JPMORGAN CHASE REPORTS FULL-YEAR 2008 NET INCOME OF $5.6 BILLION, OR $1.37 PER SHARE, ON REVENUE OF $67.3 BILLION;
FOURTH-QUARTER 2008 NET INCOME OF $702 MILLION, OR $0.07 PER SHARE
• Reported the following significant items in the fourth-quarter:
- $4.1 billion (pretax) increase to loan loss reserves, resulting in coverage ratios of 4.24%1 for consumer businesses and 2.64% for wholesale businesses
- $2.9 billion (pretax) net markdowns due to leveraged lending exposures and mortgage-related positions in the Investment Bank
- $1.1 billion (after tax) benefit from merger-related items
- $854 million (after tax) benefit from MSR risk management results
- $680 million (after tax) private equity write-downs
- $627 million (after tax) gain due to dissolution of Paymentech joint venture
• Maintained strong balance sheet, with Tier 1 capital of $136.2 billion, or 10.8% (estimated), at year-end
• Grew the franchise in 2008, as demonstrated by the following accomplishments2:
- More than one million new checking accounts opened in Retail Financial Services
- Double-digit growth in loans and liability balances in Commercial Banking and in liability balances in Treasury & Securities Services
- #1 rankings for Global Investment Banking Fees and Global Debt, Equity & Equity-related volumes for the fourth quarter and full-year 20083
• Continued to focus on safe and sound lending activities, and launched significant enhancements to mortgage modification programs:
- Extended more than $100 billion in new credit during the fourth quarter alone to consumers, corporations, small businesses, municipalities, and non-profits (including more than five million card, home equity, mortgage, auto and education loans)
- Announced plan to help 400,000 U.S. homeowners avoid foreclosure over the next two years through loan modifications
New York, January 15, 2009 – JPMorgan Chase & Co. (NYSE: JPM) today reported fourth-quarter 2008 net income of $702 million, compared with net income of $3.0 billion in the fourth quarter of 2007. Earnings per share were $0.07, compared with $0.86 in the fourth quarter of 2007. For the full year 2008, net income was $5.6 billion, or $1.37 per share, down 64% from $15.4 billion, or $4.38 per share, in 2007.
1 Excluding purchased credit impaired loans.
2 Excluding impact of Washington Mutual.
3 Source: Dealogic for fees and Thomson Reuters for volumes.

Jamie Dimon, Chairman and Chief Executive Officer, commented: “Our fourth-quarter financial results were very disappointing, driven by a loss in Investment Banking largely attributable to continued markdowns on leveraged loans and mortgage trading positions, as well as weak trading results. We also faced higher credit costs associated with continued deterioration across our loan portfolios, including a $4.1 billion addition to loan loss reserves. However, we continued to see underlying growth in many business areas. The integration of our recently-acquired Washington Mutual franchise has progressed well, and we continued to grow in Treasury & Securities Services and Commercial Banking. We also opened millions of new checking and credit card accounts, experienced net inflows in assets under management, and gained Investment Banking market share in all major fee categories.”
As of December 31, 2008, the firm reported a Tier 1 capital ratio of 10.8% (estimated). During the year, the firm increased its total allowance for loan losses to $23.2 billion, resulting in a firmwide coverage ratio of 3.16%4. Dimon commented, “While the diversified nature of our franchise and strong capital position have enabled us to weather the recessionary environment so far, we added $13.9 billion to our allowance for loan losses in 2008 to keep this important component of our fortress balance sheet firmly intact.”
Looking ahead to 2009, Dimon continued: “If the economic environment deteriorates further, which is a distinct possibility, it is reasonable to expect additional negative impact on our market-related businesses, continued higher loan losses and increases to our credit reserves.
“We are doing our part to help stabilize the financial markets and hasten recovery. We assumed risk and expended resources to assimilate Bear Stearns and Washington Mutual. We continued to lend in a safe and sound manner -- extending more than $100 billion in new credit in the fourth quarter alone to consumers, businesses, municipalities, and non-profit organizations. We also prevented more than 300,0005 foreclosures, and we plan to help more than 300,000 more families keep their homes through mortgage modifications over the next two years. In addition, we currently have billions invested in renewable energy projects, including wind farms and solar facilities, to provide green energy for the current and future generations.”
Dimon added: “JPMorgan Chase’s management team is working diligently to manage through this very difficult business climate, and to position the franchise to benefit when the economy eventually recovers. No matter how difficult the environment may get, we at JPMorgan Chase remain fully committed to delivering for our clients, supporting our franchise, and doing all we can to help restore broad-based economic growth and prosperity.”
In the discussion below of the business segments and of JPMorgan Chase as a firm, information is presented on a managed basis. Managed basis starts with GAAP results and includes the following adjustments: for Card Services and the firm as a whole, the impact of credit card securitizations is excluded, and for each line of business and the firm as a whole, net revenue is shown on a tax-equivalent basis. For more information about managed basis, as well as other non-GAAP financial measures used by management to evaluate the performance of each line of business, see Notes 1 and 2 (page 13).
Commencing this quarter: (1) RFS has been resegmented into two reporting segments; and (2) prime mortgage balances originated in RFS but previously reported in Corporate/Private Equity are now being reported in RFS. In addition, end-of-period third quarter balance sheet amounts related to assets acquired and liabilities assumed from Washington Mutual Bank have been reclassified into the appropriate business segment for the 2008 third quarter. For further information, see the JPMorgan Chase’s Earnings Release Financial Supplement filed by the Firm today.
4 Excluding purchased credit impaired loans.
5 From early 2007 through the 4th quarter of 2008.

Key Metrics and Business Updates:
(All comparisons to the prior-year quarter except as noted)
�� Tier 1 capital ratio was 10.8% at December 31, 2008 (estimated), 8.9% at September 30, 2008, and 8.4% at December 31, 2007.
�� Headcount was 224,961 at December 31, 2008, which includes 41,398 from the acquisition of Washington Mutual’s banking operations. The remaining 183,563 which includes headcount from the Bear Stearns merger, reflects an increase of 2,896 from December 31, 2007.