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Company Informatio�FA�Consolidated statements of inco�F��1_Consolidated statements of in�>3�Consolidated balance sheets�F�Consolidated balance sheets (Pa�F{�Consolidated statements of chan�F�2_Consolidated statements of ch�F��Consolidated statements of cash�F�3_Consolidated statements of ca�2�Basis of presentation�F� Business changes and developmen�4uFair value measurement�*h Fair value option�4[Derivative instruments�.NNoninterest revenue�FAInterest income and Interest ex�F4Pension and other postretiremen�F'Employee stock-based incentives�.Noninterest expense� Securities�FSecurities financing activities��Loans�>� Allowance for credit losses�0�"Loan securitizations�<�$Variable interest entities�F�&Goodwill and other intangible a�4�(Premises and equipment��*Deposits�0�,Other borrowed funds�F�.Accounts payable and other liab�$~0Long-term debt�&q2Preferred stock� d4Common stock�,W6Earnings per share�FJ8Accumulated other comprehensive� =:Income taxes�F0<Restrictions on cash and interc�#>Capital�B@Commitments and contingencies�F BOff-balance sheet lending-relat�<�CCredit risk concentrations�8�EInternational operations�*�GBusiness segments�$�IParent company��T�� ZZ(Document and Company Information (USD $) 12 Months Ended Dec. 31, 2009 Jan. 31, 2010 Jun. 30, 2009 +Document and Company Information [Abstract]Entity Registrant NameJ P MORGAN CHASE & COEntity Central Index Key 0000019617 Document Type10-KDocument Period End Date 2009-12-31Amendment FlagfalseCurrent Fiscal Year End Date--12-31!Entity Well-known Seasoned IssuerYesEntity Voluntary FilersNoEntity Current Reporting StatusEntity Filer CategoryLarge Accelerated Filer#Entity Public Float (actual number)7Entity Common Stock, Shares Outstanding (actual number))Consolidated statements of income (USD $)"In Millions, except Per Share data 12 Months Ended Dec. 31, 2008 12 Months Ended Dec. 31, 2007 RevenueInvestment banking feesPrincipal transactions!Lending- and deposit-related fees0Asset management, administration and commissionsSecurities gains[1] Mortgage fees and related incomeCredit card incomeOther incomeNoninterest revenueInterest incomeInterest expenseNet interest incomeTotal net revenueProvision for credit lossesNoninterest expenseCompensation expenseOccupancy expense0Technology, communications and equipment expense!Professional and outside services Marketing Other expenseAmortization of intangiblesMerger costsTotal noninterest expenseAIncome before income tax expense/(benefit) and extraordinary gainIncome tax expense/(benefit) Income before extraordinary gainExtraordinary gain Net income,Net income applicable to common stockholders0Per common share data - Basic earnings per share2Per common share data - Diluted earnings per shareWeighted-average basic sharesWeighted-average diluted shares(Cash dividends declared per common share[1]Securities gains for the year ended December 31, 2009, included credit losses of $578 million, consisting of $946 million of total other-than-temporary impairment losses, net of $368 million of other-than-temporary impairment losses recorded in other comprehensive income.9Consolidated statements of income (Parenthetical) (USD $)In Millions Credit losses,Total other-than-temporary impairment lossesMOther-than-temporary impairment losses recorded in other comprehensive income#Consolidated balance sheets (USD $)Dec. 31, 2009 Dec. 31, 2008 AssetsCash and due from banksDeposits with banks�Federal funds sold and securities purchased under resale agreements (included $20,536 and $20,843 at fair value at December 31, 2009 and 2008, respectively)jSecurities borrowed (included $7,032 and $3,381 at fair value at December 31, 2009 and 2008, respectively)kTrading assets (included assets pledged of $38,315 and $75,063 at December 31, 2009 and 2008, respectively)�Securities (included $360,365 and $205,909 at fair value at December 31, 2009 and 2008, respectively, and assets pledged of $100,931 and $25,942 at December 31, 2009 and 2008, respectively)\Loans (included $1,364 and $7,696 at fair value at December 31, 2009 and 2008, respectively)Allowance for loan losses'Loans, net of allowance for loan lossesAccrued interest and accounts receivable (included $5,012 and $3,099 at fair value at December 31, 2009 and 2008, respectively)Premises and equipmentGoodwillMortgage servicing rightsOther intangible assetseOther assets (included $19,165 and $29,199 at fair value at December 31, 2009 and 2008, respectively)Total assetsLiabilities_Deposits (included $4,455 and $5,605 at fair value at December 31, 2009 and 2008, respectively)�Federal funds purchased and securities loaned or sold under repurchase agreements (included $3,396 and $2,993 at fair value at December 31, 2009 and 2008, respectively)Commercial paperlOther borrowed funds (included $5,637 and $14,713 at fair value at December 31, 2009 and 2008, respectively)Trading liabilities�Accounts payable and other liabilities (included the allowance for lending-related commitments of $939 and $659 at December 31, 2009 and 2008, respectively, and $357 and zero at fair value at December 31, 2009 and 2008, respectively)�Beneficial interests issued by consolidated var< iable interest entities (included $1,410 and $1,735 at fair value at December 31, 2009 and 2008, respectively)gLong-term debt (included $48,972 and $58,214 at fair value at December 31, 2009 and 2008, respectively)Total liabilitiesStockholders' equity�Preferred stock ($1 par value; authorized 200,000,000 shares at December 31, 2009 and 2008; issued 2,538,107 and 5,038,107 shares at December 31, 2009 and 2008, respectively)�Common stock ($1 par value; authorized 9,000,000,000 shares at December 31, 2009 and 2008; issued 4,104,933,895 shares and 3,941,633,895 shares at December 31, 2009 and 2008, respectively)Capital surplusRetained earnings-Accumulated other comprehensive income/(loss)uShares held in RSU Trust, at cost (1,526,944 shares and 4,794,723 shares at December 31, 2009 and 2008, respectively)oTreasury stock, at cost (162,974,783 shares and 208,833,260 shares at December 31, 2009 and 2008, respectively)Total stockholders' equity*Total liabilities and stockholders' equity3Consolidated balance sheets (Parenthetical) (USD $)In Millions, except Share dataRFederal funds sold and securities purchased under resale agreements, at fair value"Securities borrowed, at fair valueTrading assets pledgedSecurities, at fair valueSecurities, assets pledgedLoans, at fair value8Accrued interest and accounts receivables, at fair valueOther assets, at fair valueDeposits, at fair value`Federal funds purchased and securities loaned or sold under repurchase agreements, at fair value#Other borrowed funds, at fair value)Allowance for lending-related commitments5Accounts payable and other liabilities, at fair valueUBeneficial interests issued by consolidated variable interest entities, at fair valueLong-term debt, at fair value*Preferred stock, par value (actual number)2Preferred stock, shares authorized (actual number).Preferred stock, shares issued (actual number)'Common stock, par value (actual number)/Common stock, shares authorized (actual number)+Common stock, shares issued (actual number)0Shares held in RSU Trust, shares (actual number)&Treasury stock, shares (actual number)ZConsolidated statements of changes in stockholders equity and comprehensive income (USD $)(Previously Reported Retained earnings DPreviously Reported Accumulated other comprehensive income/(loss) Preferred stock Common stock Capital surplus Retained earnings /Accumulated other comprehensive income/(loss) Stock held in RSU Trust Treasury stock, at cost Total Balance at Dec. 31, 20054Cumulative effect of change in accounting principlesEnding Balance at Dec. 31, 2006Issuance of stockLIssuance of preferred stock - conversion of the Bear Stearns preferred stockFAccretion of preferred stock discount on issuance to the U.S. Treasury9Redemption of preferred stock issued to the U.S. TreasuryNWarrant issued to U.S. Treasury in connection with issuance of preferred stockPreferred stock issue costxShares issued and commitments to issue common stock for employee stock-based compensation awards and related tax effectsgNet Change from the Bear Stearns merger - Reissuance of treasury stock and the Share Exchange agreement?Net Change from the Bear Stearns merger - Employee stock awardsOther!Dividend declared preferred stockiDividend declared accelerated amortization from redemption of preferred stock issued to the U.S. TreasurygDividend declared common stock ($0.20, $1.52 and $1.48 per share for 2009, 2008 and 2007, respectively)&Resulting from the Bear Stearns mergerReissuance from RSU TrustPurchase of treasury stockReissuance from treasury stockEShare repurchases related to employee stock-based compensation awardsxNet change from the Bear Stearns merger as a result of the reissuance of treasury stock and the Share Exchange agreement!Other comprehensive income/(loss)Ending Balance at Dec. 31, 2007Ending Balance at Dec. 31, 2008Ending Balance at Dec. 31, 2009pConsolidated statements of changes in equity and comprehensive income (Parenthetical) (Retained earnings, USD $)*Common stock, dividends declared per share< -Consolidated statements of cash flows (USD $)Operating activities[Adjustments to reconcile net income to net cash provided by (used in) operating activities:Depreciation and amortizationDeferred tax (benefit) expenseInvestment securities gainsProceeds on sale of investmentStock-based compensation1Originations and purchases of loans held-for-saleHProceeds from sales, securitizations and paydowns of loans held-for-saleNet change in trading assets!Net change in securities borrowed6Net change in accrued interest and accounts receivableNet change in other assets!Net change in trading liabilities4Net change in accounts payable and other liabilitiesOther operating adjustments3Net cash provided by (used in) operating activitiesInvesting activities!Net change in deposits with banksQNet change in federal funds sold and securities purchased under resale agreementsHeld-to-maturity securities:ProceedsAvailable-for-sale securities:Proceeds from maturitiesProceeds from sales PurchasesDProceeds from sales and securitizations of loans held-for-investmentOther changes in loans, netANet cash received (used) in business acquisitions or dispositions&Proceeds from assets sale to the FRBNYRNet maturities (purchases) of asset-backed commercial paper guaranteed by the FRBB#All other investing activities, net3Net cash provided by (used in) investing activitiesFinancing activitiesNet change in deposits_Net change in federal funds purchased and securities loaned or sold under repurchase agreements7Net change in commercial paper and other borrowed fundsTNet change in beneficial interests issued by consolidated variable interest entitiesXProceeds from the issuance of long-term debt and trust preferred capital debt securitiesHRepayments of long-term debt and trust preferred capital