Basis of Presentation

3 Months Ended

Mar. 31, 2012

Basis of Presentation [Abstract]

BASIS OF PRESENTATION

Basis of presentation

JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”), a financial holding company incorporated under Delaware law in 1968, is a leading global financial services firm and one of the largest banking institutions in the United States of America (“U.S.”), with operations worldwide. The Firm is a leader in investment banking, financial services for consumers and small business, commercial banking, financial transaction processing, asset management and private equity. For a discussion of the Firm’s business segments, see Note 24 on pages 163–165 of this

Form 10-Q.

The accounting and financial reporting policies of JPMorgan Chase and its subsidiaries conform to accounting principles generally accepted in the U.S. (“U.S. GAAP”). Additionally, where applicable, the policies conform to the accounting and reporting guidelines prescribed by regulatory authorities.

The unaudited consolidated financial statements prepared in conformity with U.S. GAAP require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expense, and the disclosures of contingent assets and liabilities. Actual results could be different from these estimates. In the opinion of management, all normal, recurring adjustments have been included for a fair statement of this interim financial information.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements, and related notes thereto, included in JPMorgan Chase’s Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the U.S. Securities and Exchange Commission (the “2011 Annual Report”).

Certain amounts reported in prior periods have been reclassified to conform to the current presentation.

Restatement of first quarter 2012 previously-filed interim financial statements

On July 13, 2012, the Firm reported that it had reached a determination to restate its previously-filed interim financial statements for the quarterly period ended March 31, 2012. The restatement had the effect of reducing the Firm's reported net income for the three months ended March 31, 2012 by $459 million. The restatement relates to valuations of certain positions in the synthetic credit portfolio of the Firm's Chief Investment Office ("CIO"). The Firm reached the determination to restate on July 12, 2012, following management review of the matter with the Audit Committee of the Firm's Board of Directors on the same day.

The restatement results from information that came to the Firm's attention in the days preceding July 12, 2012, as a result of management's internal review of activities related to CIO's synthetic credit portfolio. Specifically, information that came to management's attention raised questions about the integrity of the trader marks, and suggested that certain individuals may have been seeking to avoid showing the full amount of the losses being incurred in the portfolio for the three months ended March 31, 2012. As a result, the Firm was no longer confident that the trader marks used to prepare the Firm's reported first quarter results reflected good faith estimates of fair value at March 31, 2012. The Firm consequently concluded that the Firm's previously-filed interim financial statements for the quarterly period ended March 31, 2012 should no longer be relied upon. These restated financial statements reflect adjusted valuations of the positions in the synthetic credit portfolio as of March 31, 2012, based on external “mid-market” benchmarks, adjusted for liquidity considerations.

Management discussed the matters described above with its Board of Directors, and with the special committee of the Board of Directors that is reviewing management’s internal review of CIO activities.

The following summarizes the effects of restatement:

As of or for the three months ended March 31, 2012	Previously
(in millions, except per share and ratio data)	Reported		Adjustment			Restated
Consolidated Statements of Income (unaudited)
Principal transactions	$	3,382	$	(660	)	$	2,722
Noninterest revenue	15,046		(660		)	14,386
Total net revenue	26,712		(660		)	26,052
Income before income tax expense	7,641		(660		)	6,981
Income tax expense	2,258		(201		)	2,057
Net income	5,383		(459		)	4,924
Net income applicable to common shareholders	5,017		(440		)	4,577
Net Income per common share data
Basic earnings per common share	1.31		(0.11		)	1.20
Diluted earnings per common share	1.31		(0.12		)	1.19
Consolidated statements of comprehensive income (unaudited)
Net income	5,383		(459		)	4,924
Comprehensive income	7,084		(459		)	6,625
Consolidated balance sheets (unaudited)
Assets
Trading assets:
Derivatives receivables	85,377		(367		)	85,010
Other assets	102,625		201			102,826
Total assets	2,320,330		(166		)	2,320,164
Liabilities
Trading liabilities:
Derivatives payables	74,474		293			74,767
Total liabilities	2,130,602		293			2,130,895
Stockholders' equity
Retained Earnings	92,347		(459		)	91,888
Total stockholders' equity	189,728		(459		)	189,269
Total liabilities and stockholders' equity	2,320,330		(166		)	2,320,164

Revision of previously-filed regulatory capital ratios

The Firm's and JPMorgan Chase Bank, N.A.'s capital ratios have been revised from those previously reported based on regulatory guidance received on August 8, 2012. The determination relates to an adjustment to the Firm's regulatory capital ratios to reflect regulatory guidance regarding a limited number of market risk models used for certain positions held by the Firm during the first quarter, including the CIO synthetic credit portfolio.