Business Segments (Tables)

12 Months Ended

Dec. 31, 2010

Business Segments (Tables) [Abstract]

Segment results and reconciliation

Year ended December 31,	Investment Bank									Retail Financial Services									Card Services & Auto(f)									Commercial Banking
(in millions, except ratios)	2010			2009			2008			2010			2009			2008			2010			2009			2008			2010			2009			2008
Noninterest revenue	$	18,253		$	18,522		$	2,051		$	11,227		$	11,414		$	8,745		$	4,278		$	3,706		$	3,329		$	2,200		$	1,817		$	1,481
Net interest income		7,964			9,587			10,284			17,220			18,383			12,410			16,194			19,493			15,510			3,840			3,903			3,296
Total net revenue		26,217			28,109			12,335			28,447			29,797			21,155			20,472			23,199			18,839			6,040			5,720			4,777
Provision for credit losses		(1,200	)		2,279			2,015			8,919			14,754			9,033			8,570			19,648			10,931			297			1,454			464
Credit reimbursement (to)/from TSS(b)		—			—			—			—			—			—			—			—			—			—			—			—
Noninterest expense(c)		17,265			15,401			13,844			16,483			15,512			10,877			7,178			6,617			6,340			2,199			2,176			1,946
Income/(loss) before income tax expense/(benefit) and extraordinary gain		10,152			10,429			(3,524	)		3,045			(469	)		1,245			4,724			(3,066	)		1,568			3,544			2,090			2,367
Income tax expense/(benefit)		3,513			3,530			(2,349	)		1,317			(134	)		542			1,852			(1,273	)		611			1,460			819			928
Income/(loss) before extraordinary gain		6,639			6,899			(1,175	)		1,728			(335	)		703			2,872			(1,793	)		957			2,084			1,271			1,439
Extraordinary gain(d)		—			—			—			—			—			—			—			—			—			—			—			—
Net income/(loss)	$	6,639		$	6,899		$	(1,175	)	$	1,728		$	(335	)	$	703		$	2,872		$	(1,793	)	$	957		$	2,084		$	1,271		$	1,439
Average common equity	$	40,000		$	33,000		$	26,098		$	24,600		$	22,457		$	16,070		$	18,400		$	17,543		$	17,267		$	8,000		$	8,000		$	7,251
Average assets		731,801			699,039			832,729			314,046			344,727			243,792			213,041			255,519			234,361			133,654			135,408			114,299
Return on average equity(e)		17	%		21	%		(5	)%		7	%		(1	)%		4	%		16	%		(10	)%		6	%		26	%		16	%		20	%
Overhead ratio		66			55			112			58			52			51			35			29			34			36			38			41

(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 financial 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)

TSS was charged a credit reimbursement related to certain exposures managed within IB credit portfolio on behalf of clients shared with TSS. IB recognizes this credit reimbursement in its credit portfolio business in all other income.

(c) Includes merger costs, which are reported in the Corporate/Private Equity segment. There were no merger costs in 2010. Merger costs attributed to the business segments for 2009 and 2008 were as follows.

Year ended December 31, (in millions)	2009		2008
Investment Bank	$	27	$	183
Retail Financial Services		228		90
Card Services & Auto		40		20
Commercial Banking		6		4
Treasury & Securities Services		11		—
Asset Management		6		3
Corporate/Private Equity		163		132

(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)

Ratio is based on income/(loss) before extraordinary gain for 2009 and 2008.

(f) Effective January 1, 2010, the Firm adopted accounting guidance related to VIEs. Prior to the adoption of the new guidance, managed results for credit card excluded the impact of credit card securitizations on total net revenue, provision for credit losses and average assets, as JPMorgan Chase treated 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 on 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)	2010	2009			2008
Noninterest revenue	NA	$	(1,494	)	$	(3,333	)
Net interest income	NA		7,937			6,945
Provision for credit losses	NA		6,443			3,612
Average assets	NA		82,233			76,904

(g) Included a $1.5 billion charge to conform Washington Mutual’s credit loss reserve to JPMorgan Chase’s allowance methodology.