debt securities&Proceeds from issuance of common stock7Excess tax benefits related to stock-based compensationJProceeds from issuance of preferred stock and Warrant to the U.S. Treasury)Proceeds from issuance of preferred stockRepurchases of treasury stockDividends paid#All other financing activities, net3Net cash (used in) provided by financing activities:Effect of exchange rate changes on cash and due from banks'Net decrease in cash and due from banks4Cash and due from banks at the beginning of the year.Cash and due from banks at the end of the yearCash interest paidCash income taxes paid=Consolidated statements of cash flows (Parenthetical) (USD $)*In Billions, except Share data in Millions#Statements of cash flows [Abstract]7Noncash assets acquired in the merger with Bear Stearns3Liabilities assumed in the merger with Bear StearnscApproximate number of shares of common stock issued in connection with the merger with Bear StearnsCValue of Common stock issued in connection with Bear Stearns Merger<Noncash assets acquired in the Washington Mutual transaction8Liabilities assumed in the Washington Mutual transactionBasis of presentation.12 Months Ended Dec. 31, 2009 USD / shares Basis of presentation [Abstract]� Note 1 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 businesses, financial transaction processing and asset management. For a discussion of the Firms business segment information, see Note 34 on pages 237239 of this Annual Report. The accounting and financial reporting policies of JPMorgan Chase and its subsidiaries conform to accounting principles generally accepted in the United States of America (U.S. GAAP). Additionally, where applicable, the policies conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. Certain amounts in prior periods have been reclassified to conform to the current presentation. Consolidation The Consolidated Fin< ancial Statements include the accounts of JPMorgan Chase and other entities in which the Firm has a controlling financial interest. All material intercompany balances and transactions have been eliminated. The usual condition for a controlling financial interest is ownership of a majority of the voting interests of the entity. However, a controlling financial interest also may be deemed to exist with respect to entities, such as special purpose entities (SPEs), through arrangements that do not involve controlling voting interests. SPEs are an important part of the financial markets, providing market liquidity by facilitating investors access to specific portfolios of assets and risks. For example, they are critical to the functioning of the mortgage- and asset-backed securities and commercial paper markets. SPEs may be organized as trusts, partnerships or corporations and are typically established for a single, discrete purpose. SPEs are not typically operating entities and usually have a limited life and no employees. The basic SPE structure involves a company selling assets to the SPE. The SPE funds the purchase of those assets by issuing securities to investors. The legal documents that govern the transaction specify how the cash earned on the assets must be allocated to the SPEs investors and other parties that have rights to those cash flows. SPEs are generally structured to insulate investors from claims on the SPEs assets by creditors of other entities, including the creditors of the seller of the assets. There are two different accounting frameworks applicable to SPEs: the qualifying SPE (QSPE) framework and the variable interest entity (VIE) framework. The applicable framework depends on the nature of the entity and the Firms relation to that entity. The QSPE framework is applicable when an entity transfers (sells)financial assets to an SPE meeting certain defined criteria. These criteria are designed to ensure that the activities of the entity are essentially predetermined at the inception of the vehicle and that the transferor of the financial assets cannot exercise control over the entity and the assets th!Business changes and developments,Business changes and developments [Abstract]� Note 2 Business changes and developments Decrease in Common Stock Dividend On February23, 2009, the Board of Directors reduced the Firms quarterly common stock dividend from $0.38 to $0.05 per share, effective for the dividend payable April30, 2009, to shareholders of record on April6, 2009. Acquisition of the banking operations of Washington Mutual Bank On September25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual Bank (Washington Mutual) from the Federal Deposit Insurance Corporation (FDIC) for $1.9billion. The acquisition expanded JPMorgan Chases consumer branch network into several states, including California, Florida Washington, Georgia, Idaho, Nevada and Oregon and created the third largest branch network in the U.S. The acquisition also extends the reach of the Firms business banking, commercial banking, credit card, consumer lending and wealth management businesses. The acquisition was accounted for under the purchase method of accounting, which requires that the assets and liabilities of Washington Mutual be initially reported at fair value. In 2008, the $1.9billion purchase price was preliminarily allocated to the Washington Mutual assets acquired and liabilities assumed, which resulted in negative goodwill. In accordance with U.S. GAAP for business combinations, that was in effect at the time of this acquisition, noncurrent nonfinancial assets that were not held-for-sale, such as the premises and equipment and other intangibles, acquired in the Washington Mutual transaction were written down against the negative goodwill. The negative goodwill that remained after writing down the nonfinancial assets was recognized as an extraordinary gain of $1.9billion at December31, 2008. The final total extraordinary gain that resulted from the Washington Mutual transaction was $2.0 billion. < The final summary computation of the purchase price and the allocation of the final total purchase price of $1.9billion to the net assets acquired of Washington Mutual based on their respective fair values as of September25, 2008, and the resulting final negative goodwill of $2.0 billion are presented below. (in millions) Purchase price Purchase price $ 1,938 Direct acquisition costs 3 Total purchase price 1,941 Net assets acquired Washington Mutuals net assets before fair value adjustments $ 39,186 Washington Mutuals goodwill and other intangible assets (7,566 ) Subtotal 31,620 Adjustments to reflect assets acquired at fair value: Securities (16 ) Trading assets (591 ) Loans (30,998 ) Allowance for loan losses 8,216 Premises and equipment 680 Accrued interest and accounts receivable (243 ) Other assets 4,010 Adjustments to reflect liabilities assumed at fair value: Deposits (686 ) Other borrowed funds 68 Accounts payable, accrued expense and Fair value measurement!Fair value measurement [Abstract]� Note 3 Fair value measurement JPMorgan Chase carries a portion of its assets and liabilities at fair value. The majority of such assets and liabilities are carried at fair value on a recurring basis. Certain assets and liabilities are carried at fair value on a nonrecurring basis, including loans accounted for at the lower of cost or fair value that are only subject to fair value adjustments under certain circumstances. The Firm has an established and well-documented process for determining fair values. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is based on quoted market prices, where available. If listed prices or quotes are not available, fair value is based on internally developed models that primarily use, as inputs, market-based or independently sourced market parameters, including but not limited to yield curves, interest rates, volatilities, equity or debt prices, foreign exchange rates and credit curves. In addition to market information, models also incorporate transaction details, such as maturity of the instrument. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments include amounts to reflect counterparty credit quality, the Firms creditworthiness, constraints on liquidity and unobservable parameters. Valuation adjustments are applied consistently over time. Credit valuation adjustments (CVA) are necessary when the market price (or parameter) is not indicative of the credit quality of the counterparty. As few classes of derivative contracts are listed on an exchange, the majority of derivative positions are valued using internally developed models that use as their basis observable market parameters. Market practice is to quote parameters equivalent to an AA credit rating whereby all counterparties are assumed to have the same credit quality. Therefore, an adjustment is necessary to reflect the credit quality of each derivative counterparty to arrive at fair value. The adjustment also takes into account contractual factors designed to reduce the Firms credit exposure to each counterparty, such as collateral and legal rights of offset. Debit valuation adjustments (DVA) are necessary to reflect the credit quality of the Firm in the valuation of liabilities measured at fair value. The methodology to determine the adjustment is consistent with CVA and incorporates JPMorgan Chases credit spread as observed through the credit default swap market. Liquidity valuation adjustments are necessary when the Firm may not b< e able to observe a recent market price for a financial instrument that trades in inactive (or less active) markets or to reflect the cost of exiting larger-than-normal market-size risk positions (liquidity adjustments are not taken for positions classified within level 1 of the fair value hierarchy). The Firm tries to ascertain the amount of uncertainty in the initial valuation based on the degree of liquidity in the market in which the financial instrument trades and makes liquidFair value optionFair value option [Abstract]� Note 4 Fair value option The fair value option provides an option to elect fair value as an alternative measurement for selected financial assets, financial liabilities, unrecognized firm commitments, and written loan commitments not previously carried at fair value. Elections Elections were made by the Firm to: mitigate income statement volatility caused by the differences in the measurement basis of elected instruments (for example, certain instruments elected were previously accounted for on an accrual basis) while the associated risk management arrangements are accounted for on a fair value basis; eliminate the complexities of applying certain accounting models (e.g., hedge accounting or bifurcation accounting for hybrid instruments); and better reflect those instruments that are managed on a fair value basis. Elections include: Securities financing arrangements with an embedded derivative and/or a maturity of greater than one year. Loans purchased or originated as part of securitization warehousing activity, subject to bifurcation accounting, or managed on a fair value basis. Structured notes issued as part of IBs client-driven activities. (Structured notes are financial instruments that contain embedded derivatives.) Certain tax credits and other equity investments acquired as part of the Washington Mutual transaction. The cumulative effect on retained earnings of the adoption of the fair value option on January1, 2007, was $199million. Changes in fair value under the fair value option election The following table presents the changes in fair value included in the Consolidated Statements of Income for the years ended December31, 2009, 2008 and 2007, for items for which the fair value option was elected. Profit and loss information for related risk management instruments, which are required to be measured at fair value, are not included in the table. 