities for which you share responsibility as a member of the Operating Committee have been unsatisfactory for a sustained period of time. Among the factors the CEO may consider in assessing the Firms financial performance are net income, net revenue, return on equity, earnings per share and capital ratios, both on an absolute and, as appropriate, relative to peer firms. Such a determination is subject to ratification by the Compensation and Management Development Committee of the Board of Directors of JPMorgan Chase (Committee). In the case of an award to the CEO, such a determination shall be made by the Committee. | |
Vesting Periods | The period from the Grant Date to each vesting date will be a separate vesting period. | |
Termination of Employment | Except as explicitly set forth below under Job Elimination, Full Career Eligibility, Total Disability, Government Office and Death, any restricted stock units outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason. |
Job Elimination, Full Career Eligibility, Government Office, Total Disability |
Subject to Vesting Dates and the terms and conditions of this Award Agreement (including without limitation Your Obligations), you will be eligible to continue to vest in your outstanding restricted stock units under this award following the termination of your employment if one of the following circumstances applies to you.
Job Elimination :
This award will continue to vest on the original schedule following termination of employment in the event that:
the Director Human Resources of the Firm or nominee in his or her sole discretion determines that the Firm terminated your employment because your job was eliminated, and
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certification Requirements set forth below.
Full Career Eligibility :
This award will continue to vest on the original schedule, subject to the prior written consent of the Firm, following termination of employment in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the remainder of the relevant vesting period, you do not, to the fullest extent enforceable under applicable law, (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during such 90-day period or shorten the length of the 90-day period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements. The foregoing clause dealing with Full Career Eligibility has no application to any United States taxpayer who is or becomes subject to Section 457A of the Code.
Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.)
Government Office :
All or a portion of this award may continue to vest on the original schedule if you voluntarily resign to accept a Government Office or become a candidate for an elective Government Office, as described at the end of these terms and conditions under the section entitled Government Office. |
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Total Disability :
In the event your employment terminates as a result of your permanent and total disability as defined in the JPMorgan Chase & Co. Long Term Disability Plan (or for non-U.S. employees the equivalent local country plan), your outstanding units will continue to vest on the original schedule during such period of disability provided that you remain unemployed for such period and you satisfy the Release /Certification requirements set forth below.
For both Full Career Eligibility and Total Disability, you must notify JPMorgan Chase in writing in advance if you plan to perform services for any party or if you will be self-employed during the vesting periods. Failure to provide such notification could impact award vesting. |
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Release/Certification |
In order to qualify for continued vesting after termination of your employment under any of the foregoing circumstances:
you must timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify, |
with respect to Full Career Eligibility, prior to the termination of your employment, you must confirm with management that you meet the eligibility criteria (including providing at least 90 days advance written notification) and advise that you are seeking to be treated as an individual eligible for Full Career Eligibility, and
except in the case of a job elimination, it is your responsibility to take the appropriate steps to certify to the Firm prior to each vesting date on the authorized form of the Firm that you have complied with the employment restrictions applicable to you (as described above) throughout the vesting period and otherwise complied with all other terms of the Award Agreement. (See Your Obligations.) |
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Death | If you die while you are eligible to vest in your outstanding units under this award, the units will immediately vest and will be distributed in shares of Common Stock (after applicable tax withholding) to your designated beneficiary on file with the Firms Stock Administration Department, or if no beneficiary has been designated or survives you, then to your estate. Any shares will be distributed by the later of the end of the calendar year in which you die or the 15 th day of the third month following your date of death. | |
Termination for Cause | If your employment is terminated for Cause (as defined below), or if the Firm determines after the termination of your employment that your employment could have been terminated for Cause, your outstanding restricted stock units shall be forfeited. In addition, you may be required to return to the Firm the value of certain shares delivered to you prior to or after your termination. See Remedies for additional information. | |
Your Obligations | In consideration of the grant of this award, you agree to comply with and be bound by the following: | |
Non-Solicitation of Employees and Customers |
During your employment by the Firm and for one year following the termination of your employment, or if longer, during all remaining vesting periods if you continue to vest after your employment with the Firm terminates, you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit, induce or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere, (ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated more than six months before the date of hire or because his or her job was eliminated, or (iii) to the fullest extent enforceable under applicable law, solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information.
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. |
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Confidential Information |
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information that is intended to, or reasonably could be foreseen to, embarrass or criticize the Firm or its employees, officers, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation, investigation or governmental proceeding) with respect to which you may have knowledge or information, subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. | |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Special Notice Period: |
If you are subject to a notice period, whether by contract or by policy, that requires you to provide advance written notice of your intention to terminate your employment (Special Notice Period), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy.
After receipt of your notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
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Remedies | ||
Cancellation |
In addition to the provisions described under Termination of Employment and Termination for Cause, your outstanding restricted stock units under this award may be cancelled if:
the Firm in its sole discretion determines that you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment, or
you fail to return the required forms specified under Release/Certification within the specified deadline, including the certification required immediately prior to a vesting date under Full Career Eligibility and Total Disability, or
you violate any of the provisions as set forth above in Your Obligations, or
the Firm determines that cancellation is appropriate pursuant to Additional Award Conditions below. |
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Recovery |
In addition, you may be required to pay the Firm an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares of Common Stock distributed to you under this award as follows:
shares distributed within the one year period prior to your violation of any of the provisions as set forth above in Your Obligations; or
shares distributed at any time following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the vesting period; or
shares distributed within the one year period immediately preceding and any time after your termination of employment if your employment was terminated or the Firm determines that your employment could have been terminated for Cause (as described under Termination for Cause), or
for a period up to one year after shares are distributed under this award, the Firm may recover such shares to the extent that the Firm determines appropriate pursuant to Additional Award Conditions below.
Payment may be made in shares of Common Stock or in cash. You agree that this repayment will be a recovery of shares to which you were not entitled under this agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever |
other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. | ||
Bonus Recoupment Policy | In consideration of the grant of this award, you agree that you are subject to the JPMorgan Chase Bonus Recoupment Policy (Attachment A) as it applies both to the cash incentive compensation awarded to you for 2010 and to this award. | |
Additional Award Conditions |
Notwithstanding any terms of this Award Agreement to the contrary, JPMorgan Chase reserves the right in its sole discretion to cancel your outstanding restricted stock units under this award and/or to recover from you an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares distributed to you under this award within the preceding one year:
If you engaged in conduct detrimental to the Firm insofar as it causes material financial or reputational harm to the Firm or its business activities, or
If this award was based on materially inaccurate performance metrics, whether or not you were responsible for the inaccuracy, or
If this award was based on a material misrepresentation by you, or
If you failed to properly identify, raise or assess, in a timely manner and as reasonably expected, risks and/or concerns with respect to risks material to the Firm or its business activities. |
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Purpose of Remedies, Bonus Recoupment Policy and Additional Award Conditions | The Firms right to cancel and/or recover value of this award (or any cash bonus) under the JPMorgan Chase Bonus Recoupment Policy and the Additional Award Conditions, as well as under Cancellation and Recovery provisions set forth above, relate to the organizational goals of the Firm as that term is defined by Section 409A of the Code. | |
Administrative Provisions |
Withholding Taxes: The Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). For United States tax purposes, dividend equivalents are treated as wages and subject to tax withholding when paid. If, according to local country tax regulations, a withholding tax liability arises at a time after the date of distribution of shares or dividend equivalents, JPMorgan Chase may implement any procedures necessary to ensure that the withholding obligation is fully satisfied, including but not limited to, restricting transferability of the shares.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities otherwise payable to you pursuant to this award to satisfy any obligation or debt that you owe to the Firm. The Firm may not retain such funds or securities until such time as they would otherwise be distributable to you in accordance with the Award Agreement.
No Ownership Rights : Restricted stock units do not convey the rights of ownership of Common Stock and do not carry voting rights. No shares of Common Stock will be issued to you until after the restricted stock units have vested and all applicable restrictions have lapsed. Prior to any vesting date, JPMorgan Chase may impose, as of such vesting date and for up to 30 days following such date, such restrictions on the Common Stock to be issued to you as it may deem appropriate, including, but not limited to, restricting the sale, transfer, pledge, assignment or encumbrance of such shares of Common Stock . The imposition of such restrictions shall not be deemed an amendment of your Award Agreement subject to your consent. Shares will be issued in accordance with JPMorgan Chases procedures for issuing stock. JPMorgan Chases obligation hereunder is unfunded.
Binding Agreement : The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment : Nothing contained in the Award Agreement constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future. |
Section 409A Compliance : To the extent that Section 409A of the Code is applicable to an award, distributions of shares and cash thereunder are intended to comply with Section 409A of the Code, and the Agreement Award shall be interpreted in a manner consistent with such intent.
Notwithstanding anything herein to the contrary, if you (i) are subject to taxation under the Code, (ii) are a specified employee as defined in the JPMorgan Chase 2005 Deferred Compensation Plan and (iii) have incurred a separation from service (as defined In that Plan) and if any units/ shares under this award represent deferred compensation as defined in Section 409A and such shares are distributable to you as a result your separation from service, then those shares will be delivered to you on first business day of the first calendar month after the expiration of six full months from date of your separation from service. Further, if prior to any vesting date, your award is not subject to a substantial risk of forfeiture as defined by Section 409A of the Code, then the remainder of each calendar year immediately following (i) each vesting date shall be a payment date for purposes of distributing the vested portion of the award and (ii) each date that JPMorgan Chase specifies for payment of dividends declared on its common stock shall be the payment date(s) for purposes of dividend equivalent payments.
Change in Outstanding Shares : In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Committee will make an equitable substitution or proportionate adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Restricted Stock Units outstanding under this award for such corporate events.
Interpretation/Administration : The Committee has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement; (ii) determine the reason for termination of employment; (iii) determine application of the post-employment obligations and cancellation and recovery provisions; (iv) decide all claims arising with respect to this Award; and (v) delegate such authority as it deems appropriate. Any determination by the Committee or its delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms and the Committees determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Committee and the Firm shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan.
Amendment : The Committee or its delegate reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided, however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Committee or its delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled vesting date and any restrictions imposed with respect to shares of Common Stock that are issued to you as set forth in under the No Ownership Rights shall not be deemed to materially adversely affect your rights under this Award Agreement requiring your consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources of JPMorgan Chase.
Severability : If any portion of the Award Agreement is determined by the Firm to be unenforceable in any jurisdiction, any court of competent jurisdiction or the Director Human Resources may reform the relevant provisions (e.g., as to length of service, time, geographical area or scope) to the extent the Firm considers necessary to make the provision enforceable under applicable law.
Governing Law : This award shall be governed by and construed in accordance with the laws of the state of New York, without regard to conflict of law principles. |
Choice of Forum : By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum.
Waiver of Jury Trial/Class Claims: By accepting this award, you agree (i) to waive the right to a jury trial; and (ii) that any judicial proceeding or arbitration claim brought in connection with this award or the Plan will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action. |
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Definitions | Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than immaterial and inadvertent violations or misconduct); (v) inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is injurious to the interests of the Firm or its relationship with a customer, client or employee. | |
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards,
insurance , including but not limited to, guaranteeing against loss, harm damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments; advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Government Office means (i) a full-time position in an elected or appointed office in local, state, or federal government (including equivalent positions outside the U.S. or in a supranational organization), not reasonably anticipated to be a full-career position, or (ii) conducting a bona fide full-time campaign for such an elective public office after formally filing for candidacy, where it is customary and reasonably necessary to campaign full-time for the office.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c)(3) of the Code. Section 501(c)(3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
Government Office
You may be eligible to continue vesting in all or part of your award if you voluntarily resign to accept a Government Office (as defined below) or to become a candidate for an elective Government Office.
Eligibility
Eligibility for continued vesting is conditioned on your providing the Firm:
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At least 60 days advance written notice and such evidence as the Firm may request of your intention to resign to accept or pursue a Government Office, during which period you must perform in a cooperative and professional manner services requested by the Firm and not provide services for any other employer. The Firm may elect to shorten this notice period at the Firms discretion. |
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Confirmation, in a form satisfactory to the Firm, that vesting in this award pursuant to this provision would not violate any applicable law, regulation or rule. |
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Documentation in a form satisfactory to the Firm that your resignation is for the purpose of accepting or becoming a candidate for a Government Office. |
Continued vesting
Subject to the conditions below, the percentage of your outstanding awards with respect to each vesting date that will continue to vest in accordance with this awards original schedule will be based on your years of continuous service completed with the Firm immediately preceding your termination date, as follows:
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50% if you have at least 3 but less than 4 years of continuous service,; |
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75% if you have at least 4 but less than 5 years of continuous service or |
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100% if you have 5 or more years of continuous service. |
Restricted stock units that are not subject to continued vesting will be cancelled on the date your employment terminates.
Conditions for continuing vesting
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You must remain in a non-elective Government Office for two or more years after your employment with the Firm terminates. |
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In the case of resignation from the Firm to campaign for an elective Government Office, your name must be on the primary or final public ballot for the election. (If you are not elected, see below for employment restrictions.) |
If you do not satisfy the above conditions for continued vesting, this award will be immediately cancelled, and you will be required to repay the Fair Market Value determined as of the date the shares were distributed, of any shares that would have been outstanding but for the accelerated distribution of shares (as described below).
If service in Government Office ends during vesting period
You must notify JPMorgan Chase in writing in advance if you plan to accept employment or if you will be self-employed following service in the Government Office during the vesting period.
If your service in a Government Office ends two years or more after your employment with the Firm terminates, or in the case of resignation from the Firm to campaign for a Government Office, your name is on the primary or final public ballot for the election and you are not elected, any awards then outstanding and any awards that would have then been outstanding but for an accelerated distribution of shares (as set forth below) will be subject for the remainder of the applicable vesting period to the same terms and conditions of this Award Agreement as if you had resigned from the Firm having met the requirements for Full Career Eligibility.
Accelerated distribution for ethics or conflict reasons
If applicable United States federal, state, local, foreign or supranational ethics or conflict of interest laws or regulations require you to divest your interest in JPMorgan Chase restricted stock units, the Firm will, upon receipt of satisfactory evidence of such requirements, accelerate the distribution effective as of the date your employment terminates, of the percentage of your outstanding award determined above; provided that no accelerated distribution shall occur if the Firm determines that such acceleration will violate Section 409A of the Code. Notwithstanding such accelerated distribution, you will remain subject to the applicable terms of this Award Agreement as if your award had remained outstanding for the duration of the original vesting period, including the employment restrictions, and you will be required to repay the Fair Market Value, determined as of the date the shares were distributed, of any shares that would not otherwise have vested during that period.
Applicable to other Awards
Outstanding awards of restricted stock units have been amended to include this provision on Government Office.
Attachment A
Bonus Recoupment Policy
In the event of a material restatement of the Firms financial results, the Board believes it would be appropriate to review the circumstances that caused the restatement and consider issues of accountability for those who bore responsibility for the events, including whether anyone responsible engaged in misconduct. As part of that review, consideration would also be given to any appropriate action regarding compensation that may have been awarded to such persons. In particular, it would be appropriate to consider whether any compensation was awarded on the basis of having achieved specified performance targets, whether an officer engaged in misconduct that contributed to the restatement and whether such compensation would have been reduced had the financial results been properly reported. Misconduct includes violation of the Firms Code of Conduct or policies or any act or failure to act that could reasonably be expected to cause financial or reputational harm to the Firm.
Depending on the outcome of that review, appropriate action could include actions such as termination, reducing compensation in the year the restatement was made, seeking repayment of any bonus received for the period restated or any gains realized as a result of exercising an option awarded for the period restated, or canceling any unvested equity compensation awarded for the period restated. Consideration may also be given to whether or not any one or more of such actions should be extended to employees who did not engage in misconduct that contributed to the restatement.
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF FEBRUARY 16, 2011
RESTRICTED STOCK UNIT AWARD
CHIEF EXECUTIVE OFFICER
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of February 16, 2011 (Grant Date) awarding restricted stock units pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Each restricted stock unit represents a non-transferable right to receive one share of Common Stock following the applicable vesting date.
The purpose of this award is, in part, to motivate your future performance for services to be provided during the vesting periods and to align your interests with those of the Firm and its shareholders. Your prior performance was considered to determine if you were eligible for your award. |
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Dividend Equivalents | If dividends are paid on Common Stock while restricted stock units under this award are outstanding, you will be paid an amount equal to the dividend paid on one share of Common Stock, multiplied by the number of restricted stock units outstanding to you under this award. | |
Vesting Dates | This award will vest according to the schedule on your Award Agreement, provided that you are continuously employed by the Firm, or you meet the requirements for continued vesting described below, through the relevant vesting date. | |
Vesting Periods | The period from the Grant Date to each vesting date will be a separate vesting period. | |
Termination of Employment | Except as explicitly set forth below under Job Elimination, Full Career Eligibility, Total Disability, Government Office and Death, any restricted stock units outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason. | |
Job Elimination, Full Career Eligibility, Government Office, Total Disability |
Subject to Vesting Dates and the terms and conditions of this Award Agreement (including without limitation Your Obligations), you will be eligible to continue to vest in your outstanding restricted stock units under this award following the termination of your employment if one of the following circumstances applies to you.
Job Elimination :
This award will continue to vest on the original schedule following termination of employment in the event that:
the Director Human Resources of the Firm or nominee in his or her sole discretion determines that the Firm terminated your employment because your job was eliminated, and
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certification Requirements set forth below. |
Full Career Eligibility :
This award will continue to vest on the original schedule, subject to the prior written consent of the Firm, following termination of employment in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the remainder of the relevant vesting period, you do not, to the fullest extent enforceable under applicable law, (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during such 90-day period or shorten the length of the 90-day period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements. The foregoing clause dealing with Full Career Eligibility has no application to any United States taxpayer who is or becomes subject to Section 457A of the United States Internal Revenue Code (Code).
Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.)
Government Office:
All or a portion of this award may continue to vest on the original schedule if you voluntarily resign to accept a Government Office or become a candidate for an elective Government Office, as described at the end of these terms and conditions under the section entitled Government Office. |
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Total Disability :
In the event your employment terminates as a result of your permanent and total disability as defined in the JPMorgan Chase & Co. Long Term Disability Plan (or for non-U.S. employees the equivalent local country plan), your outstanding units will continue to vest on the original schedule during such period of disability provided that you remain unemployed for such period and you satisfy the Release /Certification requirements set forth below.
For both Full Career Eligibility and Total Disability, you must notify JPMorgan Chase in writing in advance if you plan to perform services for any party or if you will be self-employed during the vesting periods. Failure to provide such notification could impact award vesting. |
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Release/Certification |
In order to qualify for continued vesting after termination of your employment under any of the foregoing circumstances:
you must timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify,
with respect to Full Career Eligibility, prior to the termination of your employment, you must confirm with management that you meet the eligibility criteria (including providing at least 90 days advance written notification) and advise that you are seeking to be treated as an individual eligible for Full Career Eligibility, and
except in the case of a job elimination, it is your responsibility to take the appropriate steps to certify to the Firm prior to each vesting date on the authorized form of the Firm that you have complied with the employment restrictions applicable to you (as described above) throughout the vesting period and otherwise complied with all other terms of the Award Agreement. (See Your Obligations.) |
Death | If you die while you are eligible to vest in your outstanding units under this award, the units will immediately vest and will be distributed in shares of Common Stock (after applicable tax withholding) to your designated beneficiary on file with the Firms Stock Administration Department, or if no beneficiary has been designated or survives you, then to your estate. Any shares will be distributed by the later of the end of the calendar year in which you die or the 15 th day of the third month following your date of death. | |
Termination for Cause | If your employment is terminated for Cause (as defined below), or if the Firm determines after the termination of your employment that your employment could have been terminated for Cause, your outstanding restricted stock units shall be forfeited. In addition, you may be required to return to the Firm the value of certain shares delivered to you prior to or after your termination. See Remedies for additional information. | |
Your Obligations | In consideration of the grant of this award, you agree to comply with and be bound by the following: | |
Non-Solicitation of Employees and Customers |
During your employment by the Firm and for one year following the termination of your employment, or if longer, during all remaining vesting periods if you continue to vest after your employment with the Firm terminates, you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit, induce or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere, (ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated more than six months before the date of hire or because his or her job was eliminated, or (iii) to the fullest extent enforceable under applicable law, solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information.
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. |
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Confidential Information |
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information that is intended to, or reasonably could be foreseen to, embarrass or criticize the Firm or its employees, officers, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. | |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation, investigation or governmental proceeding) with respect to which you may have knowledge or information, subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. | |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. |
Special Notice Period: |
If you are subject to a notice period, whether by contract or by policy, that requires you to provide advance written notice of your intention to terminate your employment (Special Notice Period), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy.
After receipt of your notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
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Remedies | ||
Cancellation |
In addition to the provisions described under Termination of Employment and Termination for Cause, your outstanding restricted stock units under this award may be cancelled if:
the Firm in its sole discretion determines that you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment, or
you fail to return the required forms specified under Release/Certification within the specified deadline, including the certification required immediately prior to a vesting date under Full Career Eligibility and Total Disability, or
you violate any of the provisions as set forth above in Your Obligations, or
the Firm determines that cancellation is appropriate pursuant to Additional Award Conditions below. |
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Recovery |
In addition, you may be required to pay the Firm an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares of Common Stock distributed to you under this award as follows:
shares distributed within the one year period prior to your violation of any of the provisions as set forth above in Your Obligations; or
shares distributed at any time following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the vesting period; or
shares distributed within the one year period immediately preceding and any time after your termination of employment if your employment was terminated or the Firm determines that your employment could have been terminated for Cause (as described under Termination for Cause), or
for a period up to one year after shares are distributed under this award, the Firm may recover such shares to the extent that the Firm determines appropriate pursuant to Additional Award Conditions below.
Payment may be made in shares of Common Stock or in cash. You agree that this repayment will be a recovery of shares to which you were not entitled under this agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. |
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Bonus Recoupment Policy | In consideration of the grant of this award, you agree that you are subject to the JPMorgan Chase Bonus Recoupment Policy (Attachment A) as it applies both to the cash incentive compensation awarded to you for 2010 and to this award. |
Additional Award Conditions |
Notwithstanding any terms of this Award Agreement to the contrary, JPMorgan Chase reserves the right in its sole discretion to cancel your outstanding restricted stock units under this award and/or to recover from you an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares distributed to you under this award within the preceding one year:
If you engaged in conduct detrimental to the Firm insofar as it causes material financial or reputational harm to the Firm or its business activities, or
If this award was based on materially inaccurate performance metrics, whether or not you were responsible for the inaccuracy, or
If this award was based on a material misrepresentation by you, or
If you failed to properly identify, raise or assess, in a timely manner and as reasonably expected, risks and/or concerns with respect to risks material to the Firm or its business activities. |
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Purpose of Remedies, Bonus Recoupment Policy and Additional Award Conditions | The Firms right to cancel and/or recover value of this award (or any cash bonus) under the JPMorgan Chase Bonus Recoupment Policy and the Additional Award Conditions, as well as under Cancellation and Recovery provisions set forth above, relate to the organizational goals of the Firm as that term is defined by Section 409A of the Code. | |
Administrative Provisions |
Withholding Taxes: The Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). For United States tax purposes, dividend equivalents are treated as wages and subject to tax withholding when paid. If, according to local country tax regulations, a withholding tax liability arises at a time after the date of distribution of shares or dividend equivalents, JPMorgan Chase may implement any procedures necessary to ensure that the withholding obligation is fully satisfied, including but not limited to, restricting transferability of the shares.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities otherwise payable to you pursuant to this award to satisfy any obligation or debt that you owe to the Firm. The Firm may not retain such funds or securities until such time as they would otherwise be distributable to you in accordance with the Award Agreement.
No Ownership Rights : Restricted stock units do not convey the rights of ownership of Common Stock and do not carry voting rights. No shares of Common Stock will be issued to you until after the restricted stock units have vested and all applicable restrictions have lapsed. Prior to any vesting date, JPMorgan Chase may impose, as of such vesting date and for up to 30 days following such date, such restrictions on the Common Stock to be issued to you as it may deem appropriate, including, but not limited to, restricting the sale, transfer, pledge, assignment or encumbrance of such shares of Common Stock . The imposition of such restrictions shall not be deemed an amendment of your Award Agreement subject to your consent. Shares will be issued in accordance with JPMorgan Chases procedures for issuing stock. JPMorgan Chases obligation hereunder is unfunded.
Binding Agreement : The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment : Nothing contained in the Award Agreement constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future.
Section 409A Compliance : To the extent that Section 409A of the Code is applicable to an award, distributions of shares and cash thereunder are intended to comply with Section 409A of the Code, and the Agreement Award shall be interpreted in a manner consistent with such intent.
Notwithstanding anything herein to the contrary, if you (i) are subject to taxation under the Code, (ii) are a specified employee as defined in the JPMorgan Chase 2005 Deferred Compensation Plan and (iii) have incurred a separation from service (as defined In that Plan) and if any units/ shares under this award represent deferred compensation as defined in Section 409A and such shares are distributable to you as a result your separation from service, then those shares will be delivered to you on first business day of the first calendar month after the expiration of six full |
months from date of your separation from service. Further, if prior to any vesting date, your award is not subject to a substantial risk of forfeiture as defined by Section 409A of the Code, then the remainder of each calendar year immediately following (i) each vesting date shall be a payment date for purposes of distributing the vested portion of the award and (ii) each date that JPMorgan Chase specifies for payment of dividends declared on its common stock shall be the payment date(s) for purposes of dividend equivalent payments.
Change in Outstanding Shares : In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Compensation & Management Development Committee of the Board will make an equitable substitution or proportionate adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Restricted Stock Units outstanding under this award for such corporate events.
Interpretation/Administration : The Committee has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement; (ii) determine the reason for termination of employment; (iii) determine application of the post-employment obligations and cancellation and recovery provisions; (iv) decide all claims arising with respect to this Award; and (v) delegate such authority as it deems appropriate. Any determination by the Committee or its delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms and the Committees determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Committee and the Firm shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan. |
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Amendment : The Committee or its delegate reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided, however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Committee or its delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled vesting date and any restrictions imposed with respect to shares of Common Stock that are issued to you as set forth in under the No Ownership Rights shall not be deemed to materially adversely affect your rights under this Award Agreement requiring your consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources of JPMorgan Chase.
Severability : If any portion of the Award Agreement is determined by the Firm to be unenforceable in any jurisdiction, any court of competent jurisdiction or the Director Human Resources may reform the relevant provisions (e.g., as to length of service, time, geographical area or scope) to the extent the Firm considers necessary to make the provision enforceable under applicable law.
