JP Morgan Chase 2009 Annual Report Download - page 154

Notes to consolidated financial statements
JPMorgan Chase & Co./2009 Annual Report 152
The final summary computation of the purchase price and the allocation of the final total purchase price of $1.9 billion to the net assets acquired of
Washington Mutual – based on their respective fair values as of September 25, 2008, and the resulting final negative goodwill of $2.0 billion are
presented below.
(in millions)
Purchase price
Purchase price $ 1,938
Direct acquisition costs 3
Total purchase price 1,941
Net assets acquired
Washington Mutual’s net assets before fair value adjustments $ 39,186
Washington Mutual’s goodwill and other intangible assets (7,566)
Subtotal 31,620
Adjustments to reflect assets acquired at fair value:
Securities (16)
Trading assets (591)
Loans (30,998)
Allowance for loan losses 8,216
Premises and equipment 680
Accrued interest and accounts receivable (243)
Other assets 4,010
Adjustments to reflect liabilities assumed at fair value:
Deposits (686)
Other borrowed funds 68
Accounts payable, accrued expense and other liabilities (1,124)
Long-term debt 1,063
Fair value of net assets acquired 11,999
Negative goodwill before allocation to nonfinancial assets (10,058
)
Negative goodwill allocated to nonfinancial assets(a) 8,076
Negative goodwill resulting from the acquisition(b) $ (1,982 )
(a) The acquisition was accounted for as a purchase business combination, which requires the assets (including identifiable intangible assets) and liabilities (including
executory contracts and other commitments) of an acquired business to be recorded at their respective fair values as of the effective date of the acquisition and consoli-
dated with those of JPMorgan Chase. The fair value of the net assets of Washington Mutual’s banking operations exceeded the $1.9 billion purchase price, resulting in
negative goodwill. Noncurrent, nonfinancial assets not held-for-sale, such as premises and equipment and other intangibles, were written down against the negative
goodwill. The negative goodwill that remained after writing down transaction-related core deposit intangibles of approximately $4.9 billion and premises and equip-
ment of approximately $3.2 billion was recognized as an extraordinary gain of $2.0 billion.
(b) The extraordinary gain was recorded net of tax expense in Corporate/Private Equity.
Condensed statement of net assets acquired
The following condensed statement of net assets acquired reflects the final value assigned to the Washington Mutual net assets as of September 25, 2008.
(in millions) September 25, 2008
Assets
Cash and due from banks $ 3,680
Deposits with banks 3,517
Federal funds sold and securities purchased under resale agreements 1,700
Trading assets 5,691
Securities 17,224
Loans (net of allowance for loan losses) 206,456
Accrued interest and accounts receivable 3,253
Mortgage servicing rights 5,874
All other assets 16,596
Total assets $ 263,991
Liabilities
Deposits $ 159,872
Federal funds purchased and securities loaned or sold under repurchase agreements 4,549
Other borrowed funds 81,636
Trading liabilities 585
Accounts payable, accrued expense and other liabilities 6,708
Long-term debt 6,718
Total liabilities 260,068
Washington Mutual net assets acquired $ 3,923