2009 2008 2007 Total changes Total changes Total changes Principal Other in fair value Principal Other in fair value Principal Other in fair value December 31, (in millions) transactions income recorded transactions income recorded transactions income recorded Federal funds sold and securities purchased under resale agreements $ (553 ) $ $ (553 ) $ 1,139 $ $ 1,139 $ 580 $ $ 580 Securities borrowed 82 82 29 29 Trading assets: Debt and equity instruments, excluding loans 619 25 (c) 644 (870 ) (58 )(c) (928 ) 421 (1 )(c) 420 Loans reported as trading assets: Changes in instrument- specific credit risk (300 ) (177) (c) (477 ) (9,802 ) (283 )(c) (10,085 ) (517 Derivative instruments!Derivative instruments [Abstract]� Note 5 Derivative instruments Derivative instruments enable end-users to modify or mitigate exposure to credit or market risks. Counterparties to a derivative contract seek to obtain risks and rewards similar to those that could be obtained from purchasing or selling a related cash instrument without havi< ng to exchange the full purchase or sales price upfront. JPMorgan Chase makes markets in derivatives for customers and also uses derivatives to hedge or manage risks of market exposures. The majority of the Firms derivatives are entered into for market-making purposes. Trading derivatives The Firm transacts in a variety of derivatives in its trading portfolios to meet the needs of customers (both dealers and clients) and to generate revenue through this trading activity. The Firm makes markets in derivatives for its customers (collectively, client derivatives), seeking to mitigate or modify interest rate, credit, foreign exchange, equity and commodity risks. The Firm actively manages the risks from its exposure to these derivatives by entering into other derivative transactions or by purchasing or selling other financial instruments that partially or fully offset the exposure from client derivatives. The Firm also seeks to earn a spread between the client derivatives and offsetting positions, and from the remaining open risk positions. Risk management derivatives The Firm manages its market exposures using various derivative instruments. Interest rate contracts are used to minimize fluctuations in earnings that are caused by changes in interest rates. Fixed-rate assets and liabilities appreciate or depreciate in market value as interest rates change. Similarly, interest income and expense increase or decrease as a result of variable-rate assets and liabilities resetting to current market rates, and as a result of the repayment and subsequent origination or issuance of fixed-rate assets and liabilities at current market rates. Gains or losses on the derivative instruments that are related to such assets and liabilities are expected to substantially offset this variability in earnings. The Firm generally uses interest rate swaps, forwards and futures to manage the impact of interest rate fluctuations on earnings. Foreign currency forward contracts are used to manage the foreign exchange risk associated with certain foreign currencydenominated (i.e., non-U.S.) assets and liabilities and forecasted transactions, as well as the Firms net investments in certain non-U.S. subsidiaries or branches whose functional currencies are not the U.S. dollar. As a result of fluctuations in foreign currencies, the U.S. dollarequivalent values of the foreign currencydenominated assets and liabilities or forecasted revenue or expense increase or decrease. Gains or losses on the derivative instruments related to these foreign currencydenominated assets or liabilities, or forecasted transactions, are expected to substantially offset this variability. Commodities based forward and futures contracts are used to manage the price risk of certain inventory, including gold and base metals, in the Firms commodities portfolio. Gains or losses onNoninterest revenue [Abstract]� Note 6 Noninterest revenue Investment banking fees This revenue category includes advisory and equity and debt underwriting fees. Advisory fees are recognized as revenue when the related services have been performed. Underwriting fees are recognized as revenue when the Firm has rendered all services to the issuer and is entitled to collect the fee from the issuer, as long as there are no other contingencies associated with the fee (e.g., the fee is not contingent upon the customer obtaining financing). Underwriting fees are net of syndicate expense; the Firm recognizes credit arrangement and syndication fees as revenue after satisfying certain retention, timing and yield criteria. The following table presents the components of investment banking fees. Year ended December 31, (in millions) 2009 2008 2007 Underwriting: Equity $ 2,487 $ 1,477 $ 1,713 Debt 2,739 2,094 2,650 Total underwriting 5,226 3,571 4,363 Advisory 1,861 1,955 2,272 Total investment banking fees $ 7,087 $ 5,526 $ 6,635 Principal< transactions Principal transactions revenue consists of realized and unrealized gains and losses from trading activities (including physical commodities inventories that are accounted for at the lower of cost or fair value), changes in fair value associated with financial instruments held by IB for which the fair value option was elected, and loans held-for-sale within the wholesale lines of business. For loans measured at fair value under the fair value option, origination costs are recognized in the associated expense category as incurred. Principal transactions revenue also includes private equity gains and losses. The following table presents principal transactions revenue. Year ended December 31, (in millions) 2009 2008 2007 Trading revenue $ 9,870 $ (9,791 ) $ 4,736 Private equity gains/(losses)(a) (74 ) (908 ) 4,279 Principal transactions $ 9,796 $ (10,699 ) $ 9,015 (a) Includes revenue on private equity investments held in the Private Equity business within Corporate/Private Equity, and those held in other business segments. Lending- and deposit-related fees This revenue category includes fees from loan commitments, standby letters of credit, financial guarantees, deposit-related fees in lieu of compensating balances, cash management-related activities or transactions, deposit accounts and other loan-servicing activities. These fees are recognized over the period in which the related service is provided. Asset management, administration and commissions This revenue category includes fees from investment management and related services, custody, brokerage services, insurance premiums and commissions, and other products. These fees are recognized over the period in which the related service is provided. Performance-based fees, which are earned based on exceeding certain benchmarks or other performance targets, are accrued and recognize$Interest income and Interest expense/Interest income and Interest expense [Abstract]{ Note 7 Interest income and Interest expense Details of interest income and interest expense were as follows. Year ended December 31, (in millions) 2009 2008 2007 Interest income(a) Loans $ 38,704 $ 38,347 $ 36,660 Securities 12,377 6,344 5,232 Trading assets 12,098 17,236 17,041 Federal funds sold and securities purchased under resale agreements 1,750 5,983 6,497 Securities borrowed 4 2,297 4,539 Deposits with banks 938 1,916 1,418 Other assets(b) 479 895 Total interest income 66,350 73,018 71,387 Interest expense(a) Interest-bearing deposits 4,826 14,546 21,653 Short-term and other liabilities(c) 3,845 10,933 16,142 Long-term debt 6,309 8,355 6,606 Beneficial interests issued by consolidated VIEs 218 405 580 Total interest expense 15,198 34,239 44,981 Net interest income $ 51,152 $ 38,779 $ 26,406 Provision for credit losses 32,015 19,445 6,864 Provision for credit losses accounting conformity(d) 1,534 Total provision for credit losses $ 32,015 $ 20,979 $ 6,864 Net interest income after provision for credit losses $ 19,137 $ 17,800 $ 19,542 (a) Interest income and interest expense include the current-period interest accruals for financial instruments measured at fair value, except for financial instruments containing embedded derivatives that would be separately accounted for in accordance with U.S. GAAP absent the fair value option election; for those instruments, all changes in fair value, including any interest elements, are reported in principal transactions revenue. (b) Predominantly margin loans. (c) Includes brokerage customer pay< ables. (d) 2008 includes an accounting conformity loan loss reserve provision related to the acquisition of Washington Mutuals banking operations. 