JP Morgan Chase 2008 Annual Report Download - page 229

JPMorgan Chase & Co./ 2008 Annual Report 227
(table continued from previous page)
Treasury & Asset Reconciling
Securities Services Management Corporate/Private Equity items(g)(h) Total
2008 2007 2006 2008 2007 2006 2008 2007 2006 2008 2007 2006 2008 2007 2006
$ 5,196 $ 4,681 $ 4,039 $ 6,066 $ 7,475 $ 5,816 $ (278) $ 5,056 $ 1,058 $ 2,004 $ 2,572 $ 2,833 $ 28,473 $ 44,966 $ 40,757
2,938 2,264 2,070 1,518 1,160 971 347 (637) (1,044) (7,524) (6,012) (5,947) 38,779 26,406 21,242
8,134 6,945 6,109 7,584 8,635 6,787 69 4,419 14 (5,520) (3,440) (3,114) 67,252 71,372 61,999
82 19 (1) 85 (18) (28) 1,981(e)(f) (11) (1) (3,612) (2,380) (2,210) 20,979 6,864 3,270
(121) (121) (121) ———— ————— ———
5,223 4,580 4,266 5,298 5,515 4,578 (28) 1,757 1,147 ———43,500 41,703 38,843
2,708 2,225 1,723 2,201 3,138 2,237 (1,884) 2,673 (1,132) (1,908) (1,060) (904) 2,773 22,805 19,886
941 828 633 844 1,172 828 (535) 788 (1,179) (1,908) (1,060) (904) (926) 7,440 6,237
1,767 1,397 1,090 1,357 1,966 1,409 (1,349) 1,885 47 ———3,699 15,365 13,649
——— ————— 795 ——— —— 795
1,767 1,397 1,090 1,357 1,966 1,409 (1,349) 1,885 842 ———3,699 15,365 14,444
——————1,906 —————1,906 ——
$ 1,767 $ 1,397 $ 1,090 $ 1,357 $ 1,966 $ 1,409 $ 557 $ 1,885 $ 842 $—$—$—$ 5,605 $ 15,365 $ 14,444
$ 3,751 $ 3,000 $ 2,285 $ 5,645 $ 3,876 $ 3,500 $ 53,034 $ 54,245 $ 49,728 $—$—$—$ 129,116 $ 118,723 $ 110,697
54,563 53,350 31,760 65,550 51,882 43,635 323,227 231,818 218,623 (76,904) (66,780) (65,266) 1,791,617 1,455,044 1,313,794
47% 47% 48% 24% 51% 40% NM NM NM NM NM NM 4%(i) 13% 13%(i)
64 66 70 70 64 67 NM NM NM NM NM NM 65 58 63
(f) In November 2008, the Firm transferred $5.8 billion of higher quality credit card loans from the legacy Chase portfolio to a securitization trust previously established by Washington Mutual (“the Trust”).
As a result of converting higher credit quality Chase-originated on-book receivables to the Trust’s seller’s interest which has a higher overall loss rate reflective of the total assets within the Trust, approxi-
mately $400 million of incremental provision expense was recorded during the fourth quarter. This incremental provision expense was recorded in Corporate segment as the action related to the acquisi-
tion of Washington Mutual’s banking operations. For further discussion of credit card securitizations, see Note 16 on page 182 of this Annual Report.
(g) Managed results for credit card exclude the impact of CS securitizations on total net revenue, provision for credit losses and average assets, as JPMorgan Chase treats 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 upon 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) 2008 2007 2006
Noninterest revenue $ (3,333) $ (3,255) $ (3,509)
Net interest income 6,945 5,635 5,719
Provision for credit losses 3,612 2,380 2,210
Average assets 76,904 66,780 65,266
(h) 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, 2008, 2007 and 2006 were as follows.
Year ended December 31, (in millions) 2008 2007 2006
Noninterest revenue $ 1,329 $ 683 $ 676
Net interest income 579 377 228
Income tax expense 1,908 1,060 904
(i) Ratio is based upon net income.
Line of business equity increased during the second quarter of 2008 in
IB and AM due to the Bear Stearns merger and, for AM, the purchase of
the additional equity interest in Highbridge. At the end of the third
quarter of 2008, equity was increased for each line of business with a
view toward the future implementation of the new Basel II capital rules.
In addition, equity allocated to RFS, CS and CB was increased as a
result of the Washington Mutual transaction.
Discontinued operations
As a result of the transaction with The Bank of New York, selected
corporate trust businesses have been transferred from TSS to the
Corporate/Private Equity segment and reported in discontinued oper-
ations for all periods reported.