Governing Law : This award shall be governed by and construed in accordance with the laws of the state of New York, without regard to conflict of law principles.
Choice of Forum : By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum. |
Waiver of Jury Trial/Class Claims: By accepting this award, you agree (i) to waive the right to a jury trial; and (ii) that any judicial proceeding or arbitration claim brought in connection with this award or the Plan will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action. | ||
Definitions |
Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than immaterial and inadvertent violations or misconduct); (v) inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is injurious to the interests of the Firm or its relationship with a customer, client or employee.
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards,
insurance , including but not limited to, guaranteeing against loss, harm damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments; advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Government Office means (i) a full-time position in an elected or appointed office in local, state, or federal government (including equivalent positions outside the U.S. or in a supranational organization), not reasonably anticipated to be a full-career position, or (ii) conducting a bona fide full-time campaign for such an elective public office after formally filing for candidacy, where it is customary and reasonably necessary to campaign full-time for the office.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c)(3) of the Code. Section 501(c)(3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
Government Office
You may be eligible to continue vesting in all or part of your award if you voluntarily resign to accept a Government Office (as defined below) or to become a candidate for an elective Government Office.
Eligibility
Eligibility for continued vesting is conditioned on your providing the Firm:
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At least 60 days advance written notice and such evidence as the Firm may request of your intention to resign to accept or pursue a Government Office, during which period you must perform in a cooperative and professional manner services requested by the Firm and not provide services for any other employer. The Firm may elect to shorten this notice period at the Firms discretion. |
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Confirmation, in a form satisfactory to the Firm, that vesting in this award pursuant to this provision would not violate any applicable law, regulation or rule. |
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Documentation in a form satisfactory to the Firm that your resignation is for the purpose of accepting or becoming a candidate for a Government Office. |
Continued vesting
Subject to the conditions below, the percentage of your outstanding awards with respect to each vesting date that will continue to vest in accordance with this awards original schedule will be based on your years of continuous service completed with the Firm immediately preceding your termination date, as follows:
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50% if you have at least 3 but less than 4 years of continuous service,; |
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75% if you have at least 4 but less than 5 years of continuous service or |
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100% if you have 5 or more years of continuous service. |
Restricted stock units that are not subject to continued vesting will be cancelled on the date your employment terminates.
Conditions for continuing vesting
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You must remain in a non-elective Government Office for two or more years after your employment with the Firm terminates. |
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In the case of resignation from the Firm to campaign for an elective Government Office, your name must be on the primary or final public ballot for the election. (If you are not elected, see below for employment restrictions.) |
If you do not satisfy the above conditions for continued vesting, this award will be immediately cancelled, and you will be required to repay the Fair Market Value determined as of the date the shares were distributed, of any shares that would have been outstanding but for the accelerated distribution of shares (as described below).
If service in Government Office ends during vesting period
You must notify JPMorgan Chase in writing in advance if you plan to accept employment or if you will be self-employed following service in the Government Office during the vesting period.
If your service in a Government Office ends two years or more after your employment with the Firm terminates, or in the case of resignation from the Firm to campaign for a Government Office, your name is on the primary or final public ballot for the election and you are not elected, any awards then outstanding and any awards that would have then been outstanding but for an accelerated distribution of shares (as set forth below) will be subject for the remainder of the applicable vesting period to the same terms and conditions of this Award Agreement as if you had resigned from the Firm having met the requirements for Full Career Eligibility.
Accelerated distribution for ethics or conflict reasons
If applicable United States federal, state, local, foreign or supranational ethics or conflict of interest laws or regulations require you to divest your interest in JPMorgan Chase restricted stock units, the Firm will, upon receipt of satisfactory evidence of such requirements, accelerate the distribution effective as of the date your employment terminates, of the percentage of your outstanding award determined above; provided that no accelerated distribution shall occur if the Firm determines that such acceleration will violate Section 409A of the Code. Notwithstanding such accelerated distribution, you will remain subject to the applicable terms of this Award Agreement as if your award had remained outstanding for the duration of the original vesting period, including the employment restrictions, and you will be required to repay the Fair Market Value, determined as of the date the shares were distributed, of any shares that would not otherwise have vested during that period.
Applicable to other Awards
Outstanding awards of restricted stock units have been amended to include this provision on Government Office.
Attachment A
Bonus Recoupment Policy
In the event of a material restatement of the Firms financial results, the Board believes it would be appropriate to review the circumstances that caused the restatement and consider issues of accountability for those who bore responsibility for the events, including whether anyone responsible engaged in misconduct. As part of that review, consideration would also be given to any appropriate action regarding compensation that may have been awarded to such persons. In particular, it would be appropriate to consider whether any compensation was awarded on the basis of having achieved specified performance targets, whether an officer engaged in misconduct that contributed to the restatement and whether such compensation would have been reduced had the financial results been properly reported. Misconduct includes violation of the Firms Code of Conduct or policies or any act or failure to act that could reasonably be expected to cause financial or reputational harm to the Firm.
Depending on the outcome of that review, appropriate action could include actions such as termination, reducing compensation in the year the restatement was made, seeking repayment of any bonus received for the period restated or any gains realized as a result of exercising an option awarded for the period restated, or canceling any unvested equity compensation awarded for the period restated. Consideration may also be given to whether or not any one or more of such actions should be extended to employees who did not engage in misconduct that contributed to the restatement.
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF FEBRUARY 16, 2011
RESTRICTED STOCK UNIT AWARD
CHIEF EXECUTIVE OFFICER (Performance Provision)
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of February 16, 2011 (Grant Date) awarding restricted stock units pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Each restricted stock unit represents a non-transferable right to receive one share of Common Stock following the applicable vesting date.
The purpose of this award is, in part, to motivate your future performance for services to be provided during the vesting periods and to align your interests with those of the Firm and its shareholders. Your prior performance was considered to determine if you were eligible for your award. |
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Dividend Equivalents | If dividends are paid on Common Stock while restricted stock units under this award are outstanding, you will be paid an amount equal to the dividend paid on one share of Common Stock, multiplied by the number of restricted stock units outstanding to you under this award. | |
Vesting Dates | This award is intended and expected to vest according to the schedule on your Award Agreement, provided that you are continuously employed by the Firm, or you meet the requirements for continued vesting described below, through the relevant vesting date. However, the number of restricted stock units awarded hereunder may be reduced (and therefore may be forfeited) or (to the extent permitted under Section 409A of the United States Internal Revenue Code (Code) ) vesting dates may be deferred, in the event that the Chief Executive Officer (CEO) of JPMorgan Chase determines that your performance in relation to the priorities for your position or the Firms performance in relation to the priorities for which you share responsibility as a member of the Operating Committee have been unsatisfactory for a sustained period of time. Among the factors the CEO may consider in assessing the Firms financial performance are net income, net revenue, return on equity, earnings per share and capital ratios, both on an absolute and, as appropriate, relative to peer firms. Such a determination is subject to ratification by the Compensation and Management Development Committee of the Board of Directors of JPMorgan Chase (Committee). In the case of an award to the CEO, such a determination shall be made by the Committee. | |
Vesting Periods | The period from the Grant Date to each vesting date will be a separate vesting period. | |
Termination of Employment | Except as explicitly set forth below under Job Elimination, Full Career Eligibility, Total Disability, Government Office and Death, any restricted stock units outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason. | |
Job Elimination, Full Career Eligibility, Government Office, Total Disability | Subject to Vesting Dates and the terms and conditions of this Award Agreement (including without limitation Your Obligations), you will be eligible to continue to vest in your outstanding restricted stock units under this award following the termination of your employment if one of the following circumstances applies to you. |
Job Elimination :
This award will continue to vest on the original schedule following termination of employment in the event that:
the Director Human Resources of the Firm or nominee in his or her sole discretion determines that the Firm terminated your employment because your job was eliminated, and
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certification Requirements set forth below.
Full Career Eligibility :
This award will continue to vest on the original schedule, subject to the prior written consent of the Firm, following termination of employment in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the remainder of the relevant vesting period, you do not, to the fullest extent enforceable under applicable law, (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during such 90-day period or shorten the length of the 90-day period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements. The foregoing clause dealing with Full Career Eligibility has no application to any United States taxpayer who is or becomes subject to Section 457A of the Code.
Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.)
Government Office:
All or a portion of this award may continue to vest on the original schedule if you voluntarily resign to accept a Government Office or become a candidate for an elective Government Office, as described at the end of these terms and conditions under the section entitled Government Office. |
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Total Disability :
In the event your employment terminates as a result of your permanent and total disability as defined in the JPMorgan Chase & Co. Long Term Disability Plan (or for non-U.S. employees the equivalent local country plan), your outstanding units will continue to vest on the original schedule during such period of disability provided that you remain unemployed for such period and you satisfy the Release /Certification requirements set forth below.
For both Full Career Eligibility and Total Disability, you must notify JPMorgan Chase in writing in advance if you plan to perform services for any party or if you will be self-employed during the vesting periods. Failure to provide such notification could impact award vesting. |
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Release/Certification |
In order to qualify for continued vesting after termination of your employment under any of the foregoing circumstances:
you must timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify, |
with respect to Full Career Eligibility, prior to the termination of your employment, you must confirm with management that you meet the eligibility criteria (including providing at least 90 days advance written notification) and advise that you are seeking to be treated as an individual eligible for Full Career Eligibility, and
except in the case of a job elimination, it is your responsibility to take the appropriate steps to certify to the Firm prior to each vesting date on the authorized form of the Firm that you have complied with the employment restrictions applicable to you (as described above) throughout the vesting period and otherwise complied with all other terms of the Award Agreement. (See Your Obligations.) |
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Death | If you die while you are eligible to vest in your outstanding units under this award, the units will immediately vest and will be distributed in shares of Common Stock (after applicable tax withholding) to your designated beneficiary on file with the Firms Stock Administration Department, or if no beneficiary has been designated or survives you, then to your estate. Any shares will be distributed by the later of the end of the calendar year in which you die or the 15 th day of the third month following your date of death. | |
Termination for Cause | If your employment is terminated for Cause (as defined below), or if the Firm determines after the termination of your employment that your employment could have been terminated for Cause, your outstanding restricted stock units shall be forfeited. In addition, you may be required to return to the Firm the value of certain shares delivered to you prior to or after your termination. See Remedies for additional information. | |
Your Obligations | In consideration of the grant of this award, you agree to comply with and be bound by the following: | |
Non-Solicitation of Employees and Customers |
During your employment by the Firm and for one year following the termination of your employment, or if longer, during all remaining vesting periods if you continue to vest after your employment with the Firm terminates, you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit, induce or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere, (ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated more than six months before the date of hire or because his or her job was eliminated, or (iii) to the fullest extent enforceable under applicable law, solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information.
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. |
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Confidential Information |
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information that is intended to, or reasonably could be foreseen to, embarrass or criticize the Firm or its employees, officers, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation, investigation or governmental proceeding) with respect to which you may have knowledge or information, subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. | |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Special Notice Period: |
If you are subject to a notice period, whether by contract or by policy, that requires you to provide advance written notice of your intention to terminate your employment (Special Notice Period), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy.
After receipt of your notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
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Remedies | ||
Cancellation |
In addition to the provisions described under Termination of Employment and Termination for Cause, your outstanding restricted stock units under this award may be cancelled if:
the Firm in its sole discretion determines that you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment, or
you fail to return the required forms specified under Release/Certification within the specified deadline, including the certification required immediately prior to a vesting date under Full Career Eligibility and Total Disability, or
you violate any of the provisions as set forth above in Your Obligations, or
the Firm determines that cancellation is appropriate pursuant to Additional Award Conditions below. |
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Recovery |
In addition, you may be required to pay the Firm an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares of Common Stock distributed to you under this award as follows:
shares distributed within the one year period prior to your violation of any of the provisions as set forth above in Your Obligations; or
shares distributed at any time following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the vesting period; or
shares distributed within the one year period immediately preceding and any time after your termination of employment if your employment was terminated or the Firm determines that your employment could have been terminated for Cause (as described under Termination for Cause), or
for a period up to one year after shares are distributed under this award, the Firm may recover such shares to the extent that the Firm determines appropriate pursuant to Additional Award Conditions below.
Payment may be made in shares of Common Stock or in cash. You agree that this repayment will be a recovery of shares to which you were not entitled under this agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever |
other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. | ||
Bonus Recoupment Policy | In consideration of the grant of this award, you agree that you are subject to the JPMorgan Chase Bonus Recoupment Policy (Attachment A) as it applies both to the cash incentive compensation awarded to you for 2010 and to this award. | |
Additional Award Conditions |
Notwithstanding any terms of this Award Agreement to the contrary, JPMorgan Chase reserves the right in its sole discretion to cancel your outstanding restricted stock units under this award and/or to recover from you an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares distributed to you under this award within the preceding one year:
If you engaged in conduct detrimental to the Firm insofar as it causes material financial or reputational harm to the Firm or its business activities, or
If this award was based on materially inaccurate performance metrics, whether or not you were responsible for the inaccuracy, or
If this award was based on a material misrepresentation by you, or
If you failed to properly identify, raise or assess, in a timely manner and as reasonably expected, risks and/or concerns with respect to risks material to the Firm or its business activities. |
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Purpose of Remedies, Bonus Recoupment Policy and Additional Award Conditions | The Firms right to cancel and/or recover value of this award (or any cash bonus) under the JPMorgan Chase Bonus Recoupment Policy and the Additional Award Conditions, as well as under Cancellation and Recovery provisions set forth above, relate to the organizational goals of the Firm as that term is defined by Section 409A of the Code. | |
Administrative Provisions |
Withholding Taxes: The Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). For United States tax purposes, dividend equivalents are treated as wages and subject to tax withholding when paid. If, according to local country tax regulations, a withholding tax liability arises at a time after the date of distribution of shares or dividend equivalents, JPMorgan Chase may implement any procedures necessary to ensure that the withholding obligation is fully satisfied, including but not limited to, restricting transferability of the shares.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities otherwise payable to you pursuant to this award to satisfy any obligation or debt that you owe to the Firm. The Firm may not retain such funds or securities until such time as they would otherwise be distributable to you in accordance with the Award Agreement.
No Ownership Rights : Restricted stock units do not convey the rights of ownership of Common Stock and do not carry voting rights. No shares of Common Stock will be issued to you until after the restricted stock units have vested and all applicable restrictions have lapsed. Prior to any vesting date, JPMorgan Chase may impose, as of such vesting date and for up to 30 days following such date, such restrictions on the Common Stock to be issued to you as it may deem appropriate, including, but not limited to, restricting the sale, transfer, pledge, assignment or encumbrance of such shares of Common Stock . The imposition of such restrictions shall not be deemed an amendment of your Award Agreement subject to your consent. Shares will be issued in accordance with JPMorgan Chases procedures for issuing stock. JPMorgan Chases obligation hereunder is unfunded.
Binding Agreement : The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment : Nothing contained in the Award Agreement constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future. |
Section 409A Compliance : To the extent that Section 409A of the Code is applicable to an award, distributions of shares and cash thereunder are intended to comply with Section 409A of the Code, and the Agreement Award shall be interpreted in a manner consistent with such intent.
Notwithstanding anything herein to the contrary, if you (i) are subject to taxation under the Code, (ii) are a specified employee as defined in the JPMorgan Chase 2005 Deferred Compensation Plan and (iii) have incurred a separation from service (as defined In that Plan) and if any units/ shares under this award represent deferred compensation as defined in Section 409A and such shares are distributable to you as a result your separation from service, then those shares will be delivered to you on first business day of the first calendar month after the expiration of six full months from date of your separation from service. Further, if prior to any vesting date, your award is not subject to a substantial risk of forfeiture as defined by Section 409A of the Code, then the remainder of each calendar year immediately following (i) each vesting date shall be a payment date for purposes of distributing the vested portion of the award and (ii) each date that JPMorgan Chase specifies for payment of dividends declared on its common stock shall be the payment date(s) for purposes of dividend equivalent payments.
Change in Outstanding Shares : In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Committee will make an equitable substitution or proportionate adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Restricted Stock Units outstanding under this award for such corporate events.
Interpretation/Administration : The Committee has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement; (ii) determine the reason for termination of employment; (iii) determine application of the post-employment obligations and cancellation and recovery provisions; (iv) decide all claims arising with respect to this Award; and (v) delegate such authority as it deems appropriate. Any determination by the Committee or its delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms and the Committees determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Committee and the Firm shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan.
Amendment : The Committee or its delegate reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided, however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Committee or its delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled vesting date and any restrictions imposed with respect to shares of Common Stock that are issued to you as set forth in under the No Ownership Rights shall not be deemed to materially adversely affect your rights under this Award Agreement requiring your consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources of JPMorgan Chase.
Severability : If any portion of the Award Agreement is determined by the Firm to be unenforceable in any jurisdiction, any court of competent jurisdiction or the Director Human Resources may reform the relevant provisions (e.g., as to length of service, time, geographical area or scope) to the extent the Firm considers necessary to make the provision enforceable under applicable law.
Governing Law : This award shall be governed by and construed in accordance with the laws of the state of New York, without regard to conflict of law principles. |
Choice of Forum : By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum.
Waiver of Jury Trial/Class Claims: By accepting this award, you agree (i) to waive the right to a jury trial; and (ii) that any judicial proceeding or arbitration claim brought in connection with this award or the Plan will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action. |
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Definitions | Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than immaterial and inadvertent violations or misconduct); (v) inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is injurious to the interests of the Firm or its relationship with a customer, client or employee. | |
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards,
insurance , including but not limited to, guaranteeing against loss, harm damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments; advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Government Office means (i) a full-time position in an elected or appointed office in local, state, or federal government (including equivalent positions outside the U.S. or in a supranational organization), not reasonably anticipated to be a full-career position, or (ii) conducting a bona fide full-time campaign for such an elective public office after formally filing for candidacy, where it is customary and reasonably necessary to campaign full-time for the office.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c)(3) of the Code. Section 501(c)(3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
Government Office
You may be eligible to continue vesting in all or part of your award if you voluntarily resign to accept a Government Office (as defined below) or to become a candidate for an elective Government Office.
Eligibility
Eligibility for continued vesting is conditioned on your providing the Firm:
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At least 60 days advance written notice and such evidence as the Firm may request of your intention to resign to accept or pursue a Government Office, during which period you must perform in a cooperative and professional manner services requested by the Firm and not provide services for any other employer. The Firm may elect to shorten this notice period at the Firms discretion. |
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Confirmation, in a form satisfactory to the Firm, that vesting in this award pursuant to this provision would not violate any applicable law, regulation or rule. |
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Documentation in a form satisfactory to the Firm that your resignation is for the purpose of accepting or becoming a candidate for a Government Office. |
Continued vesting
Subject to the conditions below, the percentage of your outstanding awards with respect to each vesting date that will continue to vest in accordance with this awards original schedule will be based on your years of continuous service completed with the Firm immediately preceding your termination date, as follows:
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50% if you have at least 3 but less than 4 years of continuous service,; |
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75% if you have at least 4 but less than 5 years of continuous service or |
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100% if you have 5 or more years of continuous service. |
Restricted stock units that are not subject to continued vesting will be cancelled on the date your employment terminates.
Conditions for continuing vesting
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You must remain in a non-elective Government Office for two or more years after your employment with the Firm terminates. |
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In the case of resignation from the Firm to campaign for an elective Government Office, your name must be on the primary or final public ballot for the election. (If you are not elected, see below for employment restrictions.) |
If you do not satisfy the above conditions for continued vesting, this award will be immediately cancelled, and you will be required to repay the Fair Market Value determined as of the date the shares were distributed, of any shares that would have been outstanding but for the accelerated distribution of shares (as described below).
If service in Government Office ends during vesting period
You must notify JPMorgan Chase in writing in advance if you plan to accept employment or if you will be self-employed following service in the Government Office during the vesting period.
If your service in a Government Office ends two years or more after your employment with the Firm terminates, or in the case of resignation from the Firm to campaign for a Government Office, your name is on the primary or final public ballot for the election and you are not elected, any awards then outstanding and any awards that would have then been outstanding but for an accelerated distribution of shares (as set forth below) will be subject for the remainder of the applicable vesting period to the same terms and conditions of this Award Agreement as if you had resigned from the Firm having met the requirements for Full Career Eligibility.
Accelerated distribution for ethics or conflict reasons
If applicable United States federal, state, local, foreign or supranational ethics or conflict of interest laws or regulations require you to divest your interest in JPMorgan Chase restricted stock units, the Firm will, upon receipt of satisfactory evidence of such requirements, accelerate the distribution effective as of the date your employment terminates, of the percentage of your outstanding award determined above; provided that no accelerated distribution shall occur if the Firm determines that such acceleration will violate Section 409A of the Code. Notwithstanding such accelerated distribution, you will remain subject to the applicable terms of this Award Agreement as if your award had remained outstanding for the duration of the original vesting period, including the employment restrictions, and you will be required to repay the Fair Market Value, determined as of the date the shares were distributed, of any shares that would not otherwise have vested during that period.
Applicable to other Awards
Outstanding awards of restricted stock units have been amended to include this provision on Government Office.
Attachment A
Bonus Recoupment Policy
In the event of a material restatement of the Firms financial results, the Board believes it would be appropriate to review the circumstances that caused the restatement and consider issues of accountability for those who bore responsibility for the events, including whether anyone responsible engaged in misconduct. As part of that review, consideration would also be given to any appropriate action regarding compensation that may have been awarded to such persons. In particular, it would be appropriate to consider whether any compensation was awarded on the basis of having achieved specified performance targets, whether an officer engaged in misconduct that contributed to the restatement and whether such compensation would have been reduced had the financial results been properly reported. Misconduct includes violation of the Firms Code of Conduct or policies or any act or failure to act that could reasonably be expected to cause financial or reputational harm to the Firm.
Depending on the outcome of that review, appropriate action could include actions such as termination, reducing compensation in the year the restatement was made, seeking repayment of any bonus received for the period restated or any gains realized as a result of exercising an option awarded for the period restated, or canceling any unvested equity compensation awarded for the period restated. Consideration may also be given to whether or not any one or more of such actions should be extended to employees who did not engage in misconduct that contributed to the restatement.
Exhibit 10.25
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF JANUARY 18, 2012
STOCK APPRECIATION RIGHTS
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of January 18, 2012 (Grant Date) awarding Stock Appreciation Rights pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in Definitions below or elsewhere in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Stock Appreciation Rights represent the right, following exercise, to receive (without payment), a number of shares of JPMorgan Chase Common Stock, the Fair Market Value of which, as of the date of exercise, is equal to the excess of the Fair Market Value of one share of such Common Stock on such exercise date over the Exercise Price, multiplied by the number of Stock Appreciation Rights being exercised. See Exercise Procedures/Withholding Taxes for further information.
The purpose of this award is to motivate your future performance for future services to be provided while the award is outstanding and to align your interests with those of the Firm and its shareholders. Your prior performance was considered as a factor in determining the amount of your award. |
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Exercisable Dates/ Expiration Date |
This award is intended and expected to become exercisable on the Exercisable Dates set forth in your Award Agreement, provided that you are continuously employed by the Firm through the relevant Exercisable Date or you meet the requirements to allow your award to remain outstanding upon termination of employment as described below.
Your award will remain exercisable until the earlier of the tenth anniversary of the Grant Date (the Expiration Date) or the date the award is cancelled pursuant to this Award Agreement. Notwithstanding any provision herein, including but not limited to those provisions governing Job Elimination, Full Career Eligibility, Death, and Total Disability, no Stock Appreciation Right may be exercised after its Expiration Date. |
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Bonus Recoupment |
In consideration of the grant of this award, you agree that you are subject to the JPMorgan Chase Bonus Recoupment Policy as in effect from time to time, as it applies both to the cash incentive compensation awarded to you for 2011 and to this award of Stock Appreciation Rights. You can access this policy through the following link:
http://www.jpmorganchase.com/corporate/About-JPMC/corporate-governance-principles.htm#recoupment |
Recapture Provisions (Detrimental Conduct, Risk-Related and Other Recapture Provisions) |
Notwithstanding any terms of this Award Agreement to the contrary, JPMorgan Chase reserves the right in its sole discretion to cancel outstanding Stock Appreciation Rights under this award and/or to recover from you the net gain realized by you on any exercise of Stock Appreciation Rights under this award as set forth in Remedies :
If you engaged in conduct detrimental to the Firm, insofar as it causes material financial or reputational harm to the Firm or its business activities, or
If this award was based on materially inaccurate performance metrics, whether or not you were responsible for the inaccuracy, or
If this award was based on a material misrepresentation by you; or
If your employment was terminated for Cause (see Definitions below) or the Firm determines after the termination of your employment that your employment could have been terminated for Cause. |
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Termination of Employment |
Except as explicitly set forth below under Job Elimination , Full Career Eligibility , Death and Disability , any Stock Appreciation Rights outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason.
Job Elimination :
For the one year period commencing with the date of termination of your employment (or if longer the 90 day period commencing with the Exercisable Date occurring during such one year period), any Stock Appreciation Right that is exercisable on your termination date or becomes exercisable during such period may be exercised by you in the event that:
the Director Human Resources of the Firm or nominee in his/her sole discretion determines that the Firm terminated your employment because your job was eliminated, and
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certifications Requirement set forth below.
Full Career Eligibility :
For the two year period commencing with the date of termination of your employment (or if longer the 90 day period commencing with the last Exercisable Date occurring during such two year period), any Stock Appreciation Right that is exercisable on your termination date or becomes exercisable during such period may be exercised by you in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the exercise period, you do not (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during the 90-day period or shorten the length of the 90-day notice period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements. Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.) |
You must notify JPMorgan Chase in advance in writing if you are to perform services for any party or if you are self-employed following the date of your termination of employment. Failure to provide such notification could impact your right to exercise.
Death :
If you die while employed by the Firm, your designated beneficiary on file with the Human Resources Department (or if no beneficiary is on file or survives you, then your estate) may exercise for a two year period measured from date of your death (or if longer the 90 day period commencing with the last Exercisable Date occurring during such two year period) (i) any Stock Appreciation Rights that were exercisable as of that date and (ii) any Stock Appreciation Rights that would have become exercisable had you remained employed during such two year period.