7Pension and other postretirement employee benefit plansBPension and other postretirement employee benefit plans [Abstract]� Note 8 Pension and other postretirement employee benefit plans The Firms defined benefit pension plans and its other postretirement employee benefit (OPEB) plans are accounted for in accordance with U.S. GAAP for retirement benefits. Defined benefit pension plans The Firm has a qualified noncontributory U.S. defined benefit pension plan that provides benefits to substantially all U.S. employees. The U.S. plan employs a cash balance formula in the form of pay and interest credits to determine the benefits to be provided at retirement, based on eligible compensation and years of service. Employees begin to accrue plan benefits after completing one year of service, and benefits generally vest after three years of service. In November2009, the Firm announced certain changes to the pay credit schedule and amount of eligible compensation recognized under the U.S. plan effective February1, 2010. The Firm also offers benefits through defined benefit pension plans to qualifying employees in certain non-U.S. locations based on factors such as eligible compensation, age and/or years of service. It is the Firms policy to fund the pension plans in amounts sufficient to meet the requirements under applicable employee benefit and local tax laws. On January15, 2009, and August28, 2009, the Firm made discretionary deductible cash contributions to its U.S. defined benefit pension plan of $1.3billion and $1.5billion, respectively. The amount of potential 2010 contributions to the U.S. defined benefit pension plans, if any, is not reasonably estimable at this time. The expected amount of 2010 contributions to the non-U.S. defined benefit pension plans is $171million of which $148million is contractually required. JPMorgan Chase also has a number of defined benefit pension plans not subject to Title IV of the Employee Retirement Income Security Act. The most significant of these plans is the Excess Retirement Plan, pursuant to which certain employees earn pay and interest credits on compensation amounts above the maximum stipulated by law under a qualified plan. The Firm announced that, effective May1, 2009, pay credits would no longer be provided on compensation amounts above the maximum stipulated by law. The Excess Retirement Plan had an unfunded projected benefit obligation in the amount of $267million and $273million, at December31, 2009 and 2008, respectively. Defined contribution plans JPMorgan Chase offers several defined contribution plans in the U.S. and in certain non-U.S. locations, all of which are administered in accordance with applicable local laws and regulations. The most significant of these plans is The JPMorgan Chase 401(k) Savings Plan (the 401(k) Savings Plan), which covers substantially all U.S. employees. The 401(k) Savings Plan allows employees to make pretax and Roth 401(k) contributions to tax-deferred investment portfolios. The JPMorgan Chase Common Stock Fund, which is an investment option under the 401(k) Savings Plan, is a nonleveraged employee stock ownership plan. The Firm matches eligible employee contributions up to a certain percentage of benefits-eligible compensation per pay period, subjeEmployee stock-based incentives*Employee stock-based incentives [Abstract]� Note 9 Employee stock-based incentives Employee stock-based awards In 2009, 2008, and 2007, JPMorgan Chase granted long-term stock-based awards to certain key employees under the 2005 Long-Term Incentive Plan (the 2005 Plan). The 2005 Plan, plus prior Firm plans and plans assumed as the result of acquisitions, constitute the Firms stock-based incentive plans (collectively,LTI Plan). The 2005 Plan became effective on May17, 2005, and was amended in May2008. Under the terms of the amended 2005 plan, as of December31, 2009, 199million s< hares of common stock are available for issuance through May2013. The amended 2005 Plan is the only active plan under which the Firm is currently granting stock-based incentive awards. Restricted stock units (RSUs) are awarded at no cost to the recipient upon their grant. RSUs are generally granted annually and generally vest at a rate of 50% after two years and 50% after three years and convert into shares of common stock at the vesting date. In addition, RSUs typically include full-career eligibility provisions, which allow employees to continue to vest upon voluntary termination, subject to post-employment and other restrictions based on age or service-related requirements. All of these awards are subject to forfeiture until the vesting date. An RSU entitles the recipient to receive cash payments equivalent to any dividends paid on the underlying common stock during the period the RSU is outstanding and, as such, are considered participating securities as discussed in Note 25 on page 224 of this Annual Report. Under the LTI Plan, stock options and stock appreciation rights (SARs) have been granted with an exercise price equal to the fair value of JPMorgan Chases common stock on the grant date. The Firm typically awards SARs to certain key employees once per year, and it also periodically grants discretionary stock-based incentive awards to individual employees, primarily in the form of both employee stock options and SARs. The 2009, 2008 and 2007 grants of SARs to key employees vest ratably over 5years (i.e., 20% per year) and do not include any full-career eligibility provisions. These awards generally expire 10years after the grant date. The Firm separately recognizes compensation expense for each tranche of each award as if it were a separate award with its own vesting date. Generally, for each tranche granted, compensation expense is recognized on a straight-line basis from the grant date until the vesting date of the respective tranche, provided that the employees will not become full-career eligible during the vesting period. For awards with full-career eligibility provisions, the Firm accrues the estimated value of awards expected to be awarded to employees who will be retirement-eligible as of the grant date without giving consideration to the impact of post-employment restrictions. For each tranche granted to employees who will become full-career eligible during the vesting period, compensation expense is recognized on a straight-line basis from the grant date until the earlier of the employees full-career eligibility date or the vesting date of the respective tranche. The Firms pNoninterest expense [Abstract]Noninterest Expense� Note 10 Noninterest expense The following table presents the components of noninterest expense. Year ended December 31, (in millions) 2009 2008 2007 Compensation expense $ 26,928 $ 22,746 $ 22,689 Noncompensation expense: Occupancy expense 3,666 3,038 2,608 Technology, communications and equipment expense 4,624 4,315 3,779 Professional and outside services 6,232 6,053 5,140 Marketing 1,777 1,913 2,070 Other expense(a)(b) 7,594 3,740 3,814 Amortization of intangibles 1,050 1,263 1,394 Total noncompensation expense 24,943 20,322 18,805 Merger costs 481 432 209 Total noninterest expense $ 52,352 $ 43,500 $ 41,703 (a) Includes a $675million FDIC special assessment in 2009. (b) Included foreclosed property expense of $1.4billion, $213million and $56million for 2009, 2008 and 2007, respectively. For additional information regarding foreclosed property, see Note 13 on pages 192-196 of this Annual Report. Merger costs Costs associated with the Bear Stearns merger and the Washington Mutual transaction in 2008, the 2004 merger with Bank One Corporation and The Bank of New York, Inc. (The Bank of New York) transaction in 20< 06 are reflected in the merger costs caption of the Consolidated Statements of Income. For a further discussion of the Bear Stearns merger and the Washington Mutual transaction, see Note 2 on pages 143-148 of this Annual Report. A summary of merger-related costs is shown in the following table. 2009 2008 Year ended December 31, (in millions) Bear Stearns Washington Mutual Total Bear Stearns Washington Mutual Total 2007(b) Expense category Compensation $ (9 ) $ 256 $ 247 $ 181 $ 113 $ 294 $ (19 ) Occupancy (3 ) 15 12 42 42 17 Technology and communications and other 38 184 222 85 11 96 188 The Bank of New York transaction 23 Total(a) $ 26 $ 455 $ 481 $ 308 $ 124 $ 432 $ 209 (a) With the exception of occupancy- and technology-related write-offs, all of the costs in the table required the expenditure of cash. (b) The 2007 activity reflects the 2004 merger with Bank One Corporation and the transaction with The Bank of New York. The table below shows changes in the merger reserve balance related to costs associated with the above transactions. 2009 2008 Year ended December 31, (in millions) Bear Stearns Washington Mutual Total Bear Stearns Washington Mutual Total 2007(a) Merger reserve balance, beginning of period $ 327 $ 441 $ 768 $ $ $ $ 155 Recorded as merger costs 26 455 4 SecuritiesSecurities [Abstract]� Note 11 Securities Securities are classified as AFS, held-to-maturity (HTM) or trading. Trading securities are discussed in Note 3 on pages 148-165 of this Annual Report. Securities are classified primarily as AFS when used to manage the Firms exposure to interest rate movements, as well as to make strategic longer-term investments. AFS securities are carried at fair value on the Consolidated Balance Sheets. Unrealized gains and losses, after any applicable hedge accounting adjustments, are reported as net increases or decreases to accumulated other comprehensive income/(loss). The specific identification method is used to determine realized gains and losses on AFS securities, which are included in securities gains/(losses) on the Consolidated Statements of Income. Securities that the Firm has the positive intent and ability to hold to maturity are classified as HTM and are carried at amortized cost on the Consolidated Balance Sheets. The Firm has not classified new purchases of securities as HTM for the past several years. The following table presents realized gains and losses from AFS securities. Year ended December 31, (in millions) 2009 2008 2007 Realized gains $ 2,268 $ 1,890 $ 667 Realized losses (580 ) (254 ) (503 ) Net realized gains(a) 1,688 1,636 164 Credit losses included in securities gains(b) (578 ) (76 ) Net securities gains $ 1,110 $ 1,560 $ 164 (a) Proceeds from securities sold were within approximately 3% of amortized cost in 2009 and approximately 2% of amortized cost in 2008 and 2007. (b) Includes other-than-temporary impairment losses recognized in income on certain prime and subprime mortgage-backed securities and obligations of U.S. states and municipalities. The amortized costs and estimated fair values of AFS and HTM securities were as follows for the dates indicated. 2009 2008 Gross Gross Gross Gross Amortized unrealized unrealized Amortized unrealized unrealized Fair December 31, (in millions) < cost gains losses Fair value cost gains losses value Available-for-sale debt securities Mortgage-backed securities(a): U.S. government agencies(b) $ 166,094 $ 2,412 $ 608 $ 167,898 $ 115,198 $ 2,414 $ 227 $ 117,385 Residential: Prime and Alt-A 5,234 96 807 (d) 4,523 8,826 4 1,935 6,895 Subprime 17 17 213 19 194 Non-U.S. 10,003 320 65 10,258 2,233 24 182 2,075 Commercial 4,521 132 63 4,590 4,623 684 3,939 Total mortgage-backed securities $ 185,869 $ 2,960 $ 1,543 $ 187,286 $ 131,093 $ Securities financing activities*Securities financing activities [Abstract]� Note 12 Securities financing activities JPMorgan Chase enters into resale agreements, repurchase agreements, securities borrowed transactions and securities loaned transactions, primarily to finance the Firms inventory positions, acquire securities to cover short positions, accommodate customers financing needs, and settle other securities obligations. Resale agreements and repurchase agreements are generally treated as collateralized financing transactions carried on the Consolidated Balance Sheets at the amounts at which the securities will be subsequently sold or repurchased, plus accrued interest. On January1, 2007, pursuant to the adoption of the fair value option, the Firm elected fair value measurement for certain resale and repurchase agreements. In 2008, the Firm elected fair value measurement for certain newly transacted securities borrowed and securities lending agreements. For a further discussion of the fair value option, see Notes 4 and 20 on pages 165167 and 219, respectively, of this Annual Report. The securities