JP Morgan Chase 2009 Annual Report Download - page 248

Notes to consolidated financial statements
JPMorgan Chase & Co./2009 Annual Report
246
Segment results
The following table provides a summary of the Firm’s segment results for 2009, 2008 and 2007 on a managed basis. The impacts of credit card securi-
tizations and tax-equivalent adjustments have been included in Reconciling items so that the total Firm results are on a reported basis.
Segment results and reconciliation(a) (table continued on next page)
Year ended December 31,
Investment
Bank
Retail Financial
Services
Card
Services
Commercial
Banking
(in millions, except ratios) 2009 2008 2007 2009 2008 2007 2009 2008 2007 2009 2008 2007
Noninterest revenue $ 18,522 $ 2,051 $ 14,215 $ 12,200 $ 9,355 $ 6,779 $ 2,920 $ 2,719 $ 3,046 $ 1,817 $ 1,481 $ 1,263
Net interest income 9,587 10,284 4,076 20,492 14,165 10,526 17,384 13,755 12,189 3,903 3,296 2,840
Total net revenue 28,109 12,335 18,291 32,692 23,520 17,305 20,304 16,474 15,235 5,720 4,777 4,103
Provision for credit losses 2,279 2,015 654 15,940 9,905 2,610 18,462 10,059 5,711 1,454 464 279
Credit reimbursement
(to)/from TSS(b) — — — — — — — — — — — —
Noninterest expense(c) 15,401 13,844 13,074 16,748 12,077 9,905 5,381 5,140 4,914 2,176 1,946 1,958
Income/(loss) before
income tax expense/
(benefit) and
extraordinary gain 10,429 (3,524) 4,563 4 1,538 4,790 (3,539) 1,275 4,610 2,090 2,367 1,866
Income tax expense/(benefit)
3,530 (2,349) 1,424 (93) 658 1,865 (1,314) 495 1,691 819 928 732
Income/(loss) before
extraordinary gain 6,899 (1,175) 3,139 97 880 2,925 (2,225) 780 2,919 1,271 1,439 1,134
Extraordinary gain(d) — — — — — — — — — — — —
Net income/(loss) $ 6,899 $ (1,175) $ 3,139 $ 97 $ 880 $ 2,925 $ (2,225) $ 780 $ 2,919 $ 1,271 $ 1,439 $ 1,134
Average common equity $ 33,000 $ 26,098 $ 21,000 $ 25,000 $ 19,011 $ 16,000 $ 15,000 $ 14,326 $ 14,100 $ 8,000 $ 7,251 $ 6,502
Average assets 699,039 832,729 700,565 407,497 304,442 241,112 192,749 173,711 155,957 135,408 114,299 87,140
Return on average equity 21%
(5)% 15% —% 5% 18% (15)% 5% 21%
16% 20%
17 %
Overhead ratio 55 112 71 51 51 57 27 31 32 38 41 48
(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 finan-
cial measure. The Firm’s definition of managed basis starts with the reported U.S. GAAP results and includes certain reclassifications that do not have any impact
on net income as reported by the lines of business or by the Firm as a whole.
(b) In the second quarter of 2009, IB began reporting credit reimbursement from TSS as a component of total net revenue, whereas TSS continues to report its credit reim-
bursement to IB as a separate line item on its income statement (not part of net revenue). Reconciling items include an adjustment to offset IB’s inclusion of the credit
reimbursement in total net revenue. Prior periods have been revised for IB and Reconciling items to reflect this presentation.
(c) Includes merger costs, which are reported in the Corporate/Private Equity segment. Merger costs attributed to the business segments for 2009, 2008 and 2007 were as follows.
Year ended December 31, (in millions) 2009 2008 2007
Investment Bank $ 27 $ 183 $ (2
)
Retail Financial Services 228 90 14
Card Services 40 20 (1
)
Commercial Banking 6 4 (1 )
Treasury & Securities Services 11 — 121
Asset Management 6 3 20
Corporate/Private Equity 163 132 58
(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.
(e) Included a $1.5 billion charge to conform Washington Mutual’s loan loss reserve to JPMorgan Chase’s allowance methodology.