Disability:
In the event that your employment with the Firm terminates because:
(i) you are unable to return to work while you are receiving benefits under the JPMorgan Chase Long Term Disability Plan, or for non-U.S. employees, under the equivalent JPMorgan Chase-sponsored local country plan (LTD Plan), or
(ii) if you are not covered by a LTD Plan, you are unable to return to work due to a long-term disability that would qualify for benefits under the applicable LTD Plan, as determined by the Firm or a third-party designated by the Firm, and you request in writing the ability to continue to exercise due to such disability within 30 days of the date your employment terminates and provide requested supporting documentation
then you may exercise for a two year period measured from the date that your employment terminates any Stock Appreciation Rights that were exercisable as of the date of your termination; provided that you satisfy the Release/Certification Requirements set forth below.
Cancellation after the One or Two Year Period or Ninety Day Period:
Any Stock Appreciation Rights that are not exercised within the applicable one or two year period or ninety day period described above will be cancelled.
Release/Certification Requirements:
In order to have all or any portion of your award remain exercisable after the termination of your employment under any of the foregoing circumstances (other than death):
you must timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify,
with respect to Full Career Eligibility, prior to the termination of your employment, you must confirm with management that you meet the eligibility criteria (including providing at least 90 days advance written notification) and advise that you are seeking to be treated as an individual eligible for Full Career Eligibility, and
you also must certify compliance with the above requirements relevant to you and with all other terms of the Award Agreement (See Your Obligations below.), pursuant to procedures established by the Firm in connection with any exercise of Stock Appreciation Rights. |
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Restriction on Disposition of Shares Derived from an Exercise Under this Award | If you exercise any part of your award before the fifth anniversary of the Grant Date, then you may not sell, assign, transfer, pledge or encumber the net number of shares of Common Stock derived from such exercise until the fifth anniversary of the Grant Date. Prior to the fifth anniversary of the Grant Date and prior to any exercise date thereafter, JPMorgan Chase may impose, for such date and up to 30 days following such date, such restrictions on the Common Stock to be issued to you as it may deem appropriate, including, but not limited to, restricting the sale, assignment, transfer, pledge or encumbrance of such Common Stock. The imposition of such restrictions shall not be deemed an |
amendment of your Award Agreement subject to your consent. In the Firms discretion, such shares may be held in an account with the Firms stock transfer agent. Notwithstanding the foregoing, this restriction on disposition and transfer of shares shall not apply to your beneficiary in the event of your death. | ||
Your Obligations | In consideration of the grant of this award, you agree to comply with and be bound by the following: | |
Non-Solicitation of Employees and Customers |
During your employment by the Firm and for one year following the termination of your employment (or if longer, the exercise period), you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit, induce or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere, (ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated because his or her job was eliminated, or the individuals employment with the Firm has been terminated for more than six months, or (iii) to the fullest extent enforceable under applicable law, solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information.
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. |
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Confidential Information |
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information in verbal, written, electronic or any other form that is intended to, or reasonably could be foreseen to, embarrass or criticize the Firm or its employees, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. | |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation or governmental proceeding) with respect to which you may have knowledge or information, subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. | |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. |
Special Notice Period |
If you are subject to a notice policy, whether by contract or policy, that requires you to provide advance written notice of your intention to terminate your employment (Special Notice Period), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy.
After receipt of such notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
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Remedies | ||
Cancellation |
In addition to the cancellation of the award as provided for in Termination of Employment , all or part of your award may be cancelled if:
the Firm in its sole discretion determines that you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment,
you have not returned the required forms specified under Release/Certification within the specified deadline,
you violated any of the provisions as set forth above in Your Obligations , or
the Firm in its sole discretion determines cancellation is appropriate pursuant to the Recapture Provision above, and cancellation occurs within one year after the applicable Exercisable Date (except in the case of Cause, where the entire outstanding award may be cancelled). |
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Recovery |
In addition, if you received shares under this award resulting from an exercise:
during the one year prior to the violation of any of the provisions as set forth above in Your Obligations ,
following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the exercise period,
during the one year period prior to the termination of your employment for Cause, including a later determination by the Firm that your employment could have been terminated for Cause ( in which case the one year period will be measured from your actual termination date), or
during the one year period immediately following the date that the Stock Appreciation Rights became exercisable, provided that during such one year period, the Firm, in its sole discretion, determines that the application of the Recovery Provisions above is appropriate to such exercise(s)
you may be required to pay the Firm an amount equal to the gain on each such exercise less withholding taxes. Payment may be made in shares of Common Stock or in cash and may be deducted by the Firm from any shares that are subject to restriction on disposition as described above.
You agree that this payment represents recovery of shares to which you were not entitled under this Award Agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever other |
remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. | ||
Administrative Provisions |
Exercise Procedures/Withholding Taxes : The exercise of Stock Appreciation Rights shall be in accordance with the Firms procedures for exercises of such awards. The date of exercise shall be the date when the properly completed notice of exercise is received and accepted by the Firm or its designee in accordance with the Firms procedures. Under these procedures, the Firm reserves the right to prohibit exercise of stock appreciation awards for a period of time, such as during a black-out period where trading in the Firms stock is restricted, or for legal, accounting or regulatory reasons. In such an event, the Firm will not change expiration dates or make other adjustments to awards to compensate for the time that exercise is prohibited.
Following each exercise, the Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). In addition, the Firm, in its sole discretion, may implement any other desirable or necessary procedures, so that appropriate withholding and other taxes are paid to the competent authorities. This may include, but is not limited to, restricting transferability of the shares.
Assignment or Transfer: Except as otherwise provided in this Award Agreement, Stock Appreciation Rights shall not be assignable or transferable or subject to any lien, obligation or liability. You may make a gift of unexpired, unexercised Stock Appreciation Rights, subject to the Firms prior consent, to an immediate family member or a trust (or similar vehicle) for the benefit of these immediate family members (or beneficiaries) as defined below. JPMorgan Chase may condition its prior consent to receipt of an agreement by you and proposed transferee containing such terms and conditions and undertakings as JPMorgan Chase deems appropriate in its sole and absolute discretion. No attempted transfer will be valid without the Firms prior consent. Immediate family members include your parents, parents-in-law, children (including adopted children), grandchildren, and siblings or a trust exclusively for the benefit of one or more of these immediate family members. Your spouse is an Immediate Family Member but only if Stock Appreciation Rights are transferred to a trust (or similar vehicle) for the benefit of such spouse, which trust includes one or more other Immediate Family Members as beneficiaries.
Binding Agreement: The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment: Nothing contained herein constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future, nor is its value included in any severance calculation.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities (i) otherwise payable to you pursuant to this award or (ii) held in your name under any banking, brokerage or other accounts or instruments maintained with the Firm, to satisfy any obligation or debt that you owe to the Firm.
Cancellation/Substitution : JPMorgan Chase may, in its sole discretion and for any reason, cancel outstanding unexercised Stock Appreciation Rights and substitute an equal number of non-qualified stock options to purchase the same number of shares of common stock of JPMorgan Chase represented by the cancelled Stock Appreciation Rights. Such substituted options shall have the same exercise price, Expiration Date and other terms and conditions that were applicable to the Stock Appreciation Rights; provided that the method of exercise and the payment of exercise price, as well as the method of payment of withholding taxes, may be changed by JPMorgan Chase.
Change in Outstanding Shares: In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Committee will make an equitable substitution or proportionate adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Stock Appreciation Rights (including but not to limited to their Exercise Price) outstanding under this award for such corporate events. |
Interpretation/Administration: The Committee has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement, (ii) determine the reason for termination of employment, (iii) determine the application of the post-employment obligations and cancellation and recovery provisions, (iv) decide all claims arising with respect to this Award, and (v) delegate such authority as it deems appropriate. Any determination by the Committee or its delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Firm shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan.
This Award is intended to be exempt from the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (Section 409A) and shall be interpreted accordingly. Notwithstanding anything else herein or in the Plan, no action described herein or in the Plan shall be permitted if the Firm determines such action would result in the imposition of additional tax under Section 409A.
Amendment: The Committee or its delegate reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Committee or its delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled Exercisable Date shall not be deemed to materially adversely affect your rights under this Award Agreement and shall not require your written consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources of JPMorgan Chase.
Severability: If any portion of the Award Agreement is determined by the Firm to be unenforceable in any jurisdiction, any court of competent jurisdiction or the Director Human Resources of JPMorgan Chase may reform the relevant provisions (e.g. as to length of service, geographical area or scope) to the extent the Firm considered necessary to make the provision enforceable under applicable law.
Use of Personal Data: By accepting this award, you have acknowledged that the Firm may use your personal data for purposes of (i) determining your compensation, (ii) payroll activities, including, but not limited to, tax withholding and regulatory reporting, (iii) registration of shares, (iv) at its discretion, establishing brokerage account on your behalf, and (v) all other lawful purposes related to your employment and this award and that the Firm may provide such data to third party vendors with whom it has contracted to provide such services. You may terminate this authorization at any time except with respect to tax and regulatory reporting. In such case, your award will be cancelled.
Governing Law: This award shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles.
Choice of Forum: By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum. |
Waiver of Jury Trial/Class Claims : By accepting this award, you agree with respect to any claim brought in connection with your employment with the Firm (i) to waive the right to a jury trial and (ii) that any judicial proceeding or arbitration claim will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action. | ||
Definitions |
Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than an immaterial and inadvertent violation or misconduct), (v) inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is or might reasonably be expected to be injurious to the interests of the Firm or its relationship with a customer, client or employee.
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards,
insurance, including but not limited to, guaranteeing against loss, harm damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments,
advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c) (3) of the Internal Revenue Code. Section 501(c) (3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF JANUARY 18, 2012
STOCK APPRECIATION RIGHTS
Tier 1
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of January 18, 2012 (Grant Date) awarding Stock Appreciation Rights pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in Definitions below or elsewhere in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Stock Appreciation Rights represent the right, following exercise, to receive (without payment), a number of shares of JPMorgan Chase Common Stock, the Fair Market Value of which, as of the date of exercise, is equal to the excess of the Fair Market Value of one share of such Common Stock on such exercise date over the Exercise Price, multiplied by the number of Stock Appreciation Rights being exercised. See Exercise Procedures/Withholding Taxes for further information.
The purpose of this award is to motivate your future performance for future services to be provided while the award is outstanding and to align your interests with those of the Firm and its shareholders. Your prior performance was considered as a factor in determining the amount of your award. |
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Exercisable Dates/ Expiration Date |
This award is intended and expected to become exercisable on the Exercisable Dates set forth in your Award Agreement, provided that you are continuously employed by the Firm through the relevant Exercisable Date or you meet the requirements to allow your award to remain outstanding upon termination of employment as described below.
Your award will remain exercisable until the earlier of the tenth anniversary of the Grant Date (the Expiration Date) or the date the award is cancelled pursuant to this Award Agreement. Notwithstanding any provision herein, including but not limited to those provisions governing Job Elimination, Full Career Eligibility, Death, and Total Disability, no Stock Appreciation Right may be exercised after its Expiration Date. |
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Bonus Recoupment |
In consideration of the grant of this award, you agree that you are subject to the JPMorgan Chase Bonus Recoupment Policy as in effect from time to time, as it applies both to the cash incentive compensation awarded to you for 2011 and to this award of Stock Appreciation Rights. You can access this policy through the following link:
http://www.jpmorganchase.com/corporate/About-JPMC/corporate-governance-principles.htm#recoupment |
Recapture Provisions (Detrimental Conduct, Risk-Related and Other Recapture Provisions) | Notwithstanding any terms of this Award Agreement to the contrary, JPMorgan Chase reserves the right in its sole discretion to cancel outstanding Stock Appreciation Rights under this award and/or to recover from you the net gain realized by you on any exercise of Stock Appreciation Rights under this award as set forth in Remedies : | |
If you engaged in conduct detrimental to the Firm, insofar as it causes material financial or reputational harm to the Firm or its business activities, or
If this award was based on materially inaccurate performance metrics, whether or not you were responsible for the inaccuracy, or
If this award was based on a material misrepresentation by you; or
If you improperly or with gross negligence failed to identify, raise or assess, in a timely manner and as reasonably expected, risks and/or concerns with respect to risks material to the Firm or its business activities, or
If your employment was terminated for Cause (see Definitions below) or the Firm determines after the termination of your employment that your employment could have been terminated for Cause. |
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Termination of Employment |
Except as explicitly set forth below under Job Elimination , Full Career Eligibility , Death and Disability , any Stock Appreciation Rights outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason.
Job Elimination :
For the one year period commencing with the date of termination of your employment (or if longer the 90 day period commencing with the Exercisable Date occurring during such one year period), any Stock Appreciation Right that is exercisable on your termination date or becomes exercisable during such period may be exercised by you in the event that:
the Director Human Resources of the Firm or nominee in his/her sole discretion determines that the Firm terminated your employment because your job was eliminated, and
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certifications Requirement set forth below.
Full Career Eligibility :
For the two year period commencing with the date of termination of your employment (or if longer the 90 day period commencing with the last Exercisable Date occurring during such two year period), any Stock Appreciation Right that is exercisable on your termination date or becomes exercisable during such period may be exercised by you in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the exercise period, you do not (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during the 90-day period or shorten the length of the 90-day notice period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements. Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.) |
You must notify JPMorgan Chase in advance in writing if you are to perform services for any party or if you are self-employed following the date of your termination of employment. Failure to provide such notification could impact your right to exercise.
Death :
If you die while employed by the Firm, your designated beneficiary on file with the Human Resources Department (or if no beneficiary is on file or survives you, then your estate) may exercise for a two year period measured from date of your death (or if longer the 90 day period commencing with the last Exercisable Date occurring during such two year period) (i) any Stock Appreciation Rights that were exercisable as of that date and (ii) any Stock Appreciation Rights that would have become exercisable had you remained employed during such two year period.
Disability:
In the event that your employment with the Firm terminates because:
(iii) you are unable to return to work while you are receiving benefits under the JPMorgan Chase Long Term Disability Plan, or for non-U.S. employees, under the equivalent JPMorgan Chase-sponsored local country plan (LTD Plan), or
(iv) if you are not covered by a LTD Plan, you are unable to return to work due to a long-term disability that would qualify for benefits under the applicable LTD Plan, as determined by the Firm or a third-party designated by the Firm, and you request in writing the ability to continue to exercise due to such disability within 30 days of the date your employment terminates and provide requested supporting documentation
then you may exercise for a two year period measured from the date that your employment terminates any Stock Appreciation Rights that were exercisable as of the date of your termination; provided that you satisfy the Release/Certification Requirements set forth below.
Cancellation after the One or Two Year Period or Ninety Day Period:
Any Stock Appreciation Rights that are not exercised within the applicable one or two year period or ninety day period described above will be cancelled.
Release/Certification Requirements:
In order to have all or any portion of your award remain exercisable after the termination of your employment under any of the foregoing circumstances (other than death):
you must timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify,
with respect to Full Career Eligibility, prior to the termination of your employment, you must confirm with management that you meet the eligibility criteria (including providing at least 90 days advance written notification) and advise that you are seeking to be treated as an individual eligible for Full Career Eligibility, and
you also must certify compliance with the above requirements relevant to you and with all other terms of the Award Agreement (See Your Obligations below.), pursuant to procedures established by the Firm in connection with any exercise of Stock Appreciation Rights. |
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Restriction on Disposition of Shares Derived from an Exercise Under this Award | If you exercise any part of your award before the fifth anniversary of the Grant Date, then you may not sell, assign, transfer, pledge or encumber the net number of shares of Common Stock derived from such exercise until the fifth anniversary of the Grant Date. Prior to the fifth anniversary of the Grant Date and prior to any exercise date thereafter, JPMorgan Chase may impose, for such date and up to 30 days following such date, such restrictions on the Common Stock to be issued to you as it may deem |
appropriate, including, but not limited to, restricting the sale, assignment, transfer, pledge or encumbrance of such Common Stock. The imposition of such restrictions shall not be deemed an amendment of your Award Agreement subject to your consent. In the Firms discretion, such shares may be held in an account with the Firms stock transfer agent. Notwithstanding the foregoing, this restriction on disposition and transfer of shares shall not apply to your beneficiary in the event of your death. | ||
Your Obligations | In consideration of the grant of this award, you agree to comply with and be bound by the following: | |
Non-Solicitation of Employees and Customers |
During your employment by the Firm and for one year following the termination of your employment (or if longer, the exercise period), you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit, induce or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere, (ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated because his or her job was eliminated, or the individuals employment with the Firm has been terminated for more than six months, or (iii) to the fullest extent enforceable under applicable law, solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information.
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. |
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Confidential Information |
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information in verbal, written, electronic or any other form that is intended to, or reasonably could be foreseen to, embarrass or criticize the Firm or its employees, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. | |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation or governmental proceeding) with respect to which you may have knowledge or information, subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Special Notice Period |
If you are subject to a notice policy, whether by contract or policy, that requires you to provide advance written notice of your intention to terminate your employment ( Special Notice Period ), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy.
After receipt of such notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
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Remedies | ||
Cancellation |
In addition to the cancellation of the award as provided for in Termination of Employment , all or part of your award may be cancelled if:
the Firm in its sole discretion determines that you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment,
you have not returned the required forms specified under Release/Certification within the specified deadline,
you violated any of the provisions as set forth above in Your Obligations , or
the Firm in its sole discretion determines cancellation is appropriate pursuant to the Recapture Provision above, and cancellation occurs within one year after the applicable Exercisable Date (except in the case of Cause, where the entire outstanding award may be cancelled). |
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Recovery |
In addition, if you received shares under this award resulting from an exercise:
during the one year prior to the violation of any of the provisions as set forth above in Your Obligations ,
following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the exercise period,
during the one year period prior to the termination of your employment for Cause, including a later determination by the Firm that your employment could have been terminated for Cause ( in which case the one year period will be measured from your actual termination date), or
during the one year period immediately following the date that the Stock Appreciation Rights became exercisable, provided that during such one year period, the Firm, in its sole discretion, determines that the application of the Recovery Provisions above is appropriate to such exercise(s)
you may be required to pay the Firm an amount equal to the gain on each such exercise less withholding taxes. Payment may be made in shares of Common Stock or in cash and may be deducted by the Firm from any shares that are subject to restriction on disposition as described above. |
You agree that this payment represents recovery of shares to which you were not entitled under this Award Agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. | ||
Administrative Provisions |
Exercise Procedures/Withholding Taxes : The exercise of Stock Appreciation Rights shall be in accordance with the Firms procedures for exercises of such awards. The date of exercise shall be the date when the properly completed notice of exercise is received and accepted by the Firm or its designee in accordance with the Firms procedures. Under these procedures, the Firm reserves the right to prohibit exercise of stock appreciation awards for a period of time, such as during a black-out period where trading in the Firms stock is restricted, or for legal, accounting or regulatory reasons. In such an event, the Firm will not change expiration dates or make other adjustments to awards to compensate for the time that exercise is prohibited.
Following each exercise, the Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). In addition, the Firm, in its sole discretion, may implement any other desirable or necessary procedures, so that appropriate withholding and other taxes are paid to the competent authorities. This may include, but is not limited to, restricting transferability of the shares.
Assignment or Transfer: Except as otherwise provided in this Award Agreement, Stock Appreciation Rights shall not be assignable or transferable or subject to any lien, obligation or liability. You may make a gift of unexpired, unexercised Stock Appreciation Rights, subject to the Firms prior consent, to an immediate family member or a trust (or similar vehicle) for the benefit of these immediate family members (or beneficiaries) as defined below. JPMorgan Chase may condition its prior consent to receipt of an agreement by you and proposed transferee containing such terms and conditions and undertakings as JPMorgan Chase deems appropriate in its sole and absolute discretion. No attempted transfer will be valid without the Firms prior consent. Immediate family members include your parents, parents-in-law, children (including adopted children), grandchildren, and siblings or a trust exclusively for the benefit of one or more of these immediate family members. Your spouse is an Immediate Family Member but only if Stock Appreciation Rights are transferred to a trust (or similar vehicle) for the benefit of such spouse, which trust includes one or more other Immediate Family Members as beneficiaries.
Binding Agreement: The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment: Nothing contained herein constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future, nor is its value included in any severance calculation.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities (i) otherwise payable to you pursuant to this award or (ii) held in your name under any banking, brokerage or other accounts or instruments maintained with the Firm, to satisfy any obligation or debt that you owe to the Firm.
Cancellation/Substitution : JPMorgan Chase may, in its sole discretion and for any reason, cancel outstanding unexercised Stock Appreciation Rights and substitute an equal number of non-qualified stock options to purchase the same number of shares of common stock of JPMorgan Chase represented by the cancelled Stock Appreciation Rights. Such substituted options shall have the same exercise price, Expiration Date and other terms and conditions that were applicable to the Stock Appreciation Rights; provided that the method of exercise and the payment of exercise price, as well as the method of payment of withholding taxes, may be changed by JPMorgan Chase.
Change in Outstanding Shares: In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common |
stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Committee will make an equitable substitution or proportionate adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Stock Appreciation Rights (including but not to limited to their Exercise Price) outstanding under this award for such corporate events.
Interpretation/Administration: The Committee has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement, (ii) determine the reason for termination of employment, (iii) determine the application of the post-employment obligations and cancellation and recovery provisions, (iv) decide all claims arising with respect to this Award, and (v) delegate such authority as it deems appropriate. Any determination by the Committee or its delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Firm shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan.
This Award is intended to be exempt from the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (Section 409A) and shall be interpreted accordingly. Notwithstanding anything else herein or in the Plan, no action described herein or in the Plan shall be permitted if the Firm determines such action would result in the imposition of additional tax under Section 409A.
Amendment: The Committee or its delegate reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Committee or its delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled Exercisable Date shall not be deemed to materially adversely affect your rights under this Award Agreement and shall not require your written consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources of JPMorgan Chase.
Severability: If any portion of the Award Agreement is determined by the Firm to be unenforceable in any jurisdiction, any court of competent jurisdiction or the Director Human Resources of JPMorgan Chase may reform the relevant provisions (e.g. as to length of service, geographical area or scope) to the extent the Firm considered necessary to make the provision enforceable under applicable law.
Use of Personal Data: By accepting this award, you have acknowledged that the Firm may use your personal data for purposes of (i) determining your compensation, (ii) payroll activities, including, but not limited to, tax withholding and regulatory reporting, (iii) registration of shares, (iv) at its discretion, establishing brokerage account on your behalf, and (v) all other lawful purposes related to your employment and this award and that the Firm may provide such data to third party vendors with whom it has contracted to provide such services. You may terminate this authorization at any time except with respect to tax and regulatory reporting. In such case, your award will be cancelled.
Governing Law: This award shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles.
Choice of Forum : By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the |
event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum.
Waiver of Jury Trial/Class Claims: By accepting this award, you agree with respect to any claim brought in connection with your employment with the Firm (i) to waive the right to a jury trial and (ii) that any judicial proceeding or arbitration claim will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action. |
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Definitions |
Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than an immaterial and inadvertent violation or misconduct), (v) inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is or might reasonably be expected to be injurious to the interests of the Firm or its relationship with a customer, client or employee.
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards,
insurance, including but not limited to, guaranteeing against loss, harm damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments,
advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c) (3) of the Internal Revenue Code. Section 501(c) (3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF JANUARY 18, 2012
STOCK APPRECIATION RIGHTS
OPERATING COMMITTEE
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of January 18, 2012 (Grant Date) awarding Stock Appreciation Rights pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in Definitions below or elsewhere in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Stock Appreciation Rights represent the right, following exercise, to receive (without payment), a number of shares of JPMorgan Chase Common Stock, the Fair Market Value of which, as of the date of exercise, is equal to the excess of the Fair Market Value of one share of such Common Stock on such exercise date over the Exercise Price, multiplied by the number of Stock Appreciation Rights being exercised. See Exercise Procedures/Withholding Taxes for further information.
The purpose of this award is to motivate your future performance for future services to be provided while the award is outstanding and to align your interests with those of the Firm and its shareholders. Your prior performance was considered as a factor in determining the amount of your award. |
Exercisable Dates/ Expiration Date |
This award is intended and expected to become exercisable on the Exercisable Dates set forth in your Award Agreement, provided that you are continuously employed by the Firm through the relevant Exercisable Date or you meet the requirements to allow your award to remain outstanding upon termination of employment as described below. However, the number of Stock Appreciation Rights that have not yet become exercisable may be reduced (and therefore may be cancelled) or Exercisable Dates may be deferred (but not beyond the Expiration Date), in the event that the Chief Executive Officer of JPMorgan Chase (CEO) determines that your performance in relation to the priorities for your position or the Firms performance in relation to the priorities for which you share responsibility as a member of the Operating Committee has been unsatisfactory for a sustained period of time. Among the factors the CEO may consider in assessing performance are net income, net revenue, return on equity, earnings per share and capital ratios of the Firm, both on an absolute basis and, as appropriate, relative to peer firms. Such a determination is subject to ratification by the Compensation and Management Development Committee of the Board of Directors of JPMorgan Chase (Committee). In the case of an award to the CEO, such determinations shall be made by the Committee.
Your award will remain exercisable until the earlier of the tenth anniversary of the Grant Date (the Expiration Date) or the date the award is cancelled pursuant to this Award Agreement. Notwithstanding any provision herein, including but not limited to those provisions governing Job Elimination, Full Career Eligibility, Death, and Total Disability, no Stock Appreciation Right may be exercised after its Expiration Date. |
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Bonus Recoupment |
In consideration of the grant of this award, you agree that you are subject to the JPMorgan Chase Bonus Recoupment Policy as in effect from time to time, as it applies both to the cash incentive compensation awarded to you for 2011 and to this award of Stock Appreciation Rights. You can access this policy through the following link:
http://www.jpmorganchase.com/corporate/About-JPMC/corporate-governance-principles.htm#recoupment |
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Recapture Provisions (Detrimental Conduct, Risk-Related and Other Recapture Provisions) |
Notwithstanding any terms of this Award Agreement to the contrary, JPMorgan Chase reserves the right in its sole discretion to cancel outstanding Stock Appreciation Rights under this award and/or to recover from you the net gain realized by you on any exercise of Stock Appreciation Rights under this award as set forth in Remedies :
If you engaged in conduct detrimental to the Firm, insofar as it causes material financial or reputational harm to the Firm or its business activities, or
If this award was based on materially inaccurate performance metrics, whether or not you were responsible for the inaccuracy, or
If this award was based on a material misrepresentation by you, or
If you improperly or with gross negligence failed to identify, raise or assess, in a timely manner and as reasonably expected, risks and/or concerns with respect to risks material to the Firm or its business activities, or
If your employment was terminated for Cause (see Definitions below) or the Firm determines after the termination of your employment that your employment could have been terminated for Cause. |
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Termination of Employment |
Except as explicitly set forth below under Job Elimination , Full Career Eligibility , Death and Disability , any Stock Appreciation Rights outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason.