financing agreements for which the fair value option was elected are reported within securities purchased under resale agreements; securities loaned or sold under repurchase agreements; securities borrowed; and other borrowed funds on the Consolidated Balance Sheets. Generally, for agreements carried at fair value, current-period interest accruals are recorded within interest income and interest expense, with changes in fair value reported in principal transactions revenue. However, for financial instruments containing embedded derivatives that would be separately accounted for in accordance with FASB guidance for hybrid instruments, all changes in fair value, including any interest elements, are reported in principal transactions revenue. Where appropriate, resale and repurchase agreements with the same counterparty are reported on a net basis. JPMorgan Chase takes possession of securities purchased under resale agreements. On a daily basis, JPMorgan Chase monitors the market value of the underlying collateral, primarily U.S. and non-U.S. government and agency securities, that it has received from its counterparties, and requests additional collateral when necessary. Transactions similar to financing activities that do not meet the definition of a repurchase agreement are accounted for as buys and sells rather than financing transactions. These transactions are accounted for as a purchase/(sale) of the underlying securities with a forward obligation to sell/(purchase) the securities. The forward purchase/(sale) obligation is a derivative that is recorded on the Consolidated Balance Sheets at fair value, with changes in fair value recorded in principal transactions revenue. Securities borrowed and securities lent are recorded at the amount of cash collateral advanced or received. Securities borrowed consist primarily of government and equity securities. JPMorgan Chase monitors the market value of the securities borrowed and lent on a daily basis and calls for additional collateral when appropriate. Fees received< or paid in connection with securities borrowed and lent are recorded in interest income orLoansLoans [Abstract]� Note 13 Loans The accounting for a loan may differ based on whether it is originated or purchased and whether the loan is used in an investing or trading strategy. For purchased loans held-for-investment, the accounting also differs depending on whether a loan is credit-impaired at the date of acquisition. Purchased loans with evidence of credit deterioration since the origination date and for which it is probable, at acquisition, that all contractually required payments receivable will not be collected are considered to be credit-impaired. The measurement framework for loans in the Consolidated Financial Statements is one of the following: At the principal amount outstanding, net of the allowance for loan losses, unearned income, unamortized discounts and premiums, and any net deferred loan fees or costs, for loans held for investment (other than purchased credit-impaired loans); At the lower of cost or fair value, with valuation changes recorded in noninterest revenue, for loans that are classified as held-for-sale; At fair value, with changes in fair value recorded in noninterest revenue, for loans classified as trading assets or risk managed on a fair value basis; or Purchased credit-impaired loans held-for-investment are initially measured at fair value, which includes estimated future credit losses. Accordingly, an allowance for loan losses related to these loans is not recorded at the acquisition date. See Note 4 on pages 165167 of this Annual Report for further information on the Firms elections of fair value accounting under the fair value option. See Note 3 and Note 4 on pages 148165 and 165167 of this Annual Report for further information on loans carried at fair value and classified as trading assets. For loans held-for-investment, other than purchased credit-impaired loans, interest income is recognized using the interest method or on a basis approximating a level rate of return over the term of the loan. Nonaccrual loans are those on which the accrual of interest has been suspended. Loans (other than credit card loans, certain consumer loans insured by U.S. government agencies and purchased credit-impaired loans, which are discussed below) are placed on nonaccrual status and considered nonperforming when full payment of principal and interest is in doubt, or when principal or interest is 90days or more past due and collateral, if any, is insufficient to cover principal and interest. Interest accrued but not collected at the date a loan is placed on nonaccrual status is reversed against interest income. In addition, the amortization of net deferred loan fees is suspended. Interest income on nonaccrual loans may be recognized only to the extent it is received in cash. However, where there is doubt regarding the ultimate collectibility of loan principal, cash receipts are applied to reduce the carrying value of such loans (i.e., the cost recovery method). Interest and fees related to credit card loans continue to accrue until the loan is charged off or paid in full. Loans may be returned to accrual status when repayment is reasonably assured and there has been demonstrated perAllowance for credit losses&Allowance for credit losses [Abstract]� Note 14 Allowance for credit losses The allowance for loan losses includes an asset-specific component, a formula-based component and a component related to purchased credit-impaired loans. The asset-specific component relates to loans considered to be impaired, which includes any loans that have been modified in a troubled debt restructuring as well as risk-rated loans that have been placed on nonaccrual status. An asset-specific allowance for impaired loans is established when the loans discounted cash flows (or, when available, the loans observable market price) is lower than the recorded investment in the loan. To compute the asset-specific component of the allowance, larger loans are evaluated indi< vidually, while smaller loans are evaluated as pools using historical loss experience for the respective class of assets. Risk-rated loans (primarily wholesale loans) are pooled by risk rating, while scored loans (i.e., consumer loans) are pooled by product type. The Firm generally measures the asset-specific allowance as the difference between the recorded investment in the loan and the present value of the cash flows expected to be collected, discounted at the loans original effective interest rate. Subsequent changes in measured impairment due to the impact of discounting are reported as an adjustment to the provision for loan losses, not as an adjustment to interest income. An asset-specific allowance for an impaired loan with an observable market price is measured as the difference between the recorded investment in the loan and the loans fair value. Certain impaired loans that are determined to be collateral-dependent are charged-off to the fair value of the collateral less costs to sell. When collateral-dependent commercial real-estate loans are determined to be impaired, updated appraisals are typically obtained and updated every six to twelve months. The Firm also considers both borrower- and market-specific factors, which may result in obtaining appraisal updates at more frequent intervals or broker-price opinions in the interim. The formula-based component is based on a statistical calculation and covers performing risk-rated loans and consumer loans, except for loans restructured in troubled debt restructurings and purchased credit-impaired loans. See Note 13 on pages 195196 of this Annual Report for more information on purchased credit-impaired loans. For risk-rated loans, the statistical calculation is the product of an estimated probability of default (PD) and an estimated loss given default (LGD). These factors are differentiated by risk rating and expected maturity. In assessing the risk rating of a particular loan, among the factors considered are the obligors debt capacity and financial flexibility, the level of the obligors earnings, the amount and sources for repayment, the level and nature of contingencies, management strength, and the industry and geography in which the obligor operates. These factors are based on an evaluation of historical and current information, and involve subjective assessment and interpretation. Emphasizing one factor over another or considering additional factors could impacLoan securitizationsLoan securitizations [Abstract]� Note 15 Loan securitizations JPMorgan Chase securitizes and sells a variety of loans, including residential mortgage, credit card, automobile, student, and commercial loans (primarily related to real estate). JPMorgan Chase-sponsored securitizations utilize SPEs as part of the securitization process. These SPEs are structured to meet the definition of a QSPE (as discussed in Note 1 on page 142 of this Annual Report); accordingly, the assets and liabilities of securitization-related QSPEs are not reflected on the Firms Consolidated Balance Sheets (except for retained interests, as described below). The primary purpose of these securitization vehicles is to meet investor needs and to generate liquidity for the Firm through the sale of loans to the QSPEs. These QSPEs are financed through the issuance of fixed- or floating-rate asset-backed securities. See Note 16 on pages 213-214 for further information on the new accounting guidance, effective January1, 2010, which eliminates the concept of QSPEs and revises the criteria for the consolidation of VIEs. The Firm records a loan securitization as a sale when the accounting criteria for a sale are met. Those criteria are: (1)the transferred assets are legally isolated from the Firms creditors; (2) the entity can pledge or exchange the financial assets, or if the entity is a QSPE, its investors can pledge or exchange their interests; and (3)the Firm does not maintain effective control to repurchase the transferred assets before their maturity, or have the ability to unilaterally cause the holder < to return the transferred assets. For loan securitizations that meet the accounting sales criteria, the gains or losses recorded depend, in part, on the carrying amount of the loans sold except for servicing assets which are initially recorded at fair value. At the time of sale, any retained servicing asset is initially recognized at fair value. The remaining carrying amount of the loans sold is allocated between the loans sold and the other interests retained, based on their relative fair values on the date of sale. Gains on securitizations are reported in noninterest revenue. When quoted market prices are not available, the Firm estimates the fair value for these retained interests by calculating the present value of future expected cash flows using modeling techniques. Such models incorporate managements best estimates of key variables, such as