JP Morgan Chase 2009 Annual Report Download - page 62

Management’s discussion and analysis
JPMorgan Chase & Co./2009 Annual Report 60
Average tangible common equity
Year ended December 31, (in millions) 2009 2008
Common stockholders’ equity $ 145,903 $129,116
Less: Goodwill 48,254 46,068
Less: Certain identifiable intangible assets 5,095 5,779
Add: Deferred tax liabilities(a) 2,547 2,369
TCE $ 95,101 $ 79,638
(a) Represents deferred tax liabilities related to tax-deductible goodwill and to
identifiable intangibles created in non-taxable transactions, which are netted
against goodwill and other intangibles when calculating TCE.
Impact on ROE of redemption of TARP preferred stock
issued to the U.S. Treasury
The calculation of 2009 net income applicable to common equity
includes a one-time, noncash reduction of $1.1 billion resulting
from the repayment of TARP preferred capital. Excluding this reduc-
tion, ROE would have been 7% for 2009. The Firm views adjusted
ROE, a non-GAAP financial measure, as meaningful because it
enables the comparability to prior periods.
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
%
Impact on diluted earnings per share of redemption of TARP
preferred stock issued to the U.S. Treasury
Net income applicable to common equity for the year ended Decem-
ber 31, 2009, included a one-time, noncash reduction of approxi-
mately $1.1 billion resulting from the repayment of TARP preferred
capital. The following table presents the effect on net income appli-
cable to common stockholders and the $0.27 reduction to diluted
earnings per share for the year ended December 31, 2009.
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
)
Other financial measures
The Firm also discloses the allowance for loan losses to total re-
tained loans, excluding home lending purchased credit-impaired
loans and loans held by the Washington Mutual Master Trust. For a
further discussion of this credit metric, see Allowance for Credit
Losses on pages 123–125 of this Annual Report.