Job Elimination :
For the one year period commencing with the date of termination of your employment (or if longer the 90 day period commencing with the Exercisable Date occurring during such one year period), any Stock Appreciation Right that is exercisable on your termination date or becomes exercisable during such period may be exercised by you in the event that:
the Director Human Resources of the Firm or nominee in his/her sole discretion determines that the Firm terminated your employment because your job was eliminated, and |
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certifications Requirement set forth below.
Full Career Eligibility :
For the two year period commencing with the date of termination of your employment (or if longer the 90 day period commencing with the last Exercisable Date occurring during such two year period), any Stock Appreciation Right that is exercisable on your termination date or becomes exercisable during such period may be exercised by you in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the exercise period, you do not (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during the 90-day period or shorten the length of the 90-day notice period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements. Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.)
You must notify JPMorgan Chase in advance in writing if you are to perform services for any party or if you are self-employed following the date of your termination of employment. Failure to provide such notification could impact your right to exercise.
Death :
If you die while employed by the Firm, your designated beneficiary on file with the Human Resources Department (or if no beneficiary is on file or survives you, then your estate) may exercise for a two year period measured from date of your death (or if longer the 90 day period commencing with the last Exercisable Date occurring during such two year period) (i) any Stock Appreciation Rights that were exercisable as of that date and (ii) any Stock Appreciation Rights that would have become exercisable had you remained employed during such two year period.
Disability:
In the event that your employment with the Firm terminates because:
(v) you are unable to return to work while you are receiving benefits under the JPMorgan Chase Long Term Disability Plan, or for non-U.S. employees, under the equivalent JPMorgan Chase-sponsored local country plan (LTD Plan), or
(vi) if you are not covered by a LTD Plan, you are unable to return to work due to a long-term disability that would qualify for benefits under the applicable LTD Plan, as determined by the Firm or a third-party designated by the Firm, and you request in writing the ability to continue to exercise due to such disability within 30 days of the date your employment terminates and provide requested supporting documentation
then you may exercise for a two year period measured from the date that your employment terminates any Stock Appreciation Rights that were exercisable as of the date of your termination; provided that you satisfy the Release/Certification Requirements set forth below. |
Confidential Information |
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information in verbal, written, electronic or any other form that is intended to, or reasonably could be foreseen to, embarrass or criticize the Firm or its employees, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. | |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation or governmental proceeding) with respect to which you may have knowledge or information, subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. | |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Special Notice Period |
If you are subject to a notice policy, whether by contract or policy, that requires you to provide advance written notice of your intention to terminate your employment ( Special Notice Period ), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy.
After receipt of such notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
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Remedies | ||
Cancellation |
In addition to the cancellation of the award as provided for in Termination of Employment , all or part of your award may be cancelled if:
the Firm in its sole discretion determines that you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment, |
you have not returned the required forms specified under Release/Certification within the specified deadline,
you violated any of the provisions as set forth above in Your Obligations , or
the Firm in its sole discretion determines cancellation is appropriate pursuant to the Recapture Provision above, and cancellation occurs within one year after the applicable Exercisable Date (except in the case of Cause, where the entire outstanding award may be cancelled). |
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Recovery |
In addition, if you received shares under this award resulting from an exercise:
during the one year prior to the violation of any of the provisions as set forth above in Your Obligations ,
following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the exercise period,
during the one year period prior to the termination of your employment for Cause, including a later determination by the Firm that your employment could have been terminated for Cause (in which case the one year period will be measured from your actual termination date), or
during the one year period immediately following the date that the Stock Appreciation Rights became exercisable, provided that during such one year period, the Firm, in its sole discretion, determines that the application of the Recovery Provisions above is appropriate to such exercise(s)
you may be required to pay the Firm an amount equal to the gain on each such exercise less withholding taxes. Payment may be made in shares of Common Stock or in cash and may be deducted by the Firm from any shares that are subject to restriction on disposition as described above.
You agree that this payment represents recovery of shares to which you were not entitled under this Award Agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. |
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Administrative Provisions |
Exercise Procedures/Withholding Taxes : The exercise of Stock Appreciation Rights shall be in accordance with the Firms procedures for exercises of such awards. The date of exercise shall be the date when the properly completed notice of exercise is received and accepted by the Firm or its designee in accordance with the Firms procedures. Under these procedures, the Firm reserves the right to prohibit exercise of stock appreciation awards for a period of time, such as during a black-out period where trading in the Firms stock is restricted, or for legal, accounting or regulatory reasons. In such an event, the Firm will not change expiration dates or make other adjustments to awards to compensate for the time that exercise is prohibited.
Following each exercise, the Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). In addition, the Firm, in its sole discretion, may implement any other desirable or necessary procedures, so that appropriate withholding and other taxes are paid to the competent authorities. This may include, but is not limited to, restricting transferability of the shares.
Assignment or Transfer: Except as otherwise provided in this Award Agreement, Stock Appreciation Rights shall not be assignable or transferable or subject to any lien, obligation or liability. You may make a gift of unexpired, unexercised Stock Appreciation Rights, subject to the Firms prior consent, to an immediate family member or a trust (or similar vehicle) for the benefit of these immediate family members (or beneficiaries) as defined below. JPMorgan Chase may condition its prior consent to receipt of an agreement by you and proposed transferee containing such terms and conditions and undertakings as JPMorgan Chase deems appropriate in its sole and absolute discretion. No attempted transfer will be |
valid without the Firms prior consent. Immediate family members include your parents, parents-in-law, children (including adopted children), grandchildren, and siblings or a trust exclusively for the benefit of one or more of these immediate family members. Your spouse is an Immediate Family Member but only if Stock Appreciation Rights are transferred to a trust (or similar vehicle) for the benefit of such spouse, which trust includes one or more other Immediate Family Members as beneficiaries.
Binding Agreement: The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment: Nothing contained herein constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future, nor is its value included in any severance calculation.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities (i) otherwise payable to you pursuant to this award or (ii) held in your name under any banking, brokerage or other accounts or instruments maintained with the Firm, to satisfy any obligation or debt that you owe to the Firm.
Cancellation/Substitution : JPMorgan Chase may, in its sole discretion and for any reason, cancel outstanding unexercised Stock Appreciation Rights and substitute an equal number of non-qualified stock options to purchase the same number of shares of common stock of JPMorgan Chase represented by the cancelled Stock Appreciation Rights. Such substituted options shall have the same exercise price, Expiration Date and other terms and conditions that were applicable to the Stock Appreciation Rights; provided that the method of exercise and the payment of exercise price, as well as the method of payment of withholding taxes, may be changed by JPMorgan Chase.
Change in Outstanding Shares: In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Committee will make an equitable substitution or proportionate adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Stock Appreciation Rights (including but not to limited to their Exercise Price) outstanding under this award for such corporate events.
Interpretation/Administration: The Committee has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement, (ii) determine the reason for termination of employment, (iii) determine the application of the post-employment obligations and cancellation and recovery provisions, (iv) decide all claims arising with respect to this Award, and (v) delegate such authority as it deems appropriate. Any determination by the Committee or its delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Firm shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan.
This Award is intended to be exempt from the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (Section 409A) and shall be interpreted accordingly. Notwithstanding anything else herein or in the Plan, no action described herein or in the Plan shall be permitted if the Firm determines such action would result in the imposition of additional tax under Section 409A.
Amendment: The Committee or its delegate reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Committee or its delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled Exercisable Date shall not be deemed to materially adversely affect your rights under this Award Agreement and shall not require your written consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources of JPMorgan Chase. |
Severability: If any portion of the Award Agreement is determined by the Firm to be unenforceable in any jurisdiction, any court of competent jurisdiction or the Director Human Resources of JPMorgan Chase may reform the relevant provisions (e.g. as to length of service, geographical area or scope) to the extent the Firm considered necessary to make the provision enforceable under applicable law.
Use of Personal Data: By accepting this award, you have acknowledged that the Firm may use your personal data for purposes of (i) determining your compensation, (ii) payroll activities, including, but not limited to, tax withholding and regulatory reporting, (iii) registration of shares, (iv) at its discretion, establishing brokerage account on your behalf, and (v) all other lawful purposes related to your employment and this award and that the Firm may provide such data to third party vendors with whom it has contracted to provide such services. You may terminate this authorization at any time except with respect to tax and regulatory reporting. In such case, your award will be cancelled.
Governing Law: This award shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles.
Choice of Forum : By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum.
Waiver of Jury Trial/Class Claims: By accepting this award, you agree with respect to any claim brought in connection with your employment with the Firm (i) to waive the right to a jury trial and (ii) that any judicial proceeding or arbitration claim will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action. |
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Definitions |
Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than an immaterial and inadvertent violation or misconduct), (v) inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is or might reasonably be expected to be injurious to the interests of the Firm or its relationship with a customer, client or employee.
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards, |
insurance, including but not limited to, guaranteeing against loss, harm damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments,
advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c) (3) of the Internal Revenue Code. Section 501(c) (3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF JANUARY 18, 2012
RESTRICTED STOCK UNIT AWARD
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of January 18, 2012 (Grant Date) awarding restricted stock units pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in Definitions below or elsewhere in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Each restricted stock unit represents a non-transferable right to receive one share of Common Stock following the applicable vesting date.
The purpose of this award is to motivate your future performance for services to be provided during the vesting periods and to align your interests with those of the Firm and its shareholders. Your prior performance was considered as a factor in determining the amount of your award. |
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Dividend Equivalents | If dividends are paid on Common Stock while restricted stock units under this award are outstanding, you will be paid an amount equal to the dividend paid on one share of Common Stock, multiplied by the number of restricted stock units outstanding under this award. | |
Vesting Dates, Vesting Periods |
This award is intended and expected to vest according to the schedule on your Award Agreement, provided that you are continuously employed by the Firm, or you meet the requirements for continued vesting described below, through the relevant vesting date. However, vesting is subject to the Recapture Provisions below.
The period from the Grant Date to each vesting date will be a separate vesting period. |
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Bonus Recoupment |
In consideration of the grant of this award, you agree that you are subject to the JPMorgan Chase Bonus Recoupment Policy as in effect from time to time as it applies both to the cash incentive compensation awarded to you for 2011 and to this award. You can access this policy through the following link:
http://www.jpmorganchase.com/corporate/About-JPMC/corporate-governance- principles.htm#recoupment |
Recapture Provisions (Detrimental Conduct, Risk-Related and Other Recapture Provisions) |
Notwithstanding any terms of this Award Agreement to the contrary, JPMorgan Chase reserves the right in its sole discretion to cancel your outstanding restricted stock units under this award and/or to recover from you an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares distributed to you under this award:
If you engaged in conduct detrimental to the Firm insofar as it causes material financial or reputational harm to the Firm or its business activities, or
If this award was based on materially inaccurate performance metrics, whether or not you were responsible for the inaccuracy, or
If this award was based on a material misrepresentation by you, or
If your employment was terminated for Cause (see Definitions below) or the Firm determines after the termination of your employment that your employment could have been terminated for Cause.
See Remedies below for additional information. The Firms right to cancel and/or recover value of this award (or any cash bonus) under the JPMorgan Chase Bonus Recoupment Policy and the other provisions of this award relate to the organizational goals of the Firm as that as defined regulations issued under Section 409A of the Internal Revenue Code (Code). |
Termination of Employment | Except as explicitly set forth below under Job Elimination , Full Career Eligibility , Government Office , Disability and Death , any restricted stock units outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason. | |
Job Elimination, Full Career Eligibility, Government Office, Disability |
You will be eligible to continue to vest in your outstanding restricted stock units under the terms of this award following the termination of your employment if one of the following circumstances applies to you.
Job Elimination :
This award will continue to vest on the original schedule following termination of employment in the event that:
the Director Human Resources of the Firm or nominee in his or her sole discretion determines that the Firm terminated your employment because your job was eliminated, and
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certification Requirements set forth below.
Full Career Eligibility :
This award will continue to vest on the original schedule, subject to the prior written consent of the Firm, following termination of employment in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the remainder of the relevant vesting period, you do not (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during such 90-day period or shorten the length of the 90-day period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements. The foregoing clause dealing with Full Career Eligibility has no application to any United States taxpayer who is or becomes subject to Section 457A of the Code.
You must notify JPMorgan Chase in writing in advance if you plan to perform services for any party or if you will be self-employed during the vesting periods. Failure to provide such notification could impact award vesting.
Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.)
Government Office :
All or a portion of this award may continue to vest on the original schedule if you voluntarily resign to accept a Government Office or become a candidate for an elective Government Office, as described at the end of these terms and conditions under the section Government Office . |
Disability :
This award will continue to vest on the original schedule following termination of employment in the event that:
your employment with the Firm terminates because (i) you are unable to return to work while you are receiving benefits under the JPMorgan Chase Long Term Disability Plan, or for non-U.S. employees, under the equivalent JPMorgan Chase-sponsored local country plan (LTD Plan), or (ii) if you are not covered by a LTD Plan, you are unable to return to work due to a long-term disability that would qualify for benefits under the applicable LTD Plan, as determined by the Firm or a third-party designated by the Firm, and you request in writing continued vesting due to such disability within 30 days of the date your employment terminates and provide requested supporting documentation; and
you satisfy the Release/Certification Requirements set forth below. |
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Release/Certification |
In order to qualify for continued vesting after termination of your employment under any of the foregoing circumstances:
you must timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify,
with respect to Full Career Eligibility, prior to the termination of your employment, you must confirm with management that you meet the eligibility criteria (including providing at least 90 days advance written notification) and advise that you are seeking to be treated as an individual eligible for Full Career Eligibility, and
except in the case of a job elimination, it is your responsibility to take the appropriate steps to certify to the Firm prior to each vesting date on the authorized form of the Firm that you have complied with the employment restrictions applicable to you (as described above) throughout the vesting period and otherwise complied with all other terms of the Award Agreement. (See Your Obligations below.) |
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Death | If you die while you are eligible to vest in restricted stock units under this award, the restricted stock units will immediately vest and will be distributed in shares of Common Stock (after applicable tax withholding) to your designated beneficiary on file with the Firms Stock Administration Department, or if no beneficiary has been designated or survives you, then to your estate. Any shares will be distributed by the later of the end of the calendar year in which you die or the 15 th day of the third month following your date of death. | |
Your Obligations | In consideration of the grant of this award, you agree to comply with and be bound by the following: | |
Non-Solicitation of Employees and Customers |
During your employment by the Firm and for one year following the termination of your employment, or if longer, during all remaining vesting periods if you continue to vest after your employment with the Firm terminates, you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit, induce or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere, (ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated because his or her job was eliminated, or the individuals employment with the Firm has been terminated for more than six months, (iii) to the fullest extent enforceable under applicable law, solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information.
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. |
Confidential Information |
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information in verbal, written, electronic or any other form, that is intended to, or reasonably could be foreseen to, disparage, embarrass or criticize the Firm or its employees, officers, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. | |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation, investigation or governmental proceeding) with respect to which you may have knowledge or information, subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. | |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Special Notice Period |
If you are subject to a notice period, whether by contract or by policy, that requires you to provide advance written notice of your intention to terminate your employment (Special Notice Period), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy.
After receipt of your notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
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Remedies | ||
Cancellation |
In addition to the provisions described under Termination of Employment and Recapture Provisions , your outstanding restricted stock units under this award may be cancelled if:
the Firm in its sole discretion determines that you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment, or
you fail to return the required forms specified under Release/Certification within the specified deadline, including the certification required immediately prior to a vesting date under Full Career Eligibility and Disability, or
you violate any of the provisions as set forth above in Your Obligations . |
Recovery |
In addition, you may be required to pay the Firm an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares of Common Stock distributed to you under this award as follows:
shares distributed within the one year period prior to your violation of any of the provisions as set forth above in Your Obligations ,
shares distributed at any time following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the vesting period,
shares distributed within the one year period immediately preceding and any time after your termination of employment, if your employment was terminated or the Firm determines that your employment could have been terminated, for Cause,
for a period up to one year after shares are distributed under this award (or any longer period applicable in the case of termination for Cause), to the extent that the Firm determines appropriate pursuant to Recapture Provisions above.
Payment may be made in shares of Common Stock or in cash. You agree that this repayment will be a recovery of shares to which you were not entitled under this agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. |
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Administrative Provisions |
Withholding Taxes: Except as described in the next two sentences, the Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). Alternatively, the Firm, in its sole discretion, may implement any other desirable or necessary procedures, so that appropriate withholding and other taxes are paid to the competent authorities with respect to the vested shares, dividend equivalents and the award This may include but is not limited to (i) a market sale of a number of such shares on your behalf substantially equal to the withholding or other taxes, (ii) to the extent required by law, withhold from cash compensation, an amount equal to any withholding obligation with respect to vested shares, the award and dividend equivalents, and (iii) retaining vested shares or dividend equivalents until you pay any taxes associated with the shares, the dividend equivalents or the award directly to the competent authorities. For United States tax purposes, dividend equivalents are treated as wages and subject to tax withholding when paid.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities (i) otherwise payable to you pursuant to this award, or (ii) held in your name under any banking, brokerage or other accounts or instruments maintained with the Firm, to satisfy any obligation or debt that you owe to the Firm. The Firm may not retain such funds or securities payable under this award until such time as they would otherwise be distributable to you in accordance with the Award Agreement.
No Ownership Rights : Restricted stock units do not convey the rights of ownership of Common Stock and do not carry voting rights. No shares of Common Stock will be issued to you until after the restricted stock units have vested and all applicable restrictions have lapsed. Prior to any vesting date, JPMorgan Chase may impose, as of such vesting date and for up to 30 days following such date, such restrictions on the Common Stock to be issued to you as it may deem appropriate, including, but not limited to, restricting the sale, transfer, pledge, assignment or encumbrance of such shares of Common Stock. The imposition of such restrictions shall not be deemed an amendment of your Award Agreement subject to your consent. Shares will be issued in accordance with JPMorgan Chases procedures for issuing stock. By accepting this award, you authorize the Firm, in its discretion, to establish on your behalf a brokerage account in your name with the Firm and deliver to that brokerage account any vested shares derived from the award and, for avoidance of doubt, you further agree that it shall apply to prior awards. JPMorgan Chases obligation hereunder is unfunded. |
Binding Agreement : The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment : Nothing contained in the Award Agreement constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future and its value is not compensation for purposes of determining severance.
Section 409A Compliance : To the extent that Section 409A of the Code is applicable to an award, distributions of shares and cash thereunder are intended to comply with Section 409A of the Code, and the Agreement Award shall be interpreted in a manner consistent with such intent.
Notwithstanding anything herein to the contrary, if you (i) are subject to taxation under the Code, (ii) are a specified employee as defined in the JPMorgan Chase 2005 Deferred Compensation Plan and (iii) have incurred a separation from service (as defined In that Plan) and if any units/shares under this award represent deferred compensation as defined in Section 409A and such shares are distributable to you as a result your separation from service, then those shares will be delivered to you on first business day of the first calendar month after the expiration of six full months from date of your separation from service. Further, if prior to any vesting date, your award is not subject to a substantial risk of forfeiture as defined by regulations issued under Section 409A of the Code, then the remainder of each calendar year immediately following (i) each vesting date shall be a payment date for purposes of distributing the vested portion of the award and (ii) each date that JPMorgan Chase specifies for payment of dividends declared on its Common Stock shall be the payment date(s) for purposes of dividend equivalent payments.
Change in Outstanding Shares : In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Committee will make an equitable substitution or proportionate adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Restricted Stock Units outstanding under this award for such corporate events.
Interpretation/Administration : The Committee has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement; (ii) determine the reason for termination of employment; (iii) determine application of the post-employment obligations and cancellation and recovery provisions; (iv) decide all claims arising with respect to this Award; and (v) delegate such authority as it deems appropriate. Any determination by such Committee or its delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms and the Committees determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Committee and the Firm shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan.
Amendment : The Committee or its delegate reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided, however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Committee or its delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled vesting date and |
any restrictions imposed with respect to shares of Common Stock that are issued to you as set forth in under the No Ownership Rights shall not be deemed to materially adversely affect your rights under this Award Agreement requiring your consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources of JPMorgan Chase.
Severability : If any portion of the Award Agreement is determined by the Firm to be unenforceable in any jurisdiction, any court of competent jurisdiction or the Director Human Resources may reform the relevant provisions (e.g., as to length of service, time, geographical area or scope) to the extent the Firm considers necessary to make the provision enforceable under applicable law.
Accelerated Distribution for Ethics or Conflict Reasons Resulting From Employment by a Government Entity: Upon receipt of satisfactory evidence that applicable United States federal, state, local, foreign or supranational ethics or conflict of interest laws or regulations require you to divest your interest in JPMorgan Chase restricted stock units, the Firm may accelerate the distribution of all or part of your outstanding award effective as of the required divesture date; provided that no accelerated distribution shall occur if the Firm determines that such acceleration will violate Section 409A of the Code. If you have voluntarily terminated your employment and have satisfied the requirements of the Government Office section of this award, acceleration shall apply (to extent required) to the percentage of your outstanding award that would continue to vest under that section. In the case of a termination of employment where the award is outstanding as a result of Job Elimination or Full Career Eligibility , then acceleration shall apply, to the extent required, to the full outstanding award. Notwithstanding accelerated distribution pursuant to the foregoing, you will remain subject to the applicable terms of your Award Agreement as if your award had remained outstanding for the duration of the original vesting period, including, but not limited to, repayment obligations and employment restrictions in the case of Full Career Eligibility or Government Office .
Use of Personal Data: By accepting this award, you have acknowledged that the Firm may use your personal data for purposes of (i) determining your compensation, (ii) payroll activities, including, but not limited to, tax withholding and regulatory reporting, (iii) registration of shares and units, (iv) establishing brokerage account on your behalf, and (v) all other lawful purposes related to your employment and this award and that the Firm may provide such data to third party vendors with whom it has contracted to provide such services. You may terminate this authorization at any time except with respect to tax and regulatory reporting. In such case, your award will be cancelled.
Governing Law : This award shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles.
Choice of Forum : By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum. |
Waiver of Jury Trial/Class Claims: By accepting this award, you agree, with respect to any claim brought in connection with your employment with the Firm (i) to waive the right to a jury trial and (ii) that any judicial proceeding or arbitration claim will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action.
Nontransferability: Neither this award or any other outstanding awards of restricted stock units, nor your interests or rights in any such awards, shall be assigned, pledged, transferred, hypothecated or subject to any lien. An award may be transferred following your death by will, the laws of descent or by a beneficiary designation on file with the Firm. |
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Definitions |
Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than immaterial and inadvertent violations or misconduct), (v) inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is injurious to the interests of the Firm or its relationship with a customer, client or employee.
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. (whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards,
insurance, including but not limited to, guaranteeing against loss, harm, damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments; advising on, or investing in, private equity or real estate,
advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Government Office means (i) a full-time position in an elected or appointed office in local, state, or federal government (including equivalent positions outside the U.S. or in a supranational organization), not reasonably anticipated to be a full-career position, or (ii) conducting a bona fide full-time campaign for such an elective public office after formally filing for candidacy, where it is customary and reasonably necessary to campaign full-time for the office.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c)(3) of the Code. Section 501(c)(3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
Government Office
You may be eligible to continue vesting in all or part of your award if you voluntarily resign to accept a Government Office (as defined below) or to become a candidate for an elective Government Office.
Eligibility
Eligibility for continued vesting is conditioned on your providing the Firm:
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At least 60 days advance written notice of your intention to resign to accept or pursue a Government Office, during which period you must perform in a cooperative and professional manner services requested by the Firm and not provide services for any other employer. The Firm may elect to shorten this notice period at the Firms discretion. |
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Confirmation, in a form satisfactory to the Firm, that vesting in this award pursuant to this provision would not violate any applicable law, regulation or rule. |
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Documentation in a form satisfactory to the Firm that your resignation is for the purpose of accepting a Government Office or becoming a candidate for a Government Office. |
Continued vesting
Subject to the conditions below, the percentage of your outstanding awards with respect to each vesting date that will continue to vest in accordance with this awards original schedule will be based on your years of continuous service completed with the Firm immediately preceding your termination date, as follows:
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50% if you have at least 3 but less than 4 years of continuous service, |
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75% if you have at least 4 but less than 5 years of continuous service, or |
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100% if you have 5 or more years of continuous service. |
The portion of the award not subject to continued vesting will be cancelled on the date your employment terminates.
Conditions for Continued Vesting
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You must remain in a non-elective Government Office for two or more years after your employment with the Firm terminates. |
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In the case of resignation from the Firm to campaign for an elective Government Office, your name must be on the primary or final public ballot for the election. (If you are not elected, see below for employment restrictions.) |
Satisfaction of Conditions for Continued Vesting
If your service in a Government Office ends two years or more after your employment with the Firm terminates, or in the case of resignation from the Firm to campaign for a Government Office, your name is on the primary or final public ballot for the election and you are not elected, any awards then outstanding and any awards that would have then been outstanding but for an accelerated distribution of shares (as described in the Administrative Provisions under the heading Accelerated Distribution for Ethics or Conflict Reasons Resulting From Employment by a Government Entity ) will be subject for the remainder of the applicable vesting period to the same terms and conditions of this Award Agreement, including employment restrictions during the vesting period, as if you had resigned from the Firm having met the requirements for Full Career Eligibility. If you breach Your Obligations or fail to comply with requirements of Full Career Eligibility , for example, by becoming employed by a Financial Service Company, during the remaining vesting period, you will be required to repay the Fair Market Value, determined as of the date the shares were distributed, of any shares that would not otherwise have vested during that period.
Failure to Satisfy Conditions for Continued Vesting
If you do not satisfy the above Conditions for Continued Vesting, your award will be immediately cancelled. You also will be required to repay the Fair Market Value of any shares that were distributed to you that would have been outstanding as restricted stock units on the date you failed to satisfy the Condition for Continued Vesting but for their accelerated distribution (as described in the Administrative Provisions under the heading Accelerated Distribution for Ethics or Conflict Reasons Resulting From Employment by a Government Entity ). Fair Market Value for this purpose will be determined as the date that the shares were distributed.
Full Career Eligibility
The Government Office section of this award does not apply to you if you satisfy the requirement for Full Career Eligibility as of the date that you voluntarily terminate your employment with the Firm.