expected credit losses, prepayment speeds and the discount rates appropriate for the risks involved. The Firm may retain interests in the securitized loans in the form of undivided sellers interest, senior or subordinated interest-only strips, debt and equity tranches, escrow accounts and servicing rights. The classification of retained interests is dependent upon several factors, including the type of interest, whether or not the retained interest is represented by a security certificate and when it was retained. Interests retained by IB are classified as trading assets. See credit card securitizations and mortgage securitizations sections of this Note for further information on the classification of their related retained interests. Retained Variable interest entities%Variable interest entities [Abstract]� Note 16 Variable interest entities Refer to Note 1 on page 142 of this Annual Report for a further description of JPMorgan Chases policies regarding consolidation of variable interest entities. JPMorgan Chases principal involvement with VIEs occurs in the following business segments: Investment Bank: Utilizes VIEs to assist clients in accessing the financial markets in a cost-efficient manner. IB is involved with VIEs through multi-seller conduits and for investor intermediation purposes, as discussed below. IB also securitizes loans through QSPEs, to create asset-backed securities, as further discussed in Note 15 on pages 198-205 of this Annual Report. Asset Management (AM): The legal entity structures for a limited number of funds sponsored and managed by asset management include certain entities within the structure which are deemed VIEs. As asset manager of the funds, AM earns a fee based on assets managed; the fee varies with each funds investment objective and is competitively priced. For those limited number of funds that qualify as VIEs, AMs relationship with such funds are not considered significant variable interests under U.S. GAAP. Treasury Securities Services: Provides services to a number of VIEs that are similar to those provided to non-VIEs. TSS earns market-based fees for the services it provides. The relationships resulting from TSS services are not considered to be significant variable interests. Commercial Banking (CB): Utilizes VIEs to assist clients in accessing the financial markets in a cost-efficient manner. This is often accomplished through the use of products similar to those offered in IB. CB may assist in the structuring and/or ongoing administration of these VIEs and may provide liquidity, letters of credit and/or derivative instruments in support of the VIE. The relationships resulting from CBs services are not considered to be significant variable interests. Corporate/Private Equity: Corporate utilizes VIEs to issue guaranteed capital debt securities. See Note 22 on pages 220-221 for further information. The Private Equity business, within Corporate/Private Equity, may be involved with entities that could be deemed VIEs. Private equity entities are typically investment companies as defined in the investment company accounting guidance and, as such, are not required to utilize the account< ing guidance for the consolidation of VIEs. Had the guidance for consolidation of VIEs been applied to these entities, the impact would have been immaterial to the Firms Consolidated Financial Statements as of December31, 2009. As noted above, IB is predominantly involved with multi-seller conduits and VIEs associated with investor intermediation activities. These nonconsolidated VIEs that are sponsored by JPMorgan Chase are discussed below. The Firm considers a sponsored VIE to include any entity where: (1)JPMorgan Chase is the principal beneficiary of the structure; (2)the VIE is used by JPMorgan Chase to securitize Firm assets; (3)the VIE issues financial instruments associated with the JPMorgan Chase brand name; or (4)the entity is a JPMorgan Chase-administered $Goodwill and other intangible assets/Goodwill and other intangible assets [Abstract]� Note 17 Goodwill and other intangible assets Goodwill and other intangible assets consist of the following. December 31, (in millions) 2009 2008 2007 Goodwill $ 48,357 $ 48,027 $ 45,270 Mortgage servicing rights 15,531 9,403 8,632 Other intangible assets: Purchased credit card relationships $ 1,246 $ 1,649 $ 2,303 Other credit cardrelated intangibles 691 743 346 Core deposit intangibles 1,207 1,597 2,067 Other intangibles 1,477 1,592 1,383 Total other intangible assets $ 4,621 $ 5,581 $ 6,099 Goodwill Goodwill is recorded upon completion of a business combination as the difference between the purchase price and the fair value of the net assets acquired. Other intangible assets are recorded at their fair value upon completion of a business combination or certain other transactions, and generally represent the value of customer relationships or arrangements. The increase in goodwill during 2009 was primarily due to final purchase accounting adjustments related to the Bear Stearns merger, and the acquisition of a commodities business, each primarily allocated to IB, and foreign currency translation adjustments related to the Firms Canadian credit card operations, which were allocated to Card Services. The increase in goodwill during 2008 was primarily due to the dissolution of the Chase Paymentech Solutions joint venture (allocated to Card Services), the merger with Bear Stearns, the purchase of an additional equity interest in Highbridge and tax-related purchase accounting adjustments associated with the Bank One merger (which were primarily attributed to IB). The goodwill associated with each business combination is allocated to the related reporting units, which are determined based on how the Firms businesses are managed and how they are reviewed by the Firms Operating Committee. The following table presents goodwill attributed to the business segments. December 31, (in millions) 2009 2008 2007 Investment Bank $ 4,959 $ 4,765 $ 3,578 Retail Financial Services 16,831 16,840 16,848 Card Services 14,134 13,977 12,810 Commercial Banking 2,868 2,870 2,873 Treasury Securities Services 1,667 1,633 1,660 Asset Management 7,521 7,565 7,124 Corporate/Private Equity 377 377 377 Total goodwill $ 48,357 $ 48,027 $ 45,270 The following table presents changes in the carrying amount of goodwill. (in millions) Total Balance at December31, 2007(a): $ 45,270 Changes during 2008 from: Business combinations 2,481 Dispositions (38 ) Other(b) 314 Balance at December31, 2008(a): $ 48,027 Changes during 2009 from: Business combinations 271 Dispositions Other(b) 59 Balance at December31, 2009(a) $ 48,357 (a) Reflects gross goodwill balances as the Firm has not reco!Premises and equipment [Abstract]< � Note 18 Premises and equipment Premises and equipment, including leasehold improvements, are carried at cost less accumulated depreciation and amortization. JPMorgan Chase computes depreciation using the straight-line method over the estimated useful life of an asset. For leasehold improvements, the Firm uses the straight-line method computed over the lesser of the remaining term of the leased facility or the estimated useful life of the leased asset. JPMorgan Chase has recorded immaterial asset retirement obligations related to asbestos remediation in those cases where it has sufficient information to estimate the obligations fair value. JPMorgan Chase capitalizes certain costs associated with the acquisition or development of internal-use software. Once the software is ready for its intended use, these costs are amortized on a straight-line basis over the softwares expected useful life and reviewed for impairment on an ongoing basis. DepositsDeposits [Abstract]� Note 19 Deposits At December31, 2009 and 2008, noninterest-bearing and interest-bearing deposits were as follows. December 31, (in millions) 2009 2008 U.S. offices: Noninterest-bearing $ 204,003 $ 210,899 Interest-bearing (included $1,463 and $1,849 at fair value at December31, 2009 and 2008, respectively) 439,104 511,077 Non-U.S. offices: Noninterest-bearing 8,082 7,697 Interest-bearing (included $2,992 and $3,756 at fair value at December31, 2009 and 2008, respectively) 287,178 279,604 Total $ 938,367 $ 1,009,277 At December31, 2009 and 2008, time deposits in denominations of $100,000 or more were as follows. December 31, (in millions) 2009 2008 U.S. $ 90,552 $ 147,493 Non-U.S. 77,887 58,247 Total $ 168,439 $ 205,740 At December31, 2009, the maturities of time deposits were as follows. December 31, 2009 (in millions) U.S. Non-U.S. Total 2010 $ 113,912 $ 97,465 $ 211,377 2011 9,489 654 10,143 2012 3,851 485 4,336 2013 2,783 634 3,417 2014 1,321 127 1,448 After 5years 671 267 938 Total $ 132,027 $ 99,632 $ 231,659 On October3, 2008, the Emergency Economic Stabilization Act of 2008 (the 2008 Act) was signed into law. The 2008 Act temporarily increased the standard maximum FDIC deposit insurance from $100,000 to $250,000 per depositor per institution through December31, 2009. On May20, 2009, the Helping Families Save Their Homes Act of 2009 (the 2009 Act) was signed into law. The 2009 Act extends through December31, 2013, the FDICs temporary standard maximum deposit insurance amount of $250,000 per depositor. On January1, 2014, the standard maximum deposit insurance amount will return to $100,000 per depositor for all deposit accounts except Individual Retirement Accounts (IRAs) and certain other retirement accounts, which will remain at $250,000 per depositor. In addition, on November21, 2008, the FDIC released a final rule on the FDIC Temporary Liquidity Guarantee Program (the TLG Program). Under one component of this program, the Transaction Account Guarantee Program (the TAG Program) provides unlimited deposit insurance through December31, 2009, on certain noninterest-bearing transaction accounts at FDIC-insured participating institutions. On December4, 2008, the Firm elected to participate in the TLG Program and, as a result, was required to pay additional insurance premiums to the FDIC in an amount equal to an annualized 10 basis points on balances in noninterest-bearing transaction accounts that exceeded the $250,000 FDIC deposit insurance limits, as determined on a quarterly basis. The expiration date of the program was extended by six months, from December31, 2009, to June30, 2010, to provide continued support to those institutions most affected by the recent financial cr< isis and phase out the program in an orderly manner. On October22, 2009, the Firm notifOther borrowed fundsOther borrowed funds [Abstract]� Note 20 Other borrowed funds The following table details the components of other borrowed funds. At December 31, (in millions) 2009 2008 Advances from Federal Home Loan Banks(a) $ 27,847 $ 70,187 Nonrecourse advances FRBB(b) 11,192 Other(c) 27,893 51,021 Total(d) $ 55,740 $ 132,400 (a) Maturities of advances from the FHLBs are $23.6billion, $2.6billion, and $716million in each of the 12-month periods ending