(table continued from previous page)

Treasury &									Asset																	Reconciling
Securities Services									Management									Corporate/Private Equity								items(f)(i)									Total
2010			2009			2008			2010			2009			2008			2010			2009		2008			2010			2009			2008			2010			2009			2008
$	4,757		$	4,747		$	5,196		$	7,485		$	6,372		$	6,066		$	5,359		$	2,771	$	(278	)	$	(1,866	)	$	(67	)	$	1,883		$	51,693		$	49,282		$	28,473
	2,624			2,597			2,938			1,499			1,593			1,518			2,063			3,863		347			(403	)		(8,267	)		(7,524	)		51,001			51,152			38,779
	7,381			7,344			8,134			8,984			7,965			7,584			7,422			6,634		69			(2,269	)		(8,334	)		(5,641	)		102,694			100,434			67,252
	(47	)		55			82			86			188			85			14			80		1,981	(g)(h)		—			(6,443	)		(3,612	)		16,639			32,015			20,979
	(121	)		(121	)		(121	)		—			—			—			—			—		—			121			121			121			—			—			—
	5,604			5,278			5,223			6,112			5,473			5,298			6,355			1,895		(28	)		—			—			—			61,196			52,352			43,500
	1,703			1,890			2,708			2,786			2,304			2,201			1,053			4,659		(1,884	)		(2,148	)		(1,770	)		(1,908	)		24,859			16,067			2,773
	624			664			941			1,076			874			844			(205	)		1,705		(535	)		(2,148	)		(1,770	)		(1,908	)		7,489			4,415			(926	)
	1,079			1,226			1,767			1,710			1,430			1,357			1,258			2,954		(1,349	)		—			—			—			17,370			11,652			3,699
	—			—			—			—			—			—			—			76		1,906			—			—			—			—			76			1,906
$	1,079		$	1,226		$	1,767		$	1,710		$	1,430		$	1,357		$	1,258		$	3,030	$	557		$	—		$	—		$	—		$	17,370		$	11,728		$	5,605
$	6,500		$	5,000		$	3,751		$	6,500		$	7,000		$	5,645		$	57,520		$	52,903	$	53,034		$	—		$	—		$	—		$	161,520		$	145,903		$	129,116
	42,494			35,963			54,563			65,056			60,249			65,550			553,159			575,529		323,227		NA				(82,233	)		(76,904	)		2,053,251			2,024,201			1,791,617
	17	%		25	%		47	%		26	%		20	%		24	%	NM			NM		NM			NM			NM			NM				10	%		6	%		4	%
	76			72			64			68			69			70		NM			NM		NM			NM			NM			NM				60			52			65

(h) 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 WMMT. 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, approximately $400 million of incremental provision for credit losses was recorded during the fourth quarter of 2008. This incremental provision for credit losses was recorded in the Corporate/Private Equity segment as the action related to the acquisition of Washington Mutual’s banking operations. For further discussion of credit card securitizations, see Note 16 on pages 244–259 of this Annual Report.

(i) 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, 2010, 2009 and 2008 were as follows.

Year ended December 31, (in millions)	2010		2009		2008
Noninterest revenue	$	1,745	$	1,440	$	1,329
Net interest income		403		330		579
Income tax expense		2,148		1,770		1,908

Merger and acquisition costs attributed to the business segments

(c) Includes merger costs, which are reported in the Corporate/Private Equity segment. There were no merger costs in 2010. Merger costs attributed to the business segments for 2009 and 2008 were as follows.

Year ended December 31, (in millions)	2009		2008
Investment Bank	$	27	$	183
Retail Financial Services		228		90
Card Services		40		20
Commercial Banking		6		4
Treasury & Securities Services		11		—
Asset Management		6		3
Corporate/Private Equity		163		132

Credit Card Securitization Adjustments

(f) Effective January 1, 2010, the Firm adopted accounting guidance related to VIEs. Prior to the adoption of the new guidance, managed results for credit card excluded the impact of credit card securitizations on total net revenue, provision for credit losses and average assets, as JPMorgan Chase treated 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 on 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)	2010	2009			2008
Noninterest revenue	NA	$	(1,494	)	$	(3,333	)
Net interest income	NA		7,937			6,945
Provision for credit losses	NA		6,443			3,612
Average assets	NA		82,233			76,904

Tax-equivalent adjustment

(i) 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, 2010, 2009 and 2008 were as follows.

Year ended December 31, (in millions)	2010		2009		2008
Noninterest revenue	$	1,745	$	1,440	$	1,329
Net interest income		403		330		579
Income tax expense		2,148		1,770		1,908