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF JANUARY 18, 2012
RESTRICTED STOCK UNIT AWARD
Tier 1
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of January 18, 2012 (Grant Date) awarding restricted stock units pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in Definitions below or elsewhere in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Each restricted stock unit represents a non-transferable right to receive one share of Common Stock following the applicable vesting date.
The purpose of this award is to motivate your future performance for services to be provided during the vesting periods and to align your interests with those of the Firm and its shareholders. Your prior performance was considered as a factor in determining the amount of your award. |
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Dividend Equivalents | If dividends are paid on Common Stock while restricted stock units under this award are outstanding, you will be paid an amount equal to the dividend paid on one share of Common Stock, multiplied by the number of restricted stock units outstanding under this award. | |
Vesting Dates, Protection-Based Vesting |
This award is intended and expected to vest according to the schedule on your Award Agreement, provided that you are continuously employed by the Firm, or you meet the requirements for continued vesting described below, through the relevant vesting date. However, vesting is subject to the Recapture Provisions below and the following protection-based vesting provisions.
If for any calendar year ending during the vesting period, a Line of Business in which you are employed on the grant date or during the vesting period does not meet its Line of Business Financial Threshold, then up to 50% of the restricted stock units outstanding under this award and scheduled to vest on January 13, 2015 may be cancelled, if the Review Committee determines that cancellation is appropriate in light of the facts and circumstances that led to the financial results. Among the facts and circumstances to be considered in making such a determination will be the causes of the financial results, who bears responsibility for the results, the degree of internal control over the results and Line of Business performance relative to comparable businesses in peer firms. See Definitions below for the meaning of capitalized terms. |
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certification Requirements set forth below.
Full Career Eligibility :
This award will continue to vest on the original schedule, subject to the prior written consent of the Firm, following termination of employment in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the remainder of the relevant vesting period, you do not (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during such 90-day period or shorten the length of the 90-day period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements. The foregoing clause dealing with Full Career Eligibility has no application to any United States taxpayer who is or becomes subject to Section 457A of the Code.
With respect to Full Career Eligibility, you must notify JPMorgan Chase in writing in advance if you plan to perform services for any party or if you will be self-employed during the vesting periods. Failure to provide such notification could impact award vesting.
Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.)
Government Office:
All or a portion of this award may continue to vest on the original schedule if you voluntarily resign to accept a Government Office or become a candidate for an elective Government Office, as described at the end of these terms and conditions under the section Government Office .
Disability :
This award will continue to vest on the original schedule following termination of employment in the event that:
your employment with the Firm terminates because (i) you are unable to return to work while you are receiving benefits under the JPMorgan Chase Long Term Disability Plan, or for non-U.S. employees, under the equivalent JPMorgan Chase-sponsored local country plan (LTD Plan), or (ii) if you are not covered by a LTD Plan, you are unable to return to work due to a disability (as defined by the applicable) that would qualify for benefits under the applicable LTD Plan, as determined by the Firm or a third-party designated by the Firm; provided that you (x) request in writing continued vesting due to such disability within 30 days of the date your employment terminates, and (y) provide requested supporting documentation; and
you satisfy the Release/Certification Requirements set forth below. |
Release/Certification |
In order to qualify for continued vesting after termination of your employment under any of the foregoing circumstances:
you must timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify,
with respect to Full Career Eligibility, prior to the termination of your employment, you must confirm with management that you meet the eligibility criteria (including providing at least 90 days advance written notification) and advise that you are seeking to be treated as an individual eligible for Full Career Eligibility, and
except in the case of a job elimination, it is your responsibility to take the appropriate steps to certify to the Firm prior to each vesting date on the authorized form of the Firm that you have complied with the employment restrictions applicable to you (as described above) throughout the vesting period and otherwise complied with all other terms of the Award Agreement. (See Your Obligations below.) |
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Death | If you die while you are eligible to vest in restricted stock units under this award, the restricted stock units will immediately vest and will be distributed in shares of Common Stock (after applicable tax withholding) to your designated beneficiary on file with the Firms Stock Administration Department, or if no beneficiary has been designated or survives you, then to your estate. Any shares will be distributed by the later of the end of the calendar year in which you die or the 15 th day of the third month following your date of death. | |
Your Obligations | In consideration of the grant of this award, you agree to comply with and be bound by the following: | |
Non-Solicitation of Employees and Customers |
During your employment by the Firm and for one year following the termination of your employment, or if longer, during all remaining vesting periods if you continue to vest after your employment with the Firm terminates, you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit, induce or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere, (ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated because his or her job was eliminated, or the individuals employment with the Firm has been terminated for more than six months, (iii) to the fullest extent enforceable under applicable law, solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information.
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. |
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Confidential Information |
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information in verbal, written, electronic or any other form, that is intended to, or reasonably could be foreseen to, disparage, embarrass or criticize the Firm or its |
employees, officers, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation, investigation or governmental proceeding) with respect to which you may have knowledge or information, subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. | |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Special Notice Period |
If you are subject to a notice period, whether by contract or by policy, that requires you to provide advance written notice of your intention to terminate your employment (Special Notice Period), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy.
After receipt of your notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
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Remedies | ||
Cancellation |
In addition to the provisions described under Protection-Based Vesting , Termination of Employment and Recapture Provisions , your outstanding restricted stock units under this award may be cancelled if:
the Firm in its sole discretion determines that you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment, or
you fail to return the required forms specified under Release/Certification within the specified deadline, including the certification required immediately prior to a vesting date under Full Career Eligibility and Disability, or
you violate any of the provisions as set forth above in Your Obligations . |
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Recovery |
In addition, you may be required to pay the Firm an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares of Common Stock distributed to you under this award as follows:
shares distributed within the one year period prior to your violation of any of the provisions as set forth above in Your Obligations ,
shares distributed at any time following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the vesting period,
shares distributed within the one year period immediately preceding and any time after your termination of employment, if your employment was terminated or the Firm determines that your employment could have been terminated, for Cause,
for a period up to one year after shares are distributed under this award (or any longer period applicable in the case of termination for Cause), to the extent that the Firm determines appropriate pursuant to Recapture Provisions above.
Payment may be made in shares of Common Stock or in cash. You agree that this repayment will be a recovery of shares to which you were not entitled under this agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining |
any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. | ||
Administrative Provisions |
Withholding Taxes: Except as described in the next two sentences, the Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). Alternatively, the Firm, in its sole discretion, may implement any other desirable or necessary procedures, so that appropriate withholding and other taxes are paid to the competent authorities with respect to the vested shares, dividend equivalents and the award This may include but is not limited to (i) a market sale of a number of such shares on your behalf substantially equal to the withholding or other taxes, (ii) to the extent required by law, withhold from cash compensation, an amount equal to any withholding obligation with respect to vested shares, the award and dividend equivalents, and (iii) retaining vested shares or dividend equivalents until you pay any taxes associated with the shares, the dividend equivalents or the award directly to the competent authorities. For United States tax purposes, dividend equivalents are treated as wages and subject to tax withholding when paid.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities (i) otherwise payable to you pursuant to this award, or (ii) held in your name under any banking, brokerage or other accounts or instruments maintained with the Firm, to satisfy any obligation or debt that you owe to the Firm. The Firm may not retain such funds or securities payable under this award until such time as they would otherwise be distributable to you in accordance with the Award Agreement.
No Ownership Rights : Restricted stock units do not convey the rights of ownership of Common Stock and do not carry voting rights. No shares of Common Stock will be issued to you until after the restricted stock units have vested and all applicable restrictions have lapsed. Prior to any vesting date, JPMorgan Chase may impose, as of such vesting date and for up to 30 days following such date, such restrictions on the Common Stock to be issued to you as it may deem appropriate, including, but not limited to, restricting the sale, transfer, pledge, assignment or encumbrance of such shares of Common Stock. The imposition of such restrictions shall not be deemed an amendment of your Award Agreement subject to your consent. Shares will be issued in accordance with JPMorgan Chases procedures for issuing stock. By accepting this award, you authorize the Firm, in its discretion, to establish on your behalf a brokerage account in your name with the Firm and deliver to that brokerage account any vested shares derived from the award and, for avoidance of doubt, you further agree that it shall apply to prior awards. JPMorgan Chases obligation hereunder is unfunded.
Binding Agreement : The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment : Nothing contained in the Award Agreement constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future and its value is not compensation for purposes of determining severance.
Section 409A Compliance : To the extent that Section 409A of the Code is applicable to an award, distributions of shares and cash thereunder are intended to comply with Section 409A of the Code, and the Agreement Award shall be interpreted in a manner consistent with such intent.
Notwithstanding anything herein to the contrary, if you (i) are subject to taxation under the Code, (ii) are a specified employee as defined in the JPMorgan Chase 2005 Deferred Compensation Plan and (iii) have incurred a separation from service (as defined In that Plan) and if any units/ shares under this |
award represent deferred compensation as defined in Section 409A and such shares are distributable to you as a result your separation from service, then those shares will be delivered to you on first business day of the first calendar month after the expiration of six full months from date of your separation from service. Further, if prior to any vesting date, your award is not subject to a substantial risk of forfeiture as defined by regulations issued under Section 409A of the Code, then the remainder of each calendar year immediately following (i) each vesting date shall be a payment date for purposes of distributing the vested portion of the award and (ii) each date that JPMorgan Chase specifies for payment of dividends declared on its Common Stock shall be the payment date(s) for purposes of dividend equivalent payments.
Change in Outstanding Shares : In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Committee will make an equitable substitution or proportionate adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Restricted Stock Units outstanding under this award for such corporate events.
Interpretation/Administration : The Committee has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement; (ii) determine the reason for termination of employment; (iii) determine application of the post-employment obligations and cancellation and recovery provisions; (iv) decide all claims arising with respect to this Award; and (v) delegate such authority as it deems appropriate. Any determination by such Committee or its delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms and the Committees determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Committee and the Firm shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan.
Amendment : The Committee or its delegate reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided, however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Committee or its delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled vesting date and any restrictions imposed with respect to shares of Common Stock that are issued to you as set forth in under the No Ownership Rights shall not be deemed to materially adversely affect your rights under this Award Agreement requiring your consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources of JPMorgan Chase.
Severability : If any portion of the Award Agreement is determined by the Firm to be unenforceable in any jurisdiction, any court of competent jurisdiction or the Director Human Resources may reform the relevant provisions (e.g., as to length of service, time, geographical area or scope) to the extent the Firm considers necessary to make the provision enforceable under applicable law.
Accelerated Distribution for Ethics or Conflict Reasons Resulting From Employment by a Government Entity : Upon receipt of satisfactory evidence that applicable United States federal, state, local, foreign or supranational ethics or conflict of interest laws or regulations require you to divest your interest in JPMorgan Chase restricted stock units, the Firm may accelerate the distribution of all or part of your outstanding award effective as of the required divesture date; provided that no accelerated distribution shall occur if the Firm determines that such acceleration will violate Section 409A of the Code. If you have voluntarily terminated your employment and have satisfied the requirements of the Government Office section of this award, acceleration shall apply (to extent required) to the percentage of your outstanding award that would continue to vest under that section. In the case of a termination of |
employment where the award is outstanding as a result of Job Elimination or Full Career Eligibility , then acceleration shall apply, to the extent required, to the full outstanding award. Notwithstanding accelerated distribution pursuant to the foregoing, you will remain subject to the applicable terms of your Award Agreement as if your award had remained outstanding for the duration of the original vesting period, including, but not limited to, repayment obligations and employment restrictions in the case of Full Career Eligibility or Government Office .
Use of Personal Data: By accepting this award, you have acknowledged that the Firm may use your personal data for purposes of (i) determining your compensation, (ii) payroll activities, including, but not limited to, tax withholding and regulatory reporting, (iii) registration of shares and units, (iv) establishing brokerage account on your behalf, and (v) all other lawful purposes related to your employment and this award and that the Firm may provide such data to third party vendors with whom it has contracted to provide such services. You may terminate this authorization at any time except with respect to tax and regulatory reporting. In such case, your award will be cancelled.
Governing Law : This award shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles.
Choice of Forum : By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum.
Waiver of Jury Trial/Class Claims: By accepting this award, you agree, with respect to any claim brought in connection with your employment with the Firm (i) to waive the right to a jury trial and (ii) that any judicial proceeding or arbitration claim will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action.
Nontransferability: Neither this award or any other outstanding awards of restricted stock units, nor your interests or rights in any such awards, shall be assigned, pledged, transferred, hypothecated or subject to any lien. An award may be transferred following your death by will, the laws of descent or by a beneficiary designation on file with the Firm. |
Definitions |
Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than immaterial and inadvertent violations or misconduct), (v) inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is injurious to the interests of the Firm or its relationship with a customer, client or employee.
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. (whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards,
insurance, including but not limited to, guaranteeing against loss, harm, damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments;
advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Government Office means (i) a full-time position in an elected or appointed office in local, state, or federal government (including equivalent positions outside the U.S. or in a supranational organization), not reasonably anticipated to be a full-career position, or (ii) conducting a bona fide full-time campaign for such an elective public office after formally filing for candidacy, where it is customary and reasonably necessary to campaign full-time for the office.
Line of Business means the highest-level business unit of the Firm in which your position is based (e.g., Investment Bank, Asset Management). All Corporate Staff functions are considered a single Line of Business.
Line of Business Financial Threshold means the financial threshold as defined by each Line of Business Chief Executive Officer and Chief Financial Officer, and generally refers to (i) annual negative pre-provision net income at the Line of Business level for all Lines of Business except Card Services and Corporate Staff Functions, (ii) annual negative pre-tax, pre-loan loss reserve income at the Line of Business level for Card Services; and (iii) negative annual net income at the Firm level for Corporate Staff functions. The provision and exclusion definitions and calculations for Lines of Business may vary and will be communicated by Line of Business management.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c)(3) of the Code. Section 501(c)(3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
Review Committee means a committee consisting of the Firms senior Risk, Human Resources, Legal and Financial officers and the Chief Executive Officer of the Line of Business for which the review is undertaken. |
Government Office
You may be eligible to continue vesting in all or part of your award if you voluntarily resign to accept a Government Office (as defined below) or to become a candidate for an elective Government Office.
Eligibility
Eligibility for continued vesting is conditioned on your providing the Firm:
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At least 60 days advance written notice of your intention to resign to accept or pursue a Government Office, during which period you must perform in a cooperative and professional manner services requested by the Firm and not provide services for any other employer. The Firm may elect to shorten this notice period at the Firms discretion. |
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Confirmation, in a form satisfactory to the Firm, that vesting in this award pursuant to this provision would not violate any applicable law, regulation or rule. |
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Documentation in a form satisfactory to the Firm that your resignation is for the purpose of accepting a Government Office or becoming a candidate for a Government Office. |
Continued vesting
Subject to the conditions below, the percentage of your outstanding awards with respect to each vesting date that will continue to vest in accordance with this awards original schedule will be based on your years of continuous service completed with the Firm immediately preceding your termination date, as follows:
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50% if you have at least 3 but less than 4 years of continuous service, |
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75% if you have at least 4 but less than 5 years of continuous service, or |
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100% if you have 5 or more years of continuous service. |
The portion of the award not subject to continued vesting will be cancelled on the date your employment terminates.
Conditions for Continued Vesting
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You must remain in a non-elective Government Office for two or more years after your employment with the Firm terminates. |
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In the case of resignation from the Firm to campaign for an elective Government Office, your name must be on the primary or final public ballot for the election. (If you are not elected, see below for employment restrictions.) |
Satisfaction of Conditions for Continued Vesting
If your service in a Government Office ends two years or more after your employment with the Firm terminates, or in the case of resignation from the Firm to campaign for a Government Office, your name is on the primary or final public ballot for the election and you are not elected, any awards then outstanding and any awards that would have then been outstanding but for an accelerated distribution of shares (as described in the Administrative Provisions under the heading Accelerated Distribution for Ethics or Conflict Reasons Resulting From Employment by a Government Entity ) will be subject for the remainder of the applicable vesting period to the same terms and conditions of this Award Agreement, including employment restrictions during the vesting period, as if you had resigned from the Firm having met the requirements for Full Career Eligibility. If you breach Your Obligations or fail to comply with requirements of Full Career Eligibility , for example, by becoming employed by a Financial Service Company, during the remaining vesting period, you will be required to repay the Fair Market Value, determined as of the date the shares were distributed, of any shares that would not otherwise have vested during that period.
Failure to Satisfy Conditions for Continued Vesting
If you do not satisfy the above Conditions for Continued Vesting, your award will be immediately cancelled. You also will be required to repay the Fair Market Value of any shares that were distributed to you that would have been outstanding as restricted stock units on the date you failed to satisfy the Condition for Continued Vesting but for their accelerated distribution (as described in the Administrative Provisions under the heading Accelerated Distribution for Ethics or Conflict Reasons Resulting From Employment by a Government Entity ). Fair Market Value for this purpose will be determined as the date that the shares were distributed.
Full Career Eligibility
The Government Office section of this award does not apply to you if you satisfy the requirement for Full Career Eligibility as of the date that you voluntarily terminate your employment with the Firm.
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF JANUARY 18, 2012
RESTRICTED STOCK UNIT AWARD
Operating Committee
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of January 18, 2012 (Grant Date) awarding restricted stock units pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in Definitions below or elsewhere in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Each restricted stock unit represents a non-transferable right to receive one share of Common Stock following the applicable vesting date.
The purpose of this award is to motivate your future performance for services to be provided during the vesting periods and to align your interests with those of the Firm and its shareholders. Your prior performance was considered as a factor in determining the amount of your award. |
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Dividend Equivalents | If dividends are paid on Common Stock while restricted stock units under this award are outstanding, you will be paid an amount equal to the dividend paid on one share of Common Stock, multiplied by the number of restricted stock units outstanding under this award. | |
Vesting Dates, Protection-Based Vesting |
This award is intended and expected to vest according to the schedule on your Award Agreement, provided that you are continuously employed by the Firm, or you meet the requirements for continued vesting described below, through the relevant vesting date. However, vesting is subject to the Recapture Provisions below and the following protection-based vesting provisions.
If for any calendar year ending during the vesting period, a Line of Business in which you are employed on the grant date or during the vesting period does not meet its Line of Business Financial Threshold, then up to 50% of the restricted stock units outstanding under this award and scheduled to vest on January 13, 2015 may be cancelled, if the Review Committee determines that cancellation is appropriate in light of the facts and circumstances that led to the financial results. Among the facts and circumstances to be considered in making such a determination will be the causes of the financial results, who bears responsibility for the results, the degree of internal control over the results and Line of Business performance relative to comparable businesses in peer firms. See Definitions below for the meaning of capitalized terms. |
Job Elimination :
This award will continue to vest on the original schedule following termination of employment in the event that:
the Director Human Resources of the Firm or nominee in his or her sole discretion determines that the Firm terminated your employment because your job was eliminated, and
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certification Requirements set forth below.
Full Career Eligibility :
This award will continue to vest on the original schedule, subject to the prior written consent of the Firm, following termination of employment in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the remainder of the relevant vesting period, you do not (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during such 90-day period or shorten the length of the 90-day period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements. The foregoing clause dealing with Full Career Eligibility has no application to any United States taxpayer who is or becomes subject to Section 457A of the Code.
With respect to Full Career Eligibility, you must notify JPMorgan Chase in writing in advance if you plan to perform services for any party or if you will be self-employed during the vesting periods. Failure to provide such notification could impact award vesting.
Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.)
Government Office:
All or a portion of this award may continue to vest on the original schedule if you voluntarily resign to accept a Government Office or become a candidate for an elective Government Office, as described at the end of these terms and conditions under the section Government Office .
Disability :
This award will continue to vest on the original schedule following termination of employment in the event that:
your employment with the Firm terminates because (i) you are unable to return to work while you are receiving benefits under the JPMorgan Chase Long Term Disability Plan, or for non-U.S. employees, under the equivalent JPMorgan Chase-sponsored local country plan (LTD Plan), or (ii) if you are not covered by a LTD Plan, you are unable to return to work due to a disability (as defined by the applicable) that would qualify for benefits under the applicable LTD Plan, as determined by the Firm or a third-party designated by the Firm; provided that you (x) request in writing continued vesting due to such disability within 30 days of the date your employment terminates, and (y) provide requested supporting documentation; and
you satisfy the Release/Certification Requirements set forth below. |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information in verbal, written, electronic or any other form, that is intended to, or reasonably could be foreseen to, disparage, embarrass or criticize the Firm or its employees, officers, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation, investigation or governmental proceeding) with respect to which you may have knowledge or information, subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. | |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Special Notice Period |
If you are subject to a notice period, whether by contract or by policy, that requires you to provide advance written notice of your intention to terminate your employment (Special Notice Period), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy.
After receipt of your notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
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Remedies | ||
Cancellation |
In addition to the provisions described under Protection-Based Vesting , Termination of Employment and Recapture Provisions , your outstanding restricted stock units under this award may be cancelled if:
the Firm in its sole discretion determines that you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment, or
you fail to return the required forms specified under Release/Certification within the specified deadline, including the certification required immediately prior to a vesting date under Full Career Eligibility and Disability, or
you violate any of the provisions as set forth above in Your Obligations . |
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Recovery |
In addition, you may be required to pay the Firm an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares of Common Stock distributed to you under this award as follows:
shares distributed within the one year period prior to your violation of any of the provisions as set forth above in Your Obligations ,
shares distributed at any time following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the vesting period,
shares distributed within the one year period immediately preceding and any time after your termination of employment, if your employment was terminated or the Firm determines that your employment could have been terminated, for Cause,
for a period up to one year after shares are distributed under this award (or any longer period applicable in the case of termination for Cause), to the extent that the Firm determines appropriate pursuant to Recapture Provisions above.
Payment may be made in shares of Common Stock or in cash. You agree that this repayment will be a recovery of shares to which you were not entitled under this agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm |
shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. | ||
Administrative Provisions |
Withholding Taxes: Except as described in the next two sentences, the Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). Alternatively, the Firm, in its sole discretion, may implement any other desirable or necessary procedures, so that appropriate withholding and other taxes are paid to the competent authorities with respect to the vested shares, dividend equivalents and the award This may include but is not limited to (i) a market sale of a number of such shares on your behalf substantially equal to the withholding or other taxes, (ii) to the extent required by law, withhold from cash compensation, an amount equal to any withholding obligation with respect to vested shares, the award and dividend equivalents, and (iii) retaining vested shares or dividend equivalents until you pay any taxes associated with the shares, the dividend equivalents or the award directly to the competent authorities. For United States tax purposes, dividend equivalents are treated as wages and subject to tax withholding when paid.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities (i) otherwise payable to you pursuant to this award, or (ii) held in your name under any banking, brokerage or other accounts or instruments maintained with the Firm, to satisfy any obligation or debt that you owe to the Firm. The Firm may not retain such funds or securities payable under this award until such time as they would otherwise be distributable to you in accordance with the Award Agreement.
No Ownership Rights : Restricted stock units do not convey the rights of ownership of Common Stock and do not carry voting rights. No shares of Common Stock will be issued to you until after the restricted stock units have vested and all applicable restrictions have lapsed. Prior to any vesting date, JPMorgan Chase may impose, as of such vesting date and for up to 30 days following such date, such restrictions on the Common Stock to be issued to you as it may deem appropriate, including, but not limited to, restricting the sale, transfer, pledge, assignment or encumbrance of such shares of Common Stock. The imposition of such restrictions shall not be deemed an amendment of your Award Agreement subject to your consent. Shares will be issued in accordance with JPMorgan Chases procedures for issuing stock. By accepting this award, you authorize the Firm, in its discretion, to establish on your behalf a brokerage account in your name with the Firm and deliver to that brokerage account any vested shares derived from the award and, for avoidance of doubt, you further agree that it shall apply to prior awards. JPMorgan Chases obligation hereunder is unfunded.
Binding Agreement : The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment : Nothing contained in the Award Agreement constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future and its value is not compensation for purposes of determining severance.
Section 409A Compliance : To the extent that Section 409A of the Code is applicable to an award, distributions of shares and cash thereunder are intended to comply with Section 409A of the Code, and the Agreement Award shall be interpreted in a manner consistent with such intent.
Notwithstanding anything herein to the contrary, if you (i) are subject to taxation under the Code, (ii) are |
a specified employee as defined in the JPMorgan Chase 2005 Deferred Compensation Plan and (iii) have incurred a separation from service (as defined In that Plan) and if any units/ shares under this award represent deferred compensation as defined in Section 409A and such shares are distributable to you as a result your separation from service, then those shares will be delivered to you on first business day of the first calendar month after the expiration of six full months from date of your separation from service. Further, if prior to any vesting date, your award is not subject to a substantial risk of forfeiture as defined by regulations issued under Section 409A of the Code, then the remainder of each calendar year immediately following (i) each vesting date shall be a payment date for purposes of distributing the vested portion of the award and (ii) each date that JPMorgan Chase specifies for payment of dividends declared on its Common Stock shall be the payment date(s) for purposes of dividend equivalent payments.
Change in Outstanding Shares : In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Committee will make an equitable substitution or proportionate adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Restricted Stock Units outstanding under this award for such corporate events.
Interpretation/Administration : The Committee has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the terms of this Award Agreement; (ii) determine the reason for termination of employment; (iii) determine application of the post-employment obligations and cancellation and recovery provisions; (iv) decide all claims arising with respect to this Award; and (v) delegate such authority as it deems appropriate. Any determination by such Committee or its delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms and the Committees determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Committee and the Firm shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan.
Amendment : The Committee or its delegate reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided, however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Committee or its delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled vesting date and any restrictions imposed with respect to shares of Common Stock that are issued to you as set forth in under the No Ownership Rights shall not be deemed to materially adversely affect your rights under this Award Agreement requiring your consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources of JPMorgan Chase.
Severability : If any portion of the Award Agreement is determined by the Firm to be unenforceable in any jurisdiction, any court of competent jurisdiction or the Director Human Resources may reform the relevant provisions (e.g., as to length of service, time, geographical area or scope) to the extent the Firm considers necessary to make the provision enforceable under applicable law.
Accelerated Distribution for Ethics or Conflict Reasons Resulting From Employment by a Government Entity: Upon receipt of satisfactory evidence that applicable United States federal, state, local, foreign or supranational ethics or conflict of interest laws or regulations require you to divest your interest in JPMorgan Chase restricted stock units, the Firm may accelerate the distribution of all or part of your outstanding award effective as of the required divesture date; provided that no accelerated distribution shall occur if the Firm determines that such acceleration will violate Section 409A of the |
Code. If you have voluntarily terminated your employment and have satisfied the requirements of the Government Office section of this award, acceleration shall apply (to extent required) to the percentage of your outstanding award that would continue to vest under that section. In the case of a termination of employment where the award is outstanding as a result of Job Elimination or Full Career Eligibility , then acceleration shall apply, to the extent required, to the full outstanding award. Notwithstanding accelerated distribution pursuant to the foregoing, you will remain subject to the applicable terms of your Award Agreement as if your award had remained outstanding for the duration of the original vesting period, including, but not limited to, repayment obligations and employment restrictions in the case of Full Career Eligibility or Government Office .