December31, 2010, 2011, and 2013, respectively, and $926 million maturing after December31, 2014. Maturities for the 12-month period ending December 31, 2012 and 2014 were not material. (b) On September19, 2008, the Federal Reserve Board established a special lending facility, the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AML Facility), to provide liquidity to eligible U.S. money market mutual funds. Under the AML Facility, banking organizations must use the loan proceeds to finance their purchases of eligible high-quality ABCP investments from money market mutual funds, which are pledged to secure nonrecourse advances from the Federal Reserve Bank of Boston (FRBB). Participating banking organizations do not bear any credit or market risk related to the ABCP investments they hold under this facility; therefore, the ABCP investments held are not assessed any regulatory capital. The AML Facility ended on February1, 2010. The nonrecourse advances from the FRBB were elected under the fair value option and recorded in other borrowed funds; the corresponding ABCP investments were also elected under the fair value option and recorded in other assets. The fair value of ABCP investments purchased under the AML Facility for U.S. money market mutual funds is determined based on observable market information and is classified in level 2 of the valuation hierarchy. (c) Includes zero and $30billion of advances from the Federal Reserve under the Federal Reserves Term Auction Facility (TAF) at December31, 2009 and 2008, respectively, pursuant to which the Federal Reserve auctions term funds to depository institutions that are eligible to borrow under the primary credit program. The TAF allows all eligible depository institutions to place a bid for an advance from its local Federal Reserve Bank at an interest rate set by an auction. All advances are required to be fully collateralized. The TAF is designed to improve liquidity by making it easier for sound institutions to borrow when the markets are not operating efficiently. (d) Includes other borrowed funds of $5.6billion and $14.7billion accounted for at fair value at December31, 2009 and 2008, respectively. &Accounts payable and other liabilities1Accounts payable and other liabilities [Abstract]� Note 21 Accounts payable and other liabilities The following table details the components of accounts payable and other liabilities at each of the dates indicated. At December 31, (in millions) 2009 2008 Brokerage payables(a) $ 92,848 $ 115,483 Accounts payable and other liabilities(b) 69,848 72,495 Total $ 162,696 $ 187,978 (a) Includes payables to customers, brokers, dealers and clearing organizations, and securities fails. (b) Includes $357million and zero accounted for at fair value at December31, 2009 and 2008, respectively. Long-term debtLong-term debt [Abstract]� Note 22 Long-term debt JPMorgan Chase issues long-term debt denominated in various currencies, although predominantly U.S. dollars, with both fixed and variable interest rates. The following table is a summary of long-term debt carrying values (including unamortized original issue discount, valuation adjustments and fair value adjustments, where applicable) by contractual maturity as of December31, 2009. < By remaining maturity at 2009 December 31, 2009 Under After 2008 (in millions, except rates) 1 year 15 years 5 years Total Total Parent company Senior debt:(a) Fixed rate (b) $ 11,645 $ 57,292 $ 24,792 $ 93,729 $ 79,908 Variable rate (c) 16,892 47,308 9,135 73,335 65,234 Interest rates (d) 0.286.00 % 0.357.00 % 0.227.50 % 0.227.50 % 0.207.63 % Subordinated debt: Fixed rate $ 1,713 $ 9,625 $ 13,513 $ 24,851 $ 28,966 Variable rate 41 1,797 1,838 1,786 Interest rates (d) 7.8810.00 % 1.926.75 % 1.148.53 % 1.1410.00 % 1.9210.00 % Subtotal $ 30,250 $ 114,266 $ 49,237 $ 193,753 $ 175,894 Subsidiaries Senior debt: (a) Fixed rate $ 96 $ 1,695 $ 1,519 $ 3,310 $ 8,370 Variable rate (e) 6,729 22,759 10,347 39,835 57,980 Interest rates (d) 0.220.23 % 0.162.10 % 0.1814.21 % 0.1614.21 % 0.0314.21 % Subordinated debt: Fixed rate $ $ $ 8,655 $ 8,655 $ 8,700 Variable rate 1,150 1,150 1,150 Interest rates (d) 0.588.25 % 0.588.25 % 2.338.25 % Subtotal $ 6,825 $ 24,454 $ 21,671 $ 52,950 $ 76,200 Junior subordinated debt: Fixed rate $ $ $ 16,349 $ 16,349 $ 15,180 Variable rate 3,266 3,266 3,409 Interest rates (d) 0.788.75 % 0.788.75 % 2.428.75 % Subtotal $ $ $ 19,615 $ 19,615 $ 18,589 Total long-term debt(f) $ 37,075 $ 138,720 $ 90,523 $ 266,318 (h)(i)(j) $ 270,683 (j) Long-term beneficial interests: Fixed rate $ 596 $ 373 $ 65 $ 1,034 $ 571 Variable rate 3,361 2,549 3,494 9,404 9,990 Interest rates 0.265.20 % 0.257.13 % 0.255.50 % 0.257.13 % 0.809.16 % Total long-term beneficial interests(g) $ 3,957 $ 2,922 $ 3,559 $ 10,438 $ 10,561 (a) Included are various equity-linked or other indexed instrPreferred stockPreferred stock [Abstract]Preferred Stock� Note 23 Preferred stock JPMorgan Chase is authorized to issue 200million shares of preferred stock, in one or more series, with a par value of $1 per share. On April23, 2008, the Firm issued 600,000 shares of Fixed to Floating Rate Noncumulative Preferred Stock, SeriesI (SeriesI), for total proceeds of $6.0billion. On July15, 2008, each series of Bear Stearns preferred stock then issued and outstanding was exchanged into a series of JPMorgan Chase preferred stock (Cumulative Preferred Stock, SeriesE, SeriesF and SeriesG) having substantially identical terms. As a result of the exchange, these preferred shares rank equally with the other series of the Firms preferred stock. On August21, 2008, the Firm issued 180,000 shares of 8.625% Noncumulative Preferred Stock, Series J (SeriesJ), for total proceeds of $1.8billion. On October28, 2008, pursuant to the U.S. Department of the Treasurys (the U.S. Treasury) Capital Purchase Program (the Capital Purchase Program), the Firm issued to the U.S. Treasury, for total proceeds of $25.0billion, (i)2.5million shares of the Firms Fixed Rate Cumulative Perpetual Preferred Stock, SeriesK, par value $1 per share and liquidation preference $10,000 per share (the SeriesK Preferred Stock); and (ii)a wa< rrant to purchase up to 88,401,697 shares of the Firms common stock at an exercise price of $42.42 per share (the Warrant), subject to certain anti-dilution and other adjustments. The $25.0billion proceeds were allocated to the SeriesK Preferred Stock and the Warrant based on the relative fair value of the instruments. The difference between the initial carrying value of $23.7billion allocated to the SeriesK Preferred Stock and its redemption value of $25.0billion was being amortized to retained earnings (with a corresponding increase in the carrying value of the SeriesK Preferred Stock) over the first five years of the contract as an adjustment to the dividend yield, using the effective-yield method. The SeriesK Preferred Stock was nonvoting, qualified as Tier 1 capital and ranked equally with the Firms other series of preferred stock. On June17, 2009, the Firm redeemed all of the outstanding shares of SeriesK Preferred Stock and repaid the full $25.0billion principal amount together with accrued but unpaid dividends. In the event of a liquidation or dissolution of the Firm, JPMorgan Chases preferred stock then outstanding takes precedence over the Firms common stock for the payment of dividends and the distribution of assets. Generally, dividends on shares of outstanding series of preferred stock are payable quarterly. Dividends on the shares of SeriesI preferred stock are payable semiannually at a fixed annual dividend rate of 7.90% through April2018, and then become payable quarterly at an annual dividend rate of three-month LIBOR plus 3.47%. The SeriesK Preferred Stock bore cumulative dividends, payable quarterly, at a rate of 5% per year for the first five years and 9% per year thereafter. Dividends could only be paid if, as and when declared by the Firms Board of Directors. The effective dividend yield on the SeriesK Preferred Stock was 6.16%. The SeriesK Preferred Stock ranked equalCommon stockCommon stock [Abstract]� Note 24 Common stock At December31, 2009, JPMorgan Chase was authorized to issue 9.0billion shares of common stock with a par value of $1 per share. On June5, 2009, the Firm issued $5.8billion, or 163million new shares, of its common stock at $35.25 per share. On September30, 2008, the Firm issued $11.5 billion, or 284million new shares, of its common stock at $40.50 per share. On April8, 2008, pursuant to the Share Exchange Agreement dated March24, 2008, between JPMorgan Chase and Bear Stearns, 20.7million newly issued shares of JPMorgan Chase common stock were issued to Bear Stearns in a transaction that was exempt from registration under the Securities Act of 1933, pursuant to Section4(2) thereof, in exchange for 95.0million newly issued shares of Bear Stearns common stock (or 39.5% of Bear Stearns common stock after giving effect to the issuance). Upon the consummation of the Bear Stearns merger, on May30, 2008, the 20.7million shares of JPMorgan Chase common stock and 95.0million shares of Bear Stearns common stock were cancelled. For a further discussion of this transaction, see Note 2 on pages 143148 of this Annual Report. Common shares issued (newly issued or distributed from treasury) by JPMorgan Chase during the years ended December31, 2009, 2008 and 2007 were as follows. December 31, (in millions) 2009 2008 2007 Issued balance at January 1 3,941.6 3,657.7 3,657.8 Newly issued: Common stock: Open market issuance 163.3 283.9 Bear Stearns Share Exchange Agreement 20.7 Total newly issued 163.3 304.6 Canceled shares (20.7 ) (0.1 ) Total issued balance at December 31 4,104.9 3,941.6 3,657.7 Treasury balance at January 1 (208.8 ) (290.3 ) (196.1 ) Purchase of treasury stock (168.2 ) Share repurchases related to employee stock-based awards (a) (1.1 ) (0.5 ) (2.7 ) Issued from treasury: Net change from the Bear< Stearns merger as a result of the reissuance of Treasury stock and the Share Exchange Agreement 26.5 Employee benefits and compensation plans 45.7 54.4 75.7 Employee stock purchase plans 1.3 1.1 1.0 Total issued from treasury 47.0 82.0 76.7 Total treasury balance at December 31 (162.9 ) (208.8 ) (290.3 ) Outstanding 3,942.0 3,732.8 3,367.4 (a) Participants in the Firms stock-based incentive plans may have shares withheld to cover income taxes. Pursuant to the Capital Purchase Program, the Firm issued to the U.S. Treasury a Warrant to purchase up to 88,401,697 shares of the Firms common stock, at an exercise price of $42.42 per share, subject to certain antidilution and other adjustments. Based on the Warrants fair value relative to the fair value of the SeriesK Preferred Stock on October28, 2008, as discussed in Note 23 on pages 222223 of this Annual Report, the Warrant was recorded at a value of $1.3 billion. The U.SEarnings per shareEarnings per share [Abstract]� Note 25 Earnings per share Effective January1, 2009, the Firm implemented