Use of Personal Data: By accepting this award, you have acknowledged that the Firm may use your personal data for purposes of (i) determining your compensation, (ii) payroll activities, including, but not limited to, tax withholding and regulatory reporting, (iii) registration of shares and units, (iv) establishing brokerage account on your behalf, and (v) all other lawful purposes related to your employment and this award and that the Firm may provide such data to third party vendors with whom it has contracted to provide such services. You may terminate this authorization at any time except with respect to tax and regulatory reporting. In such case, your award will be cancelled.
Governing Law : This award shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles.
Choice of Forum : By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum.
Waiver of Jury Trial/Class Claims: By accepting this award, you agree, with respect to any claim brought in connection with your employment with the Firm (i) to waive the right to a jury trial and (ii) that any judicial proceeding or arbitration claim will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action.
Nontransferability: Neither this award or any other outstanding awards of restricted stock units, nor your interests or rights in any such awards, shall be assigned, pledged, transferred, hypothecated or subject to any lien. An award may be transferred following your death by will, the laws of descent or by a beneficiary designation on file with the Firm. |
Definitions |
Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than immaterial and inadvertent violations or misconduct), (v) inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is injurious to the interests of the Firm or its relationship with a customer, client or employee.
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. (whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards,
insurance, including but not limited to, guaranteeing against loss, harm, damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments;
advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Government Office means (i) a full-time position in an elected or appointed office in local, state, or federal government (including equivalent positions outside the U.S. or in a supranational organization), not reasonably anticipated to be a full-career position, or (ii) conducting a bona fide full-time campaign for such an elective public office after formally filing for candidacy, where it is customary and reasonably necessary to campaign full-time for the office.
Line of Business means the highest-level business unit of the Firm in which your position is based (e.g., Investment Bank, Asset Management). All Corporate Staff functions are considered a single Line of Business.
Line of Business Financial Threshold means the financial threshold as defined by each Line of Business Chief Executive Officer and Chief Financial Officer, and generally refers to (i) annual negative pre-provision net income at the Line of Business level for all Lines of Business except Card Services and Corporate Staff Functions, (ii) annual negative pre-tax, pre-loan loss reserve income at the Line of Business level for Card Services; and (iii) negative annual net income at the Firm level for Corporate Staff functions. The provision and exclusion definitions and calculations for Lines of Business may vary and will be communicated by Line of Business management.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c)(3) of the Code. Section 501(c)(3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
Review Committee means a committee consisting of the Firms senior Risk, Human Resources, Legal and Financial officers and the Chief Executive Officer of the Line of Business for which the review is undertaken. |
Government Office
You may be eligible to continue vesting in all or part of your award if you voluntarily resign to accept a Government Office (as defined below) or to become a candidate for an elective Government Office.
Eligibility
Eligibility for continued vesting is conditioned on your providing the Firm:
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At least 60 days advance written notice of your intention to resign to accept or pursue a Government Office, during which period you must perform in a cooperative and professional manner services requested by the Firm and not provide services for any other employer. The Firm may elect to shorten this notice period at the Firms discretion. |
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Confirmation, in a form satisfactory to the Firm, that vesting in this award pursuant to this provision would not violate any applicable law, regulation or rule. |
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Documentation in a form satisfactory to the Firm that your resignation is for the purpose of accepting a Government Office or becoming a candidate for a Government Office. |
Continued vesting
Subject to the conditions below, the percentage of your outstanding awards with respect to each vesting date that will continue to vest in accordance with this awards original schedule will be based on your years of continuous service completed with the Firm immediately preceding your termination date, as follows:
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50% if you have at least 3 but less than 4 years of continuous service, |
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75% if you have at least 4 but less than 5 years of continuous service, or |
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100% if you have 5 or more years of continuous service. |
The portion of the award not subject to continued vesting will be cancelled on the date your employment terminates.
Conditions for Continued Vesting
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You must remain in a non-elective Government Office for two or more years after your employment with the Firm terminates. |
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In the case of resignation from the Firm to campaign for an elective Government Office, your name must be on the primary or final public ballot for the election. (If you are not elected, see below for employment restrictions.) |
Satisfaction of Conditions for Continued Vesting
If your service in a Government Office ends two years or more after your employment with the Firm terminates, or in the case of resignation from the Firm to campaign for a Government Office, your name is on the primary or final public ballot for the election and you are not elected, any awards then outstanding and any awards that would have then been outstanding but for an accelerated distribution of shares (as described in the Administrative Provisions under the heading Accelerated Distribution for Ethics or Conflict Reasons Resulting From Employment by a Government Entity ) will be subject for the remainder of the applicable vesting period to the same terms and conditions of this Award Agreement, including employment restrictions during the vesting period, as if you had resigned from the Firm having met the requirements for Full Career Eligibility. If you breach Your Obligations or fail to comply with requirements of Full Career Eligibility , for example, by becoming employed by a Financial Service Company, during the remaining vesting period, you will be required to repay the Fair Market Value, determined as of the date the shares were distributed, of any shares that would not otherwise have vested during that period.
Failure to Satisfy Conditions for Continued Vesting
If you do not satisfy the above Conditions for Continued Vesting, your award will be immediately cancelled. You also will be required to repay the Fair Market Value of any shares that were distributed to you that would have been outstanding as restricted stock units on the date you failed to satisfy the Condition for Continued Vesting but for their accelerated distribution (as described in the Administrative Provisions under the heading Accelerated Distribution for Ethics or Conflict Reasons Resulting From Employment by a Government Entity ). Fair Market Value for this purpose will be determined as the date that the shares were distributed.
Full Career Eligibility
The Government Office section of this award does not apply to you if you satisfy the requirement for Full Career Eligibility as of the date that you voluntarily terminate your employment with the Firm.
JPMORGAN CHASE & CO. LONG-TERM INCENTIVE PLAN
TERMS AND CONDITIONS OF JANUARY 18, 2012
RESTRICTED STOCK UNIT AWARD
OPERATING COMMITTEE (Protection-Based Vesting Provisions)
Award Agreement |
These terms and conditions are made part of the Award Agreement dated as of January 18, 2012 (Grant Date) awarding restricted stock units pursuant to the terms of the JPMorgan Chase & Co. Long-Term Incentive Plan (Plan). To the extent the terms of the Award Agreement (all references to which will include these terms and conditions) conflict with the Plan, the Plan will govern. The Award Agreement, the Plan and Prospectus supersede any other agreement, whether written or oral, that may have been entered into by the Firm and you relating to this award.
This award was granted on the Grant Date subject to the Award Agreement. Unless you decline by the deadline and in the manner specified in the Award Agreement, you will have agreed to be bound by these terms and conditions, effective as of the Grant Date. If you decline the award, it will be cancelled as of the Grant Date.
Capitalized terms that are not defined in Definitions below or elsewhere in the Award Agreement will have the same meaning as set forth in the Plan.
JPMorgan Chase & Co. will be referred to throughout the Award Agreement as JPMorgan Chase, and together with its subsidiaries as the Firm. |
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Form and Purpose of Award |
Each restricted stock unit represents a non-transferable right to receive one share of Common Stock following the applicable vesting date.
The purpose of this award is to motivate your future performance for services to be provided during the vesting periods and to align your interests with those of the Firm and its shareholders. Your prior performance was considered as a factor in determining the amount of your award. |
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Dividend Equivalents | If dividends are paid on Common Stock while restricted stock units under this award are outstanding, you will be paid an amount equal to the dividend paid on one share of Common Stock, multiplied by the number of restricted stock units outstanding under this award. | |
Vesting Dates, Protection-Based Vesting |
This award is intended and expected to vest according to the schedule on your Award Agreement, provided that you are continuously employed by the Firm, or you meet the requirements for continued vesting described below, through the relevant vesting date. However, vesting is subject to the Recapture Provisions below and the following protection-based vesting provisions.
All or a portion of the restricted stock units awarded hereunder may be cancelled in the event that the Chief Executive Officer of JPMorgan Chase (CEO) determines that cancellation is appropriate in light of any one or a combination of the following factors:
(i) Your performance in relation to the priorities for your position, or the Firms performance in relation to the priorities for which you share responsibility as a member of the Operating Committee, have been unsatisfactory for a sustained period of time. Among the factors the CEO may consider in assessing performance are net income, net revenue, return on equity, earnings per share and capital ratios of the Firm, both on an absolute basis and, as appropriate, relative to peer firms. |
(ii) For any one calendar year ending during the vesting period, JPMorgan Chases reported net income is negative.
(iii) Awards granted to participants in a line of business for which you exercise responsibility were in whole or in part cancelled because the line of business did not meet its annual Line of Business Financial Threshold (see Definitions below).
Further, all restricted stock units outstanding under this award scheduled to vest on January 13, 2015 automatically will be cancelled if, for the three calendar years preceding the vesting date, the Firm does not meet the Firmwide Financial Threshold (see Definitions below), unless the CEO determines that it is appropriate, due to extraordinary circumstances or because a portion of this award has been forfeited under (i) (ii) or (iii) above to reflect adverse performance over the vesting period, that some or all such restricted stock units should vest with respect to a particular individual or individuals.
Any determination above with respect to performance-based vesting provisions is subject to ratification by the Compensation and Management Development Committee of the Board of Directors of JPMorgan Chase (Committee). In the case of an award to the CEO, all such determinations shall be made by the Committee. |
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Vesting Periods | The period from the Grant Date to each vesting date will be a separate vesting period. | |
Bonus Recoupment |
In consideration of the grant of this award, you agree that you are subject to the JPMorgan Chase Bonus Recoupment Policy as in effect from time to time as it applies both to the cash incentive compensation awarded to you for 2011 and to this award. You can access this policy through the following link:
http://www.jpmorganchase.com/corporate/About-JPMC/corporate-governance-principles.htm#recoupment |
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Recapture Provisions
(Detrimental Conduct, Risk-Related and Other Recapture Provisions) |
Notwithstanding any terms of this Award Agreement to the contrary, JPMorgan Chase reserves the right in its sole discretion to cancel your outstanding restricted stock units under this award and/or to recover from you an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares distributed to you under this award:
If you engaged in conduct detrimental to the Firm insofar as it causes material financial or reputational harm to the Firm or its business activities, or
If this award was based on materially inaccurate performance metrics, whether or not you were responsible for the inaccuracy, or
If this award was based on a material misrepresentation by you, or
If you improperly or with gross negligence failed to identify, raise or assess, in a timely manner and as reasonably expected, risks and/or concerns with respect to risks material to the Firm or its business activities, or
If your employment was terminated for Cause (see Definitions below) or the Firm determines after the termination of your employment that your employment could have been terminated for Cause.
See Remedies below for additional information. The Firms right to cancel and/or recover value of this award (or any cash bonus) under the JPMorgan Chase Bonus Recoupment Policy and the other provisions of this award relate to the organizational goals of the Firm as that as defined regulations issued under Section 409A of the Internal Revenue Code (Code). |
Termination of Employment | Except as explicitly set forth below under Job Elimination , Full Career Eligibility , Government Office , Disability and Death , any restricted stock units outstanding under this award will be cancelled effective on the date your employment with the Firm terminates for any reason. | |
Job Elimination, Full Career Eligibility, Government Office, Disability |
You will be eligible to continue to vest in your outstanding restricted stock units under the terms of this award following the termination of your employment if one of the following circumstances applies to you.
Job Elimination :
This award will continue to vest on the original schedule following termination of employment in the event that:
the Director Human Resources of the Firm or nominee in his or her sole discretion determines that the Firm terminated your employment because your job was eliminated, and
after you are notified that your job will be eliminated, you provide such services as requested by the Firm in a cooperative and professional manner, and
you satisfy the Release/Certification Requirements set forth below.
Full Career Eligibility :
This award will continue to vest on the original schedule, subject to the prior written consent of the Firm, following termination of employment in the event that:
you leave the Firm voluntarily, have completed at least five years of continuous service with the Firm immediately preceding your termination date, and the sum of your age and Recognized Service (as defined below) on your date of termination equals or exceeds 60, and
you provide at least 90 days advance written notice to the Firm of your intention to voluntarily terminate your employment under this provision, during which notice period you provide such services as requested by the Firm in a cooperative and professional manner and you do not perform any services for any other employer, and
for the remainder of the relevant vesting period, you do not (i) perform services in any capacity (including self-employment) for a Financial Services Company (as defined below) or (ii) work in your profession (whether or not for a Financial Services Company); provided that you may work for a government, education or Not-for-Profit Organization (as defined below), and
you satisfy the Release/Certification Requirements set forth below.
After receipt of such advance written notice, the Firm may choose to have you continue to provide services during such 90-day period or shorten the length of the 90-day period at the Firms discretion, but to a date no earlier than the date you would otherwise meet the age and service requirements. The foregoing clause dealing with Full Career Eligibility has no application to any United States taxpayer who is or becomes subject to Section 457A of the Code.
You must notify JPMorgan Chase in writing in advance if you plan to perform services for any party or if you will be self-employed during the vesting periods. Failure to provide such notification could impact award vesting Additional advance notice requirements may apply for employees subject to notice period policies. (See Special Notice Period below.) |
Government Office:
All or a portion of this award may continue to vest on the original schedule if you voluntarily resign to accept a Government Office or become a candidate for an elective Government Office, as described at the end of these terms and conditions under the section Government Office .
Disability :
This award will continue to vest on the original schedule following termination of employment in the event that:
your employment with the Firm terminates because (i) you are unable to return to work while you are receiving benefits under the JPMorgan Chase Long Term Disability Plan, or for non-U.S. employees, under the equivalent JPMorgan Chase-sponsored local country plan (LTD Plan), or (ii) if you are not covered by a LTD Plan, you are unable to return to work due to a long-term disability that would qualify for benefits under the applicable LTD Plan, as determined by the Firm or a third-party designated by the Firm, and you request in writing continued vesting due to such disability within 30 days of the date your employment terminates and provide requested supporting documentation; and
you satisfy the Release/Certification Requirements set forth below;. |
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Release/Certification |
In order to qualify for continued vesting after termination of your employment under any of the foregoing circumstances:
you must timely execute and deliver a release of claims in favor of the Firm, having such form and terms as the Firm shall specify,
with respect to Full Career Eligibility, prior to the termination of your employment, you must confirm with management that you meet the eligibility criteria (including providing at least 90 days advance written notification) and advise that you are seeking to be treated as an individual eligible for Full Career Eligibility, and
except in the case of a job elimination, it is your responsibility to take the appropriate steps to certify to the Firm prior to each vesting date on the authorized form of the Firm that you have complied with the employment restrictions applicable to you (as described above) throughout the vesting period and otherwise complied with all other terms of the Award Agreement. (See Your Obligations below.) |
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Death | If you die while you are eligible to vest in restricted stock units under this award, the restricted stock units will immediately vest and will be distributed in shares of Common Stock (after applicable tax withholding) to your designated beneficiary on file with the Firms Stock Administration Department, or if no beneficiary has been designated or survives you, then to your estate. Any shares will be distributed by the later of the end of the calendar year in which you die or the 15 th day of the third month following your date of death. | |
Your Obligations | In consideration of the grant of this award, you agree to comply with and be bound by the following: | |
Non-Solicitation of Employees and Customers |
During your employment by the Firm and for one year following the termination of your employment, or if longer, during all remaining vesting periods if you continue to vest after your employment with the Firm terminates, you will not directly or indirectly, whether on your own behalf or on behalf of any other party, without the prior written consent of the Director Human Resources of JPMorgan Chase: (i) solicit, induce or encourage any of the Firms then current employees to leave the Firm or to apply for employment elsewhere, (ii) hire any employee or former employee who was employed by the Firm at the date your employment terminated, unless the individuals employment terminated because his or her job was eliminated, or the individuals employment with the Firm has been terminated for more than six months, (iii) to the fullest extent enforceable under applicable law, solicit or induce or attempt to induce to leave the Firm, or divert or attempt to divert from doing business with the Firm, any then current customers, |
suppliers or other persons or entities that were serviced by you or whose names became known to you by virtue of your employment with the Firm, or otherwise interfere with the relationship between the Firm and such customers, suppliers or other persons or entities. This does not apply to publicly known institutional customers that you service after your employment with the Firm without the use of the Firms confidential or proprietary information.
These restrictions do not apply to authorized actions you take in the normal course of your employment with the Firm, such as employment decisions with respect to employees you supervise or business referrals in accordance with the Firms policies. |
||
Confidential Information |
You may not, either during your employment with the Firm or thereafter, directly or indirectly use or disclose to anyone any confidential information related to the Firms business, except as explicitly permitted by the JPMorgan Chase Code of Conduct and applicable policies or law or legal process. Confidential information shall have the same meaning for the Award Agreement as it has in the JPMorgan Chase Code of Conduct. | |
Non-Disparagement |
You may not, either during your employment with the Firm or thereafter, make or encourage others to make any public statement or release any information in verbal, written, electronic or any other form, that is intended to, or reasonably could be foreseen to, disparage, embarrass or criticize the Firm or its employees, officers, directors or shareholders as a group. This shall not preclude you from reporting to the Firms management or directors or to the government or a regulator conduct you believe to be in violation of the law or the Firms Code of Conduct or responding truthfully to questions or requests for information to the government, a regulator or in a court of law in connection with a legal or regulatory investigation or proceeding. | |
Cooperation |
You agree to cooperate fully with and provide full and accurate information to the Firm and its counsel with respect to any matter (including any audit, tax proceeding, litigation, investigation or governmental proceeding) with respect to which you may have knowledge or information, subject to reimbursement for actual, appropriate and reasonable expenses incurred by you. | |
Compliance with Award Agreement |
You agree that you will provide the Firm with any information reasonably requested to determine compliance with the Award Agreement, and you authorize the Firm to disclose the terms of the Award Agreement to any third party who might be affected thereby, including your prospective employer. | |
Special Notice Period |
If you are subject to a notice period, whether by contract or by policy, that requires you to provide advance written notice of your intention to terminate your employment (Special Notice Period), then as consideration for this Award, you shall provide the Firm with the necessary advance written notice that applies to you, as specified by such contract or policy.
After receipt of your notice, the Firm may choose to have you continue to provide services during the applicable Special Notice Period or may place you on a paid leave for all or part of the applicable Special Notice Period. During the Special Notice Period, you shall continue to devote your full time and loyalty to the Firm by providing services in a cooperative and professional manner and not perform any services for any other employer and shall receive your base salary and certain benefits until your employment terminates. You and the Firm may mutually agree to waive or modify the length of the Special Notice Period.
Regardless of whether a Special Notice Period applies to you, you must comply with the 90-day advance notice period described under Full Career Eligibility in the event you wish to terminate employment under the Full Career Eligibility provision. |
Remedies | ||
Cancellation |
In addition to the provisions described under Protection-Based Vesting , Termination of Employment and Recapture Provisions , your outstanding restricted stock units under this award may be cancelled if:
the Firm in its sole discretion determines that you are not in compliance with any of the advance notice/cooperation requirements or employment restrictions applicable to your termination of employment, or
you fail to return the required forms specified under Release/Certification within the specified deadline, including the certification required immediately prior to a vesting date under Full Career Eligibility and Disability, or
you violate any of the provisions as set forth above in Your Obligations . |
|
Recovery |
In addition, you may be required to pay the Firm an amount equal to the Fair Market Value (determined as of the vesting date) of the net number of shares of Common Stock distributed to you under this award as follows:
shares distributed within the one year period prior to your violation of any of the provisions as set forth above in Your Obligations ,
shares distributed at any time following termination of employment when you were not in compliance with the employment restrictions then applicable to you during the vesting period,
shares distributed within the one year period immediately preceding and any time after your termination of employment, if your employment was terminated or the Firm determines that your employment could have been terminated, for Cause,
for a period up to one year after shares are distributed under this award (or any longer period applicable in the case of termination for Cause), to the extent that the Firm determines appropriate pursuant to Recapture Provisions above.
Payment may be made in shares of Common Stock or in cash. You agree that this repayment will be a recovery of shares to which you were not entitled under this agreement and is not to be construed in any manner as a penalty. You also acknowledge that a violation or attempted violation of the obligations set forth herein will cause immediate and irreparable damage to the Firm, and therefore agree that the Firm shall be entitled as a matter of right to an injunction, from any court of competent jurisdiction, restraining any violation or further violation of such obligations; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies the Firm may have under law or equity. In any action or proceeding by the Firm to enforce the terms and conditions of this Award Agreement where the Firm is the prevailing party, the Firm shall be entitled to recover from you its reasonable attorneys fees and expenses incurred in such action or proceeding. |
|
Administrative Provisions |
Withholding Taxes: Except as described in the next two sentences, the Firm will retain from each distribution the number of shares of Common Stock required to satisfy applicable tax obligations (including, to the extent legally permissible, recovery by the Firm of fringe benefit taxes). Alternatively, the Firm, in its sole discretion, may implement any other desirable or necessary procedures, so that appropriate withholding and other taxes are paid to the competent authorities with respect to the vested shares, dividend equivalents and the award This may include but is not limited to (i) a market sale of a number of such shares on your behalf substantially equal to the withholding or other taxes, (ii) to the extent required by law, withhold from cash compensation, an amount equal to any withholding obligation with respect to vested shares, the award and dividend equivalents, and (iii) retaining vested shares or dividend equivalents until you pay any taxes associated with the shares, the dividend equivalents or the award directly to the competent authorities. For United States tax purposes, dividend equivalents are treated as wages and subject to tax withholding when paid.
Right to Set Off: The Firm may, to the maximum extent permitted by applicable law, retain for itself funds or securities (i) otherwise payable to you pursuant to this award, or (ii) held in your name under |
any banking, brokerage or other accounts or instruments maintained with the Firm, to satisfy any obligation or debt that you owe to the Firm. The Firm may not retain such funds or securities payable under this award until such time as they would otherwise be distributable to you in accordance with the Award Agreement.
No Ownership Rights : Restricted stock units do not convey the rights of ownership of Common Stock and do not carry voting rights. No shares of Common Stock will be issued to you until after the restricted stock units have vested and all applicable restrictions have lapsed. Prior to any vesting date, JPMorgan Chase may impose, as of such vesting date and for up to 30 days following such date, such restrictions on the Common Stock to be issued to you as it may deem appropriate, including, but not limited to, restricting the sale, transfer, pledge, assignment or encumbrance of such shares of Common Stock. The imposition of such restrictions shall not be deemed an amendment of your Award Agreement subject to your consent. Shares will be issued in accordance with JPMorgan Chases procedures for issuing stock. By accepting this award, you authorize the Firm, in its discretion, to establish on your behalf a brokerage account in your name with the Firm and deliver to that brokerage account any vested shares derived from the award and, for avoidance of doubt, you further agree that it shall apply to prior awards. JPMorgan Chases obligation hereunder is unfunded.
Binding Agreement : The Award Agreement will be binding upon any successor in interest to JPMorgan Chase, by merger or otherwise.
Not a Contract of Employment : Nothing contained in the Award Agreement constitutes a contract of employment or continued employment. Employment is at-will and may be terminated by either you or JPMorgan Chase for any reason at any time. This award does not confer any right or entitlement to, nor does the award impose any obligation on the Firm to provide, the same or any similar award in the future and its value is not compensation for purposes of determining severance.
Section 409A Compliance : To the extent that Section 409A of the Code is applicable to an award, distributions of shares and cash thereunder are intended to comply with Section 409A of the Code, and the Agreement Award shall be interpreted in a manner consistent with such intent.
Notwithstanding anything herein to the contrary, if you (i) are subject to taxation under the Code, (ii) are a specified employee as defined in the JPMorgan Chase 2005 Deferred Compensation Plan and (iii) have incurred a separation from service (as defined In that Plan) and if any units/ shares under this award represent deferred compensation as defined in Section 409A and such shares are distributable to you as a result your separation from service, then those shares will be delivered to you on first business day of the first calendar month after the expiration of six full months from date of your separation from service. Further, if prior to any vesting date, your award is not subject to a substantial risk of forfeiture as defined by regulations issued under Section 409A of the Code, then the remainder of each calendar year immediately following (i) each vesting date shall be a payment date for purposes of distributing the vested portion of the award and (ii) each date that JPMorgan Chase specifies for payment of dividends declared on its Common Stock shall be the payment date(s) for purposes of dividend equivalent payments.
Change in Outstanding Shares : In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to stockholders of Common Stock other than regular cash dividends, the Committee will make an equitable substitution or proportionate adjustment, in the number or kind of shares of Common Stock or other securities issued or reserved for issuance pursuant to the Plan and to any Restricted Stock Units outstanding under this award for such corporate events.
Interpretation/Administration : The Committee has sole and complete authority to interpret and administer this Award Agreement, including, without limitation, the power to (i) interpret the Plan and the |
terms of this Award Agreement; (ii) determine the reason for termination of employment; (iii) determine application of the post-employment obligations and cancellation and recovery provisions; (iv) decide all claims arising with respect to this Award; and (v) delegate such authority as it deems appropriate. Any determination by such Committee or its delegate shall be binding on all parties.
Notwithstanding anything herein to the contrary, the Firms and the Committees determinations under the Plan and the Award Agreements are not required to be uniform. By way of clarification, the Committee and the Firm shall be entitled to make non-uniform and selective determinations and modifications under Award Agreements and the Plan.
Amendment : The Committee or its delegate reserves the right to amend this Award Agreement in any manner, at any time and for any reason; provided, however, that no such amendment shall materially adversely affect your rights under this Award Agreement without your consent except to the extent that the Committee or its delegate considers advisable to comply with applicable laws, regulatory requirements or take into account changes in or interpretations of applicable laws or accounting rules or standards. To extent permitted by Section 409A of the Code, a change in a scheduled vesting date and any restrictions imposed with respect to shares of Common Stock that are issued to you as set forth in under the No Ownership Rights shall not be deemed to materially adversely affect your rights under this Award Agreement requiring your consent. This Award Agreement may not be amended except in writing signed by the Director Human Resources of JPMorgan Chase.
Severability : If any portion of the Award Agreement is determined by the Firm to be unenforceable in any jurisdiction, any court of competent jurisdiction or the Director Human Resources may reform the relevant provisions (e.g., as to length of service, time, geographical area or scope) to the extent the Firm considers necessary to make the provision enforceable under applicable law.
Accelerated Distribution for Ethics or Conflict Reasons Resulting From Employment by a Government Entity : Upon receipt of satisfactory evidence that applicable United States federal, state, local, foreign or supranational ethics or conflict of interest laws or regulations require you to divest your interest in JPMorgan Chase restricted stock units, the Firm may accelerate the distribution of all or part of your outstanding award effective as of the required divesture date; provided that no accelerated distribution shall occur if the Firm determines that such acceleration will violate Section 409A of the Code. If you have voluntarily terminated your employment and have satisfied the requirements of the Government Office section of this award, acceleration shall apply (to extent required) to the percentage of your outstanding award that would continue to vest under that section. In the case of a termination of employment where the award is outstanding as a result of Job Elimination or Full Career Eligibility , then acceleration shall apply, to the extent required, to the full outstanding award. Notwithstanding accelerated distribution pursuant to the foregoing, you will remain subject to the applicable terms of your Award Agreement as if your award had remained outstanding for the duration of the original vesting period, including, but not limited to, repayment obligations and employment restrictions in the case of Full Career Eligibility or Government Office .
Use of Personal Data: By accepting this award, you have acknowledged that the Firm may use your personal data for purposes of (i) determining your compensation, (ii) payroll activities, including, but not limited to, tax withholding and regulatory reporting, (iii) registration of shares and units, (iv) establishing brokerage account on your behalf, and (v) all other lawful purposes related to your employment and this award and that the Firm may provide such data to third party vendors with whom it has contracted to provide such services. You may terminate this authorization at any time except with respect to tax and regulatory reporting. In such case, your award will be cancelled.
Governing Law : This award shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles. |
Choice of Forum : By accepting this award, you agree that to the extent not otherwise subject to arbitration under an arbitration agreement between you and the Firm, any dispute arising directly or indirectly in connection with this award or the Plan shall be submitted to arbitration in accordance with the rules of the American Arbitration Association if so elected by the Firm in its sole discretion. In the event such a dispute is not subject to arbitration for any reason, you agree to accept the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York with respect to any judicial proceeding in connection with this award or the Plan. You waive, to the fullest extent permitted by law, any objection to personal jurisdiction or to the laying of venue of such dispute and further agree not to commence any action arising out of or relating to this award or the Plan in any other forum.
Waiver of Jury Trial/Class Claims: By accepting this award, you agree, with respect to any claim brought in connection with your employment with the Firm (i) to waive the right to a jury trial and (ii) that any judicial proceeding or arbitration claim will be brought on an individual basis, and you hereby waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action.
Nontransferability: Neither this award or any other outstanding awards of restricted stock units, nor your interests or rights in any such awards, shall be assigned, pledged, transferred, hypothecated or subject to any lien. An award may be transferred following your death by will, the laws of descent or by a beneficiary designation on file with the Firm. |
||
Definitions |
Cause means a determination by the Firm that your employment terminated as a result of your (i) violation of any law, rule or regulation (including rules of self-regulatory bodies) related to the Firms business, (ii) indictment or conviction of a felony, (iii) commission of a fraudulent act, (iv) violation of the JPMorgan Code of Conduct or other Firm policies or misconduct related to your duties to the Firm (other than immaterial and inadvertent violations or misconduct), (v) inadequate performance of the duties associated with your position or job function or failure to follow reasonable directives of your manager, or (vi) any act or failure to act that is injurious to the interests of the Firm or its relationship with a customer, client or employee.
Financial Services Company means a business enterprise that employs you in any capacity (as an employee, contractor, consultant, advisor, self-employed individual, etc. (whether paid or unpaid) and engages in:
commercial or retail banking, including, but not limited to, commercial, institutional and personal trust, custody and/or lending and processing services, originating and servicing mortgages, issuing and servicing credit cards,
insurance, including but not limited to, guaranteeing against loss, harm, damage, illness, disability or death, providing and issuing annuities, acting as principal, agent or broker for purpose of the forgoing,
financial, investment or economic advisory services, including but not limited to, investment banking services (such as advising on mergers or dispositions, underwriting, dealing in, or making a market in securities or other similar activities), brokerage services, investment management services, asset management services, and hedge funds,
issuing, trading or selling instruments representing interests in pools of assets or in derivatives instruments;
advising on, or investing in, private equity or real estate, or
any similar activities that JPMorgan Chase determines in its sole discretion constitute financial services.
Firmwide Financial Threshold means a Cumulative Return on Tangible Common Equity for 2012, 2013 and 2014 of less than 15%. Cumulative Return on Tangible Common Equity means (i) the sum of the Firms reported net income for all three years, divided by (ii) reported year-end tangible equity averaged over the three years. |
Government Office means (i) a full-time position in an elected or appointed office in local, state, or federal government (including equivalent positions outside the U.S. or in a supranational organization), not reasonably anticipated to be a full-career position, or (ii) conducting a bona fide full-time campaign for such an elective public office after formally filing for candidacy, where it is customary and reasonably necessary to campaign full-time for the office.
Line of Business Financial Threshold means, for each of the highest-level business units of the Firm (e.g., Investment Bank, Asset Management), the financial threshold applicable under certain 2012 restricted stock unit awards granted to individuals designated as Tier 1. Unless otherwise specified, the applicable financial threshold will be negative annual pre-provision net income.
Not-for-Profit Organization means an entity exempt from tax under state law and under Section 501(c)(3) of the Code. Section 501(c)(3) includes entities organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, or to foster national or international amateur sports competition or for the prevention of cruelty to children or animals.
Recognized Service means the period of service as an employee set forth in the Firms applicable service-related policies. |
Government Office
You may be eligible to continue vesting in all or part of your award if you voluntarily resign to accept a Government Office (as defined below) or to become a candidate for an elective Government Office.
Eligibility
Eligibility for continued vesting is conditioned on your providing the Firm:
|
At least 60 days advance written notice of your intention to resign to accept or pursue a Government Office, during which period you must perform in a cooperative and professional manner services requested by the Firm and not provide services for any other employer. The Firm may elect to shorten this notice period at the Firms discretion. |
|
Confirmation, in a form satisfactory to the Firm, that vesting in this award pursuant to this provision would not violate any applicable law, regulation or rule. |
|
Documentation in a form satisfactory to the Firm that your resignation is for the purpose of accepting a Government Office or becoming a candidate for a Government Office. |
Continued vesting
Subject to the conditions below, the percentage of your outstanding awards with respect to each vesting date that will continue to vest in accordance with this awards original schedule will be based on your years of continuous service completed with the Firm immediately preceding your termination date, as follows:
|
50% if you have at least 3 but less than 4 years of continuous service, |
|
75% if you have at least 4 but less than 5 years of continuous service, or |
|
100% if you have 5 or more years of continuous service. |
The portion of the award not subject to continued vesting will be cancelled on the date your employment terminates.
Conditions for Continued Vesting
|
You must remain in a non-elective Government Office for two or more years after your employment with the Firm terminates. |
|
In the case of resignation from the Firm to campaign for an elective Government Office, your name must be on the primary or final public ballot for the election. (If you are not elected, see below for employment restrictions.) |
Satisfaction of Conditions for Continued Vesting
If your service in a Government Office ends two years or more after your employment with the Firm terminates, or in the case of resignation from the Firm to campaign for a Government Office, your name is on the primary or final public ballot for the election and you are not elected, any awards then outstanding and any awards that would have then been outstanding but for an accelerated distribution of shares (as described in the Administrative Provisions under the heading Accelerated Distribution for Ethics or Conflict Reasons Resulting From Employment by a Government Entity ) will be subject for the remainder of the applicable vesting period to the same terms and conditions of this Award Agreement, including employment restrictions during the vesting period, as if you had resigned from the Firm having met the requirements for Full Career Eligibility. If you breach Your Obligations or fail to comply with requirements of Full Career Eligibility , for example, by becoming employed by a Financial Service Company, during the remaining vesting period, you will be required to repay the Fair Market Value, determined as of the date the shares were distributed, of any shares that would not otherwise have vested during that period.
Failure to Satisfy Conditions for Continued Vesting
If you do not satisfy the above Conditions for Continued Vesting , your award will be immediately cancelled. You also will be required to repay the Fair Market Value of any shares that were distributed to you that would have been outstanding as restricted stock units on the date you failed to satisfy the Condition for Continued Vesting but for their accelerated distribution (as described in the Administrative Provisions under the heading Accelerated Distribution for Ethics or Conflict Reasons Resulting From Employment by a Government Entity ). Fair Market Value for this purpose will be determined as the date that the shares were distributed.
Full Career Eligibility
The Government Office section of this award does not apply to you if you satisfy the requirement for Full Career Eligibility as of the date that you voluntarily terminate your employment with the Firm.
Year ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|||||
(in millions, except ratios)
|
2011
|
|
2010
|
|
2009
|
|
2008
(b)
|
|
2007
|
|
|||||
Excluding interest on deposits
|
|
|
|
|
|
||||||||||
Income from continuing operations before income taxes
|
$
|
26,749
|
|
$
|
24,859
|
|
$
|
16,067
|
|
$
|
2,773
|
|
$
|
22,805
|
|
Fixed charges:
|
|
|
|
|
|
||||||||||
Interest expense
|
9,749
|
|
9,357
|
|
10,372
|
|
19,693
|
|
23,328
|
|
|||||
One-third of rents, net of income from subleases
(a)
|
562
|
|
578
|
|
569
|
|
507
|
|
400
|
|
|||||
Total fixed charges
|
10,311
|
|
9,935
|
|
10,941
|
|
20,200
|
|
23,728
|
|
|||||
Add: Equity in undistributed loss of affiliates/Less: Equity in undistributed income of affiliates
|
59
|
|
127
|
|
(21
|
)
|
623
|
|
(159
|
)
|
|||||
Income from continuing operations before income taxes and fixed charges, excluding capitalized interest
|
$
|
37,119
|
|
$
|
34,921
|
|
$
|
26,987
|
|
$
|
23,596
|
|
$
|
46,374
|
|
Fixed charges, as above
|
$
|
10,311
|
|
$
|
9,935
|
|
$
|
10,941
|
|
$
|
20,200
|
|
$
|
23,728
|
|
Ratio of earnings to fixed charges
|
3.60
|
|
3.51
|
|
2.47
|
|
1.17
|
|
1.95
|
|
|||||
Including interest on deposits
|
|
|
|
|
|
||||||||||
Fixed charges as above
|
$
|
10,311
|
|
$
|
9,935
|
|
$
|
10,941
|
|
$
|
20,200
|
|
$
|
23,728
|
|
Add: Interest on deposits
|
3,855
|
|
3,424
|
|
4,826
|
|
14,546
|
|
21,653
|
|
|||||
Total fixed charges and interest on deposits
|
$
|
14,166
|
|
$
|
13,359
|
|
$
|
15,767
|
|
$
|
34,746
|
|
$
|
45,381
|
|
Income from continuing operations before income taxes and fixed charges, excluding capitalized interest, as above
|
$
|
37,119
|
|
$
|
34,921
|
|
$
|
26,987
|
|
$
|
23,596
|
|
$
|
46,374
|
|
Add: Interest on deposits
|
3,855
|
|
3,424
|
|
4,826
|
|
14,546
|
|
21,653
|
|
|||||
Total income from continuing operations before income taxes, fixed charges and interest on deposits
|
$
|
40,974
|
|
$
|
38,345
|
|
$
|
31,813
|
|
$
|
38,142
|
|
$
|
68,027
|
|
Ratio of earnings to fixed charges
|
2.89
|
|
2.87
|
|
2.02
|
|
1.10
|
|
1.50
|
|
(a)
|
The proportion deemed representative of the interest factor.
|
(b)
|
On September 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual Bank. On May 30, 2008, JPMorgan Chase merged with The Bear Stearns Companies Inc. Each of these transactions was accounted for as a purchase, and their respective results of operations are included in the Firm’s results from each respective transaction date.
|
Year ended December 31,
|
|
|
|
|
|
|
|
|
|
|
||||||
(in millions, except ratios)
|
2011
|
|
2010
|
|
2009
|
|
|
2008
(c)
|
|
2007
|
|
|||||
Excluding interest on deposits
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income taxes
|
$
|
26,749
|
|
$
|
24,859
|
|
$
|
16,067
|
|
|
$
|
2,773
|
|
$
|
22,805
|
|
Fixed charges:
|
|
|
|
|
|
|
||||||||||
Interest expense
|
9,749
|
|
9,357
|
|
10,372
|
|
|
19,693
|
|
23,328
|
|
|||||
One-third of rents, net of income from subleases
(a)
|
562
|
|
578
|
|
569
|
|
|
507
|
|
400
|
|
|||||
Total fixed charges
|
10,311
|
|
9,935
|
|
10,941
|
|
|
20,200
|
|
23,728
|
|
|||||
Add: Equity in undistributed loss of affiliates/Less: Equity in undistributed income of affiliates
|
59
|
|
127
|
|
(21
|
)
|
|
623
|
|
(159
|
)
|
|||||
Income from continuing operations before income taxes and fixed charges, excluding capitalized interest
|
$
|
37,119
|
|
$
|
34,921
|
|
$
|
26,987
|
|
|
$
|
23,596
|
|
$
|
46,374
|
|
Fixed charges, as above
|
$
|
10,311
|
|
$
|
9,935
|
|
$
|
10,941
|
|
|
$
|
20,200
|
|
$
|
23,728
|
|
Preferred stock dividends (pretax)
|
899
|
|
947
|
|
3,435
|
|
(b)
|
803
|
|
—
|
|
|||||
Fixed charges including preferred stock dividends
|
$
|
11,210
|
|
$
|
10,882
|
|
$
|
14,376
|
|
|
$
|
21,003
|
|
$
|
23,728
|
|
Ratio of earnings to fixed charges and preferred stock dividend requirements
|
3.31
|
|
3.21
|
|
1.88
|
|
|
1.12
|
|
1.95
|
|
|||||
Including interest on deposits
|
|
|
|
|
|
|
||||||||||
Fixed charges including preferred stock dividends, as above
|
$
|
11,210
|
|
$
|
10,882
|
|
$
|
14,376
|
|
|
$
|
21,003
|
|
$
|
23,728
|
|
Add: Interest on deposits
|
3,855
|
|
3,424
|
|
4,826
|
|
|
14,546
|
|
21,653
|
|
|||||
Total fixed charges including preferred stock dividends and interest on deposits
|
$
|
15,065
|
|
$
|
14,306
|
|
$
|
19,202
|
|
|
$
|
35,549
|
|
$
|
45,381
|
|
Income from continuing operations before income taxes and fixed charges, excluding capitalized interest, as above
|
$
|
37,119
|
|
$
|
34,921
|
|
$
|
26,987
|
|
|
$
|
23,596
|
|
$
|
46,374
|
|
Add: Interest on deposits
|
3,855
|
|
3,424
|
|
4,826
|
|
|
14,546
|
|
21,653
|
|
|||||
Total income from continuing operations before income taxes, fixed charges and interest on deposits
|
$
|
40,974
|
|
$
|
38,345
|
|
$
|
31,813
|
|
|
$
|
38,142
|
|
$
|
68,027
|
|
Ratio of earnings to fixed charges and preferred stock dividend requirements
|
2.72
|
|
2.68
|
|
1.66
|
|
|
1.07
|
|
1.50
|
|
(a)
|
The proportion deemed representative of the interest factor.
|
(b)
|
Includes a one-time $1.6 billion pretax payment of TARP preferred dividends.
|
(c)
|
On September 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual Bank. On May 30, 2008, JPMorgan Chase merged with The Bear Stearns Companies Inc. Each of these transactions was accounted for as a purchase, and their respective results of operations are included in the Firm’s results from each respective transaction date.
|
December 31, 2011
Name
|
Organized under
the laws of
|
Banc One Building Management Corporation
|
Wisconsin
|
Banc One Capital Holdings LLC
|
Delaware
|
BOCP Holdings Corporation
|
Ohio
|
Banc One Capital Partners IV, Ltd.
|
Ohio
|
Banc One Capital Partners VIII, Ltd.
|
Ohio
|
BOCP Energy Partners, L.P.
|
Texas
|
BOCF, LLC
|
Delaware
|
JPM Mezzanine Capital, LLC
|
Delaware
|
Chase Investment Services Corp.
|
Delaware
|
Banc One Financial LLC
|
Delaware
|
JPMorgan Capital Corporation
|
Delaware
|
First Chicago Capital Corporation
|
Delaware
|
JPMorgan Capital (Canada) Corp.
|
Canada
|
One Mortgage Partners Corp.
|
Vermont
|
First Chicago Equity Corporation
|
Illinois
|
First Chicago Leasing Corporation
|
Delaware
|
First Chicago Lease Holdings, Inc.
|
Delaware
|
Palo Verde Leasing Corporation
|
Delaware
|
First Chicago Lease Investments, Inc.
|
Delaware
|
FM Holdings I, Inc.
|
Delaware
|
GHML Holdings I, Inc.
|
Delaware
|
GHML Holdings II, Inc.
|
Delaware
|
GTC Fund III Holdings, Inc.
|
Delaware
|
GTC Fund IV Holdings, Inc.
|
Delaware
|
GTC Fund V Holdings, Inc.
|
Delaware
|
JPMorgan Housing Corporation
|
Delaware
|
Cooper Project, L.L.C.
|
Delaware
|
J.P. Morgan Mansart Investments
|
France
|
Lenox Court GP, LLC
|
Delaware
|
Lenox Court Associates, Ltd
|
Florida
|
NLTC Fund Holdings I, Inc.
|
Delaware
|
OX FCL Two, Inc.
|
Delaware
|
SAHP 130 Holdings, Inc.
|
Delaware
|
OEP Holding Corporation
|
Delaware
|
Banc One Equity Capital Fund II, L.L.C.
|
Delaware
|
Banc One Equity Capital II, L.L.C.
|
Delaware
|
Chase Travel Investment I, LLC
|
Delaware
|
SapoToro Cooperatief U.A.
|
Netherlands
|
OEP Parent LLC
|
Delaware
|
Bank One Investment LLC
|
Delaware
|
One Equity Partners II, L.P.
|
Cayman Islands
|
One Equity Partners III, L.P.
|
Cayman Islands
|
One Equity Partners IV, L.P.
|
Cayman Islands
|
One Equity Partners LLC
|
Delaware
|
Banc One Neighborhood Development Corporation
|
Ohio
|
Bear Stearns Irish Holdings Inc.
|
Delaware
|
Bear Stearns International Funding I S.a r.l.
|
Luxembourg
|
J.P. Morgan Dublin Financial Holdings Limited
|
Ireland
|
J.P. Morgan Bank Dublin plc
|
Ireland
|
Bear Stearns International Funding II S.a r.l.
|
Luxembourg
|
Bear Stearns Ireland Limited
|
Ireland
|
Bryant Financial Corporation
|
California
|
CCC Holding Inc.
|
Delaware
|
Chase Commercial Corporation
|
Delaware
|
Chase Capital Holding Corporation
|
Delaware
|
Chase Capital Corporation
|
Delaware
|
Chase Capital Credit Corporation
|
Delaware
|
Chase Lincoln First Commercial Corporation
|
Delaware
|
December 31, 2011
Name |
Organized under
the laws of
|
Chase Manhattan Realty Leasing Corporation
|
New York
|
Palo Verde 1-PNM August 50 Corporation
|
Delaware
|
Palo Verde 1-PNM December 75 Corporation
|
Delaware
|
PV2-APS 150 Corporation
|
Delaware
|
Chatham Ventures, Inc.
|
New York
|
J.P. Morgan Partners (BHCA), L.P.
|
California
|
CVCA, LLC
|
Delaware
|
Chemical Investments, Inc.
|
Delaware
|
Clintstone Properties Inc.
|
New York
|
Hambrecht & Quist California
|
California
|
H&Q Holdings Inc.
|
Delaware
|
Homesales, Inc.
|
Delaware
|
J.P. Morgan Broker-Dealer Holdings Inc.
|
Delaware
|
J.P. Morgan Securities LLC
|
Delaware
|
Bear, Stearns Benefits Planning Group Inc.
|
Delaware
|
J.P. Morgan Clearing Corp.
|
Delaware
|
J.P. Morgan Capital Financing Limited
|
England
|
J.P. Morgan Chase International Financing Limited
|
England
|
Robert Fleming Holdings Limited
|
England
|
Copthall Overseas Limited
|
England
|
J.P. Morgan Management (Jersey) Limited
|
Jersey
|
J.P. Morgan Chase Community Development Corporation
|
Delaware
|
J.P. Morgan Chase National Corporate Services, Inc.
|
New York
|
J.P. Morgan Corporate Services Limited
|
England
|
J.P. Morgan Equity Holdings, Inc.
|
Delaware
|
CMC Holding Delaware Inc.
|
Delaware
|
Chase Bank USA, National Association
|
United States
|
Chase BankCard Services, Inc.
|
Delaware
|
Chase BankCard LLC
|
Delaware
|
Chase Credit Card Master Trust
|
Delaware
|
Chase Issuance Trust
|
Delaware
|
First USA Credit Card Master Trust
|
United States
|
J.P. Morgan Trust Company of Delaware
|
Delaware
|
JPMorgan Bank and Trust Company, National Association
|
United States
|
JPM Capital Corporation
|
Delaware
|
JPM Heartland Wind I, LLC
|
Delaware
|
JPM Penta Wind, LLC
|
Delaware
|
JPMC Wind Assignor Corporation
|
Delaware
|
JPMC Wind Investment LLC
|
Delaware
|
J.P. Morgan Finance Holdings (Japan) LLC
|
Delaware
|
J.P.Morgan Finance Japan YK
|
Japan
|
J.P. Morgan GT Corporation
|
Delaware
|
J.P. Morgan Insurance Holdings, L.L.C.
|
Arizona
|
Banc One Insurance Company
|
Vermont
|
Chase Insurance Agency, Inc.
|
Wisconsin
|
J.P. Morgan International Holdings LLC
|
Delaware
|
J.P. Morgan Trust Company (Bahamas) Limited
|
The Bahamas
|
J.P. Morgan Trust Company (Cayman) Limited
|
Cayman Islands
|
JPMAC Holdings Inc.
|
Delaware
|
J.P. Morgan Invest Holdings LLC
|
Delaware
|
J.P. Morgan Retirement Plan Services LLC
|
Delaware
|
J.P. Morgan Partners (23A Manager), LLC
|
Delaware
|
J.P. Morgan Private Investments Inc.
|
Delaware
|
J.P. Morgan Services Asia Holdings, Inc.
|
Delaware
|
J.P. Morgan Services Asia Holdings Limited
|
Mauritius
|
J.P. Morgan Services India Private Limited
|
India
|
J.P. Morgan Services Inc.
|
Delaware
|
J.P. Morgan Ventures Energy Corporation
|
Delaware
|
BE Investment Holding Inc.
|
Delaware
|
Arroyo Energy Investors LLC
|
Delaware
|
Argonaut Power LP
|
Delaware
|
December 31, 2011
Name |
Organized under
the laws of
|
Arroyo Power GP Holdings LLC
|
Delaware
|
Jackson Preferred Holdings LP
|
Delaware
|
Central Power Holdings LP
|
Delaware
|
Okwari CB Holdings LP
|
Delaware
|
Carbon Acquisition Company Limited
|
Jersey
|
ECOSECURITIES GROUP PLC
|
Ireland
|
J.P. Morgan China Commodities Corporation
|
China, Peoples Republic of
|
J.P. Morgan Commodities Canada Corporation
|
Canada
|
J.P. Morgan Energy Europe Espana, S.L.
|
Spain
|
J.P. Morgan Energy Hungary Korlatolt Felelossegu Tarsasag
|
Hungary
|
J.P. Morgan Energy Trading Holdings Sarl
|
Switzerland
|
J.P. Morgan Commodities Sarl
|
Switzerland
|
TTMI Sarl
|
Switzerland
|
J.P. Morgan Metals & Concentrates LLC
|
Delaware
|
J.P. Morgan Metals Group Limited
|
England
|
Henry Bath & Son Limited
|
England
|
Henry Bath BV
|
Netherlands
|
Henry Bath LLC
|
Delaware
|
Henry Bath Singapore Pte Ltd
|
Singapore
|
J.P. Morgan Energy Trading Holdings Ltd.
|
England
|
J.P. Morgan Energy Europe Ltd.
|
England
|
J.P. Morgan Energy Europe s.r.o.
|
Czech Republic
|
J.P. Morgan Metals Limited
|
England
|
JPMorgan Ventures Energy (Asia) Pte Ltd
|
Singapore
|
Trading & Transportation Management LLC
|
Delaware
|
JPM International Consumer Holding Inc.
|
Delaware
|
JPM International Consumer Holding, LLC
|
Delaware
|
JPMorgan Asset Management Holdings Inc.
|
Delaware
|
Constellation Venture Capital III (EF), L.P.
|
Delaware
|
HCM Participacoes Brasil Ltda.
|
Brazil
|
HCM Participacoes No. 2 Brasil Ltda.
|
Brazil
|
Gavea Investimentos Ltda.
|
Brazil
|
Highbridge Capital Management, LLC
|
Delaware
|
Highbridge Capital Management (Hong Kong), Limited
|
Hong Kong
|
Highbridge Capital Management (UK), Ltd.
|
England
|
Highbridge Principal Strategies, LLC
|
Delaware
|
Constellation Growth Capital, LLC
|
Delaware
|
CVC III Partners LLC
|
Delaware
|
Highbridge Mezzanine Partners, LLC
|
Delaware
|
Highbridge Principal Strategies (UK) I, Ltd
|
England
|
Highbridge Principal Strategies (UK), LLP
|
England
|
Highbridge Principal Strategies Mezzanine Partners GP, L.P.
|
Delaware
|
Highbridge Principal Strategies Mezzanine Partners Offshore GP, L.P.
|
Cayman Islands
|
J.P. Morgan Alternative Asset Management, Inc.
|
Delaware
|
J.P. Morgan Fund Investor LLC
|
Delaware
|
J.P. Morgan Investment Management Inc.
|
Delaware
|
522 Fifth Avenue Corporation
|
Delaware
|
522 Fifth Avenue Fund, L.P.
|
Delaware
|
J.P. Morgan Direct Investors L.P.
|
Delaware
|
DVCMM LLC
|
Delaware
|
J.P. Morgan Research Total Return Fund LLC
|
United States
|
J. P. Morgan Research Total Return Master Fund Ltd
|
Cayman Islands
|
JP Morgan URPF Master Holding, LP
|
Delaware
|
JPMorgan Absolute Return Credit Fund LLC
|
Delaware
|
JPMorgan AIRRO Cayman SLP, LP
|
Cayman Islands
|
JPMorgan Distressed Debt Fund LLC
|
Delaware
|
JPMorgan Distressed Debt Master Fund Ltd.
|
Cayman Islands
|
JPMorgan Distressed Debt Opportunities Fund LLC
|
Delaware
|
JPMorgan Distressed Debt Opportunities Master Fund Ltd.
|
Cayman Islands
|
JPMorgan Global Absolute Return Strategies Fund LLC
|
Delaware
|
JPMorgan Global Absolute Return Strategies Master Fund Ltd.
|
Cayman Islands
|
December 31, 2011
Name |
Organized under
the laws of
|
JPMorgan Greater China Property Fund Cayman SLP LP
|
Cayman Islands
|
JPMorgan India Property Fund Cayman PS L.P.
|
Cayman Islands
|
JPMorgan USOPF RE Master, LP
|
Delaware
|
USOPF JV 3 LLC
|
Delaware
|
JPMorgan Asset Management (Asia) Inc.
|
Delaware
|
JF Asset Management Limited
|
Hong Kong
|
JPMorgan Asset Management (Japan) Limited
|
Japan
|
JPMorgan Asset Management (Korea) Company Limited
|
South Korea
|
JPMorgan Asset Management (Singapore) Limited
|
Singapore
|
JPMorgan Asset Management (Taiwan) Limited
|
Taiwan
|
JPMorgan Asset Management Real Assets (Asia) Limited
|
Hong Kong
|
JPMorgan Funds (Asia) Limited
|
Hong Kong
|
JPMorgan Funds (Taiwan) Limited
|
Taiwan
|
JPMorgan Asset Management (Canada) Inc.
|
Canada
|
JPMorgan Asset Management International Limited
|
England
|
JPMorgan Asset Management Holdings (UK) Limited
|
England
|
JPMorgan Asset Management (UK) Limited
|
England
|
JPMorgan Asset Management Holdings (Luxembourg) S.a r.l.
|
Luxembourg
|
J.P. Morgan Specialist Funds - J.P. Morgan Special Opportunities Fund
|
Luxembourg
|
JPMorgan Asset Management (Europe) S.a r.l.
|
Luxembourg
|
JPMorgan Asset Management Luxembourg S.A.
|
Luxembourg
|
JPMorgan Asset Management Marketing Limited
|
England
|
J.P. Morgan Trustee & Administration Services Limited
|
England
|
JPMorgan Funds Limited
|
Scotland
|
JPMorgan Investments Limited
|
England
|
JPMorgan Life Limited
|
England
|
JPMorgan LDHES LLC
|
Delaware
|
Security Capital Research & Management Incorporated
|
Delaware
|
JPMorgan Chase Bank, Dearborn
|
Michigan
|
JPMorgan Chase Bank, National Association
|
United States
|
Banc One Arizona Leasing Corporation
|
Arizona
|
Banc One Building Corporation
|
Illinois
|
Banc One Community Development Corporation
|
Delaware
|
Protech Tax Credit Fund III, LLC
|
United States
|
Banc One Equipment Finance, Inc.
|
Indiana
|
Banc One Kentucky Leasing Corporation
|
Kentucky
|
Banc One Real Estate Investment Corp.
|
Delaware
|
Bear Stearns Mortgage Capital Corporation
|
Delaware
|
Bear, Stearns Funding, Inc.
|
Delaware
|
Blue Box Holdings Inc.
|
Delaware
|
BONA Capital I, LLC
|
Delaware
|
BONA Capital II, LLC
|
Delaware
|
California Reconveyance Company
|
California
|
Chase Access Services Corporation
|
Delaware
|
Chase Community Development Corporation
|
Delaware
|
Chase Community Equity, LLC
|
Delaware
|
Chase NMTC CHASS Investment Fund, LLC
|
Delaware
|
Chase NMTC KIPP Bronx Investment Fund, LLC
|
Delaware
|
Chase NMTC Madison Theatre Investment Fund, LLC
|
Delaware
|
Chase Education Loan Trust 2007A
|
Delaware
|
Chase Funding Corporation
|
Delaware
|
Chase Mortgage Holdings, Inc.
|
Delaware
|
Chase New Markets Corporation
|
Delaware
|
Chase NMTC Crown Heights, LLC
|
Delaware
|
Chase NMTC SA St. Joseph Investment Fund, LLC
|
Delaware
|
Chase Preferred Capital Corporation
|
Delaware
|
CPCC Delaware Statutory Trust
|
Delaware
|
CPCC Texas Limited Partnership
|
Texas
|
CPCC Massachusetts Business Trust
|
Massachusetts
|
Collegiate Funding Services, L.L.C.
|
Virginia
|
Chase Student Loans, Inc.
|
Delaware
|
December 31, 2011
Name |
Organized under
the laws of
|
Collegiate Funding of Delaware, L.L.C.
|
Delaware
|
Collegiate Funding Services Education Loan Trust 2003A
|
Delaware
|
Collegiate Funding Services Education Loan Trust 2003B
|
Delaware
|
Collegiate Funding Services Education Loan Trust 2004A
|
Delaware
|
Collegiate Funding Services Education Loan Trust 2005A
|
Delaware
|
Collegiate Funding Services Education Loan Trust 2005B
|
Delaware
|
Commercial Loan Partners L.P.
|
Nevada
|
Cross Country Insurance Company
|
Vermont
|
CSL Leasing, Inc.
|
Delaware
|
DNT Asset Trust
|
Delaware
|
Ventures Business Trust
|
Maryland
|
FA Out-of-State Holdings, Inc.
|
California
|
Ahmanson Marketing, Inc.
|
California
|
CRP Properties, Inc.
|
California
|
FA California Aircraft Holding Corp.
|
California
|
Pacific Centre Associates LLC
|
California
|
WMRP Delaware Holdings LLC
|
Delaware
|
WMICC Delaware Holdings LLC
|
Delaware
|
Irvine Corporate Center, Inc.
|
California
|
Rivergrade Investment Corp.
|
California
|
Savings of America, Inc.
|
California
|
Washington Mutual Community Development, Inc.
|
California
|
FC Energy Finance I, Inc.
|
Delaware
|
FDC Offer Corporation
|
Delaware
|
Chase Merchant Services, L.L.C.
|
Delaware
|
Chase Paymentech Solutions, LLC
|
Delaware
|
Paymentech, LLC
|
Delaware
|
Paymentech, Inc.
|
Delaware
|
Paymentech Management Resources, Inc.
|
Delaware
|
FNBC Leasing Corporation
|
Delaware
|
Guilford Capital Fund II, LP
|
United States
|
ICIB Fund I Holdings, Inc.
|
Delaware
|
Georgetown/Chase Phase I LLC
|
Delaware
|
Georgetown/Chase Phase II LLC
|
Delaware
|
Harvest Opportunity Holdings Corp.
|
New York
|
HCP Properties, Inc.
|
California
|
J.P. Morgan Chase Custody Services, Inc.
|
Delaware
|
J.P. Morgan Commercial Mortgage Inc.
|
New York
|
J.P. Morgan Electronic Financial Services, Inc.
|
New York
|
J.P. Morgan International Inc.
|
United States
|
Bank One International Holdings Corporation
|
United States
|
Bank One Europe Limited
|
England
|
J.P. Morgan International Finance Limited
|
United States
|
Ambre Mauritius Investment Limited
|
Mauritius
|
Banco J.P. Morgan S.A.
|
Brazil
|
Atacama Multimercado - Fundo de Investimento
|
Brazil
|
J.P. Morgan Corretora de Cambio e Valores Mobiliarios S.A.
|
Brazil
|
J.P. Morgan S.A. Distribuidora de Titulos e Valores Mobiliarios
|
Brazil
|
Bear Stearns Singapore Management Pte. Ltd.
|
Singapore
|
Bluebay Mauritius Investment Limited
|
Mauritius
|
BOL Canada II Sub, Inc.
|
Delaware
|
BOL Canada II Trust
|
Delaware
|
BO Leasing II ULC
|
Canada
|
BOL Canada I, Inc.
|
Delaware
|
BOL Canada I Sub, Inc.
|
Delaware
|
BOL Canada III, Inc.
|
Delaware
|
BOL Canada III Sub, Inc.
|
Delaware
|
BO Leasing III ULC
|
Canada
|
Brysam Lux (Colombia), S.a.r.l.
|
Luxembourg
|
Cazenove Group Limited
|
Jersey
|
Cazenove Holdings Limited
|
Jersey
|
December 31, 2011
Name |
Organized under
the laws of
|
Cazenove IP Limited
|
England
|
CB "J.P. Morgan Bank International" (LLC)
|
Russia
|
Chase Manhattan Holdings Limitada
|
Brazil
|
Crosby Sterling (Holdings) Limited
|
England
|
Dearborn Merchant Services, Inc.
|
Canada
|
Chase Paymentech Solutions
|
Canada
|
First Data/Paymentech Canada Partner ULC
|
British Columbia
|
Inversiones J.P. Morgan Limitada
|
Chile
|
J.P. Morgan Corredores de Bolsa SpA
|
Chile
|
J.P. Morgan (Suisse) SA
|
Switzerland
|
J.P. Morgan Bank (Ireland) plc
|
Ireland
|
J.P. Morgan Administration Services (Ireland) Limited
|
Ireland
|
J.P. Morgan Bank Canada
|
Canada
|
J.P. Morgan Bank Luxembourg S.A.
|
Luxembourg
|
J.P. Morgan Beteiligungs- und Verwaltungsgesellschaft mbH
|
Germany
|
J.P. Morgan AG
|
Germany
|
J.P. Morgan Capital Holdings Limited
|
England
|
J.P. Morgan Chase (UK) Holdings Limited
|
England
|
J.P. Morgan Chase International Holdings
|
England
|
J.P. Morgan Courtage SAS
|
France
|
J.P. Morgan EU Holdings Limited
|
England
|
J.P. Morgan (SC) Limited
|
England
|
J.P. Morgan Equities Limited
|
South Africa
|
J.P. Morgan International Bank Limited
|
England
|
J.P. Morgan Securities Ltd.
|
England
|
J.P. Morgan Europe Limited
|
England
|
JPMorgan Servicios Auxiliares, S.A.
|
Spain
|
Morgan Property Development Company Limited
|
England
|
J.P. Morgan Limited
|
England
|
J.P. Morgan Chase Finance Limited
|
England
|
JPMorgan Cazenove Holdings
|
England
|
J.P. Morgan Cazenove Limited
|
England
|
JPMorgan Cazenove Service Company
|
England
|
J.P. Morgan Holdings B.V.
|
Netherlands
|
J.P. Morgan Chase Bank Berhad
|
Malaysia
|
J.P. Morgan Chile Limitada
|
Chile
|
J.P. Morgan Funding South East Asia Private Limited
|
Singapore
|
J.P. Morgan (S.E.A.) Limited
|
Singapore
|
J.P. Morgan Grupo Financiero S.A. De C.V.
|
Mexico
|
Banco J.P. Morgan S.A., Institucion de Banca Multiple, J.P. Morgan Grupo Financiero
|
Mexico
|
Fideicomiso Socio Liquidador de Posicion de Terceros F00265
|
Mexico
|
J.P. Morgan Casa de Bolsa, S.A. de C.V., J.P. Morgan Grupo Financiero
|
Mexico
|
J.P. Morgan Holdings (Hong Kong) Limited
|
Hong Kong
|
Copthall Mauritius Investment Limited
|
Mauritius
|
J.P. Morgan Securities (Far East) Limited
|
Hong Kong
|
J.P. Morgan Broking (Hong Kong) Limited
|
Hong Kong
|
J.P. Morgan Futures Co., Limited
|
China, Peoples Republic Of
|
J.P. Morgan International Derivatives Ltd.
|
Jersey
|
J.P. Morgan International Holdings Limited
|
Cayman Islands
|
J.P. Morgan India Securities Holdings Limited
|
Mauritius
|
J.P. Morgan India Private Limited
|
India
|
J.P. Morgan Indonesia Holdings (B.V.I.) Limited
|
British Virgin Islands
|
J.P. Morgan Securities Singapore Private Limited
|
Singapore
|
J.P. Morgan Securities Thailand Holdings Limited
|
British Virgin Islands
|
PGW Limited
|
Thailand
|
JPMorgan Securities (Thailand) Limited
|
Thailand
|
Jadeling Malaysia Holdings Limited
|
British Virgin Islands
|
J.P. Morgan Services (Malaysia) Sdn. Bhd.
|
Malaysia
|
JPMorgan Securities (Malaysia) Sdn. Bhd.
|
Malaysia
|
J.P. Morgan Investimentos e Financas Ltda.
|
Brazil
|
J.P. Morgan Gavea Gestão de Patrimônio Ltda.
|
Brazil
|
December 31, 2011
Name |
Organized under
the laws of
|
J.P. Morgan Luxembourg International S.a r.l.
|
Luxembourg
|
J.P. Morgan Malaysia Ltd.
|
Malaysia
|
J.P. Morgan Overseas Capital Corporation
|
Delaware
|
J.P. Morgan Australia Group Pty Limited
|
Australia
|
J.P. Morgan Operations Australia Limited
|
Australia
|
J.P. Morgan Administrative Services Australia Limited
|
Australia
|
J.P. Morgan Australia Limited
|
Australia
|
J.P. Morgan Nominees Australia Limited
|
Australia
|
J.P. Morgan Portfolio Services Limited
|
Australia
|
J.P. Morgan Securities Australia Limited
|
Australia
|
JPMorgan Investments Australia Limited
|
Australia
|
J.P. Morgan Markets Australia Pty Limited
|
Australia
|
J.P. Morgan Espana S.A.
|
Spain
|
J.P. Morgan Securities Canada Inc.
|
Canada
|
J.P. Morgan Whitefriars Inc.
|
Delaware
|
J.P. Morgan Whitefriars (UK)
|
England
|
JPMorgan Colombia Holdings I, LLC
|
Delaware
|
JPMorgan Colombia Ltda.
|
Colombia
|
Patrimonio Autonomo "macondo"
|
Colombia
|
JPMorgan Colombia Holdings II, LLC
|
Delaware
|
JPMorgan Corporacion Financiera S.A.
|
Colombia
|
PT J.P. Morgan Securities Indonesia
|
Indonesia
|
J.P. Morgan Partners (CMB Reg K GP), Inc.
|
Delaware
|
J.P. Morgan Saudi Arabia Limited
|
Saudi Arabia
|
J.P. Morgan Securities (C.I.) Limited
|
Jersey
|
J.P. Morgan Securities (Taiwan) Limited
|
Taiwan
|
J.P. Morgan Securities Asia Private Limited
|
Singapore
|
J.P. Morgan Securities Holdings (Hong Kong) Limited
|
Hong Kong
|
J.P. Morgan Securities (Asia Pacific) Limited
|
Hong Kong
|
J.P. Morgan Securities Holdings (Caymans) Limited
|
Cayman Islands
|
J.P. Morgan Securities India Private Limited
|
India
|
J.P. Morgan Securities Philippines, Inc.
|
Philippines
|
J.P. Morgan Securities South Africa (Proprietary) Limited
|
South Africa
|
JPMorgan Administration Services (Proprietary) Limited
|
South Africa
|
J.P. Morgan Structured Products B.V.
|
Netherlands
|
J.P. Morgan Trust Company (Jersey) Limited
|
Jersey
|
JPM Administration Services (Bermuda) Limited
|
Bermuda
|
JPMorgan Hedge Fund Services (Bermuda) Limited
|
Bermuda
|
JPMorgan Hedge Fund Services (Ireland) Limited
|
Ireland
|
JPMorgan Holdings (Japan) LLC
|
Delaware
|
JPMorgan Securities Japan Co., Ltd.
|
Japan
|
Norchem Holdings e Negocios S.A.
|
Brazil
|
NorChem Participacoes e Consultoria S.A.
|
Brazil
|
Paymentech Salem Services, LLC
|
Delaware
|
Chase Paymentech Europe Limited
|
Ireland
|
Sibelius Corporation
|
Delaware
|
J.P. Morgan Mortgage Acquisition Corp.
|
Delaware
|
J.P. Morgan Treasury Technologies Corporation
|
Delaware
|
JPMN II Inc.
|
Nevada
|
JPMN Inc.
|
Nevada
|
JPMorgan Chase Bank (China) Company Limited
|
China, Peoples Republic Of
|
JPMorgan Chase Vastera Inc.
|
Delaware
|
JP Morgan Chase Vastera Professional Services Inc.
|
Delaware
|
JPMorgan Xign Corporation
|
Delaware
|
Manufacturers Hanover Leasing International Corp.
|
Delaware
|
Meliora Holding Corp.
|
Delaware
|
Providian Bancorp Services
|
California
|
SCORE Trust
|
Canada
|
Second and Union, LLC
|
Delaware
|
So Wehren Holding Corp.
|
Delaware
|
South Cutler Corporation
|
Delaware
|
December 31, 2011
Name |
Organized under
the laws of
|
Stockton Plaza, Incorporated
|
Florida
|
WaMu Asset Acceptance Corp.
|
Delaware
|
WaMu Capital Corp.
|
Washington
|
Washington Mutual Mortgage Securities Corp.
|
Delaware
|
We Uterque Holding Corp.
|
Delaware
|
WM Asset Holdings Corp.
|
Delaware
|
WM Marion Holdings, LLC
|
Delaware
|
JPMC Mortgage Funding LLC
|
Delaware
|
WaMu 2007 MF-1 Trust
|
United States
|
WaMu 2008 SFR- 2
|
United States
|
JPMC Real Estate Investment Trust
|
Maryland
|
Washington Mutual Preferred Funding LLC
|
Delaware
|
Wamu 2006-OA1
|
Delaware
|
Wamu 2007-Flex 1
|
United States
|
Washington Mutual Home Equity Trust I
|
Delaware
|
JPMC Specialty Mortgage LLC
|
Delaware
|
WMB Baker LLC
|
Nevada
|
JPMorgan Chase Funding Inc.
|
Delaware
|
Arden PropPartners Diversified Master, L.P.
|
Cayman Islands
|
BSMFT 2007-AR5
|
United States
|
J.P. Morgan Indies SRL
|
Barbados
|
JPS Credit Opportunities Master Fund, L.P.
|
Cayman Islands
|
Madison Rubicon Holdings, LLC
|
Delaware
|
Rubicon US REIT, Inc.
|
Delaware
|
PropPartners Master Fund L.P.
|
Cayman Islands
|
JPMorgan Distribution Services, Inc.
|
Delaware
|
JPMorgan Funds Management, Inc.
|
Delaware
|
JPMorgan Private Capital Asia Corp.
|
Delaware
|
JPMorgan Private Capital Asia GP Limited
|
Cayman Islands
|
JPMorgan Private Capital Asia General Partner, L.P.
|
Cayman Islands
|
JPMorgan Private Capital Asia Fund I, L.P.
|
Cayman Islands
|
JPMorgan PCA Holdings (Mauritius) I Limited
|
Mauritius
|
JPMorgan Securities Holdings LLC
|
Delaware
|
J.P. Morgan Commercial Mortgage Investment Corp.
|
Delaware
|
J.P. Morgan Institutional Investments Inc.
|
Delaware
|
Neovest, Inc.
|
Utah
|
Reoco, Inc.
|
Delaware
|
JPMorgan Special Situations Asia Corporation
|
Delaware
|
J.P. Morgan Special Opportunities (Delaware) I LLC
|
Delaware
|
J.P. Morgan Special Opportunities (Delaware) LLC
|
Delaware
|
JPMorgan Global Special Situations I LLC
|
Delaware
|
J.P. Morgan (China) Venture Capital Investment Company Limited
|
China, Peoples Republic Of
|
JPMorgan Mauritius Holdings VI Limited
|
Mauritius
|
Harbour Formosa Investment Holdings Limited
|
Mauritius
|
Harbour Victoria Investment Holdings Limited
|
Mauritius
|
JPMorgan Mauritius Holdings IV Limited
|
Mauritius
|
JPMorgan Mauritius Holdings VII Limited
|
Mauritius
|
Mountain Orchard Limited
|
Mauritius
|
Sterling Pathway
|
Mauritius
|
Banrod Investments Limited
|
Cyprus
|
JPMorgan Special Situations (Mauritius) Limited
|
Mauritius
|
J.P. Morgan Advisors India Private Limited
|
India
|
Silver Summit (Delaware) Corporation
|
Delaware
|
Magenta Magic Limited
|
British Virgin Islands
|
JPMP Capital Corp.
|
New York
|
J.P. Morgan Partners, LLC
|
Delaware
|
JPMP Capital, LLC
|
Delaware
|
J.P. Morgan Capital, L.P.
|
Delaware
|
JPMCC Belgium (SCA)
|
Belgium
|
J.P. Morgan Partnership Capital Corporation
|
Delaware
|
Peabody Real Estate Partnership Corporation
|
Delaware
|
December 31, 2011
Name |
Organized under
the laws of
|
Peabody Real Estate Partnership Corporation
|
Delaware
|
The Peabody Fund Consultants, Inc.
|
Delaware
|
JPMREP Holding Corporation
|
Delaware
|
JPMorgan Real Estate Partners, L.P.
|
Delaware
|
JPMorgan Real Estate Partners, LP, BofA Plaza LLC
|
Delaware
|
St. Louis BOA Plaza, LLC
|
Delaware
|
PIM Continental LLC
|
Delaware
|
Patriot-JPM Conti Charlotte Holdings, LLC
|
Delaware
|
PIM Portland Hotel, LLC
|
Delaware
|
PIM/Waterton Portland Hotel, LLC
|
Delaware
|
PIM SP4 Office Holdings, LLC
|
Delaware
|
SPG Lodi, LLC
|
Delaware
|
Westcore Vine, LP
|
Delaware
|
SPG Portland Hotel Lender, LLC
|
Delaware
|
SPG/Waterton PH Lender, LLC
|
Delaware
|
LabMorgan Corporation
|
Delaware
|
J.P. Morgan Financial Investments Limited
|
England
|
LabMorgan Investment Corporation
|
Delaware
|
LabMorgan Investment LLC
|
Delaware
|
Max Recovery Australia Pty Limited
|
Australia
|
MorServ, Inc.
|
Delaware
|
NBD Community Development Corporation
|
Michigan
|
Offshore Equities, Inc.
|
New York
|
Park Assurance Company
|
Vermont
|
SCG Equities I Holding Corp.
|
Delaware
|
SIG Holdings, Inc.
|
New York
|
Special Situations Investing Inc.
|
Delaware
|
The Bear Stearns Companies LLC
|
Delaware
|
Aldermanbury Investments Limited
|
England
|
Principal Real Estate Funding Corporation Limited
|
England
|
Bear Growth Capital Partners, LP
|
Delaware
|
Bear Hunter Holdings LLC
|
Delaware
|
Bear Stearns Access Fund VII, L.P.
|
Delaware
|
Bear Stearns Asset Management Inc.
|
New York
|
BSAM Private Equity Solutions, Inc.
|
New York
|
Bear Stearns Capital Markets Inc.
|
Delaware
|
Bear Stearns Alternative Assets International Limited
|
Cayman Islands
|
Bear Stearns Corporate Lending Inc.
|
Delaware
|
Bear Stearns International Funding I, Inc.
|
Delaware
|
Bear Stearns International Funding (Bermuda) Limited
|
Bermuda
|
Bear Stearns Overseas Funding Unlimited
|
England
|
Bear Stearns International Funding II, Inc.
|
Delaware
|
Bear Stearns Investment Products Inc.
|
New York
|
Strategic Mortgage Opportunities REIT Inc.
|
Delaware
|
Bear Stearns Residential Mortgage Corporation (d/b/a Bear Stearns Mortgage Company)
|
Delaware
|
Bear Stearns Services Inc.
|
Delaware
|
Bear Stearns UK Holdings Limited
|
England
|
Bear Stearns Holdings Limited
|
England
|
Bear Stearns International Trading Limited
|
England
|
J.P. Morgan Markets Limited
|
England
|
Bear Strategic Investments Corp.
|
Delaware
|
Bear Stearns Singapore Holdings Pte Ltd
|
Singapore
|
Bear UK Mortgages Limited
|
England
|
Rooftop Holdings Limited
|
England
|
Rooftop Funding Limited
|
England
|
Bear, Stearns International Holdings Inc.
|
New York
|
BSG Insurance Holdings Limited
|
England
|
Minster Insurance Company Limited
|
England
|
Bear, Stearns Realty Investors, Inc.
|
Delaware
|
CL II Holdings LLC
|
Delaware
|
Commercial Lending II LLC
|
Delaware
|
December 31, 2011
Name |
Organized under
the laws of
|
Commercial Lending III LLC
|
Delaware
|
Community Capital Markets LLC
|
Delaware
|
Commercial Lending LLC
|
Delaware
|
eCAST Settlement Corporation
|
Delaware
|
EMC Mortgage LLC
|
Delaware
|
EMC Mortgage SFJV 2005, LLC
|
Delaware
|
SFJV 2005, LLC
|
Delaware
|
Gregory/Madison Avenue LLC
|
Delaware
|
Indiana Four Holdings LLC
|
Delaware
|
Indiana Four LLC
|
Delaware
|
Madison Insurance Company, Inc.
|
New York
|
Madison Vanderbilt Management, LLC
|
Delaware
|
MAX Recovery Inc.
|
Delaware
|
MAX Flow Corp.
|
Delaware
|
Max Recovery Limited
|
England
|
MLP Investment Holdings, Inc.
|
Delaware
|
Plymouth Park Tax Services LLC
|
Delaware
|
Madison Tax Capital, LLC
|
Delaware
|
PricingDirect Inc.
|
Delaware
|
Vandelay Recoveries Inc.
|
Delaware
|
Max Recovery Canada Company
|
Nova Scotia
|
1.
|
I have reviewed this annual report on Form 10-K of JPMorgan Chase & Co.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
I have reviewed this annual report on Form 10-K of JPMorgan Chase & Co.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of JPMorgan Chase & Co.
|
Date:
|
February 29, 2012
|
|
By:
|
/s/
|
James Dimon
|
|
|
|
|
|
|
|
|
|
|
|
James Dimon
|
|
|
|
|
|
Chairman and Chief Executive Officer
|
Date:
|
February 29, 2012
|
|
By:
|
/s/
|
Douglas L. Braunstein
|
|
|
|
|
|
|
|
|
|
|
|
Douglas L. Braunstein
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|