new FASB guidance for participating securities, which clarifies that unvested stock-based compensation awards containing nonforfeitable rights to dividends or dividend equivalents (collectively, dividends) are participating securities and should be included in the earnings per share (EPS) calculation using the two-class method. JPMorgan Chase grants restricted stock and RSUs to certain employees under its stock-based compensation programs, which entitle the recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock; these unvested awards meet the definition of participating securities. Under the two-class method, all earnings (distributed and undistributed) are allocated to each class of common stock and participating securities, based on their respective rights to receive dividends. EPS data for the prior periods were revised as required by the FASBs guidance. The following table presents the calculation of basic and diluted EPS for the years ended December 31, 2009, 2008 and 2007. Year ended December 31, (in millions, except per share amounts) 2009 2008 2007 Basic earnings per share Income before extraordinary gain $ 11,652 $ 3,699 $ 15,365 Extraordinary gain 76 1,906 Net income 11,728 5,605 15,365 Less: Preferred stock dividends 1,327 674 Less: Accelerated amortization from redemption of preferred stock issued to the U.S. Treasury 1,112 (e) Net income applicable to common equity 9,289 4,931 15,365 Less: Dividends and undistributed earnings allocated to participating securities 515 189 441 Net income applicable to common stockholders(a) 8,774 4,742 14,924 Total weighted-average basic shares outstanding 3,862.8 3,501.1 3,403.6 Per share Income before extraordinary gain $ 2.25 $ 0.81 $ 4.38 Extraordinary gain 0.02 0.54 Net income(b) $ 2.27 (e) $ 1.35 $ 4.38 Year ended December 31, (in millions, except per share amounts) 2009 2008 2007 Diluted earnings per share Net income applicable to common equity $ 9,289 $ 4,931 $ 15,365 Less: Dividends and undistributed earnings allocated to participating securities 515 189 438 Net income applicable to common stockholders(a) 8,774 4,742 14,927 Total weighted-average basic shares outstanding 3,862.8 3,501.1 3,403.6 Add: Employee stock options, SARs and Warrants(c) 16.9 20.7 41.7 Total weighted-average diluted shares < outstanding(d) 3,879.7 3,521.8 3,445.3 Per share Income before extraordinary gain $ 2.24 $ 0.81 $ 4.33 Extraordinary gain 0.02 0.54 -Accumulated other comprehensive income (loss)8Accumulated other comprehensive income/(loss) [Abstract]� Note 26 Accumulated other comprehensive income/(loss) Accumulated other comprehensive income/(loss) includes the after-tax change in unrealized gains/(losses) on AFS securities, foreign currency translation adjustments (including the impact of related derivatives), cash flow hedging activities and net loss and prior service cost/(credit) related to the Firms defined benefit pension and OPEB plans. Net loss and prior Translation service costs/(credit) of Accumulated other Unrealized gains/(losses) adjustments, defined benefit pension comprehensive (in millions) on AFS securities(a) net of hedges Cash flow hedges and OPEB plans income/(loss) Balance at December31, 2006 $ 29 $ 5 $ (489 ) $ (1,102 ) $ (1,557 ) Cumulative effect of changes in accounting principles (for fair value option elections) (1 ) (1 ) Balance at January1, 2007, adjusted 28 5 (489 ) (1,102 ) (1,558 ) Net change 352 (b) 3 (313 ) 599 641 Balance at December31, 2007 380 8 (802 ) (503 ) (917 ) Net change (2,481 )(c) (606 ) 600 (2,283 ) (4,770 ) Balance at December31, 2008 (2,101 ) (598 ) (202 ) (2,786 ) (5,687 ) Net change 4,133 (d) 582 383 498 5,596 Balance at December31, 2009 $ 2,032 (e) $ (16 ) $ 181 $ (2,288 ) $ (91 ) (a) Represents the after-tax difference between the fair value and amortized cost of the AFS securities portfolio and retained interests in securitizations recorded in other assets. (b) The net change during 2007 was due primarily to a decline in interest rates. (c) The net change during 2008 was due primarily to spread widening related to credit card asset-backed securities, nonagency mortgage-backed securities and collateralized loan obligations. (d) The net change during 2009 was due primarily to overall market spread and market liquidity improvement as well as changes in the composition of investments. (e) Includes after-tax unrealized losses of $(226) million not related to credit on debt securities for which credit losses have been recognized in income. The following table presents the before- and after-tax changes in net unrealized gains/(losses); and reclassification adjustments for realized (gains)/losses on AFS securities and cash flow hedges; changes resulting from foreign currency translation adjustments (including the impact of related derivatives); net gains/(losses) and prior service costs/(credits) from pension and OPEB plans; and amortization of pension and OPEB amounts into net income. Reclassification adjustments include amounts recognized in net income that had been recorded previously in other comprehensive income/(loss). 2009 2008 2007 Before Tax After Before Tax After Before Tax After Year ended December 31, (in millions) Income taxesIncome taxes [Abstract]� Note 27 Income taxes JPMorgan Chase and its eligible subsidiaries file a consolidated U.S. federal income tax return. JPMorgan Chase uses the asset and liability method to provide income taxes on all transactions recorded in the Consolidated Financial Statements. This method requires that income taxes reflect the expected future tax consequences of temporary differences between the carrying amounts of assets or liabilities for book and tax purposes. Accordingly, a deferred tax asset or liability for each temporary difference is determined based on t< he tax rates that the Firm expects to be in effect when the underlying items of income and expense are realized. JPMorgan Chases expense for income taxes includes the current and deferred portions of that expense. A valuation allowance is established to reduce deferred tax assets to the amount the Firm expects to realize. Due to the inherent complexities arising from the nature of the Firms businesses, and from conducting business and being taxed in a substantial number of jurisdictions, significant judgments and estimates are required to be made. Agreement of tax liabilities between JPMorgan Chase and the many tax jurisdictions in which the Firm files tax returns may not be finalized for several years. Thus, the Firms final tax-related assets and liabilities may ultimately be different from those currently reported. The components of income tax expense/(benefit) included in the Consolidated Statements of Income were as follows for each of the years ended December31, 2009, 2008 and 2007. Year ended December 31, (in millions) 2009 2008 2007 Current income tax expense U.S. federal $ 4,698 $ 395 $ 2,805 Non-U.S. 2,368 1,009 2,985 U.S. state and local 971 307 343 Total current income tax expense 8,037 1,711 6,133 Deferred income tax expense/ (benefit) U.S. federal (2,867 ) (3,015 ) 1,122 Non-U.S. (454 ) 1 (185 ) U.S. state and local (301 ) 377 370 Total deferred income tax expense/(benefit) (3,622 ) (2,637 ) 1,307 Total income tax expense/ (benefit)before extraordinary gain $ 4,415 $ (926 ) $ 7,440 Total income tax expense includes $280million, $55million and $74million of tax benefits recorded in 2009, 2008 and 2007, respectively, as a result of tax audit resolutions. The preceding table does not reflect the tax effect of certain items that are recorded each period directly in stockholders equity and certain tax benefits associated with the Firms employee stock-based compensation plans. The table also does not reflect the cumulative tax effects of initially implementing new accounting pronouncements in 2007. The tax effect of all items recorded directly to stockholders equity resulted in a decrease of $3.7billion in 2009 and an increase in stockholders equity of $3.0billion and $159million in 2008 and 2007, respectively. U.S. federal income taxes have not been provided on the undistributed earnings of certain non-U.S. subsidiaries, to the 5Restrictions on cash and intercompany funds transfers@Restrictions on cash and intercompany funds transfers [Abstract]v Note 28 Restrictions on cash and intercompany funds transfers The business of JPMorgan Chase Bank, National Association (JPMorgan Chase Bank, N.A.) is subject to examination and regulation by the Office of the Comptroller of the Currency (OCC). The Bank is a member of the U.S. Federal Reserve System, and its deposits are insured by the FDIC. The Board of Governors of the Federal Reserve System (the Federal Reserve) requires depository institutions to maintain cash reserves with a Federal Reserve Bank. The average amount of reserve balances deposited by the Firms bank subsidiaries with various Federal Reserve Banks was approximately $821million and $1.6billion in 2009 and 2008, respectively. Restrictions imposed by U.S. federal law prohibit JPMorgan Chase and certain of its affiliates from borrowing from banking subsidiaries unless the loans are secured in specified amounts. Such secured loans to the Firm or to other affiliates are generally limited to 10% of the banking subsidiarys total capital, as determined by the risk-based capital guidelines; the aggregate amount of all such loans is limited to 20% of the banking subsidiarys total capital. The principal sources of JPMorgan Chases income (on a parent company-only basis) are dividends and interest from JPMorgan Chase Bank, N.A., and the other banking and nonba< nking subsidiaries of JPMorgan Chase. In addition to dividend restrictions set forth in statutes and regulations, the Federal Reserve, the OCC and the FDIC have authority under the Financial Institutions Supervisory Act to prohibit or to limit the payment of dividends by the banking organizations they supervise, including JPMorgan Chase and its subsidiaries that are banks or bank holding companies, if, in the banking regulators opinion, payment of a dividend would constitute an unsafe or unsound practice in light of the financial condition of the banking organization. At January1, 2010 and 2009, JPMorgan Chases banking subsidiaries could pay, in the aggregate, $3.6billion and $17.0billion, respectively, in dividends to their respective bank holding companies without the prior approval of their relevant banking regulators. The capacity to pay dividends in 2010 will be supplemented by the banking subsidiaries earnings during the year. In compliance with rules and regulations established by U.S. and non-U.S. regulators, as of December31, 2009 and 2008, cash in the amount of $24.0billion and $34.8billion, respectively, and securities with a fair value of $10.2billion and $23.4billion, respectively, were segregated in special bank accounts for the benefit of securities and futures brokerage customers. CapitalCapital [Abstract]� Note 29 Capital The Federal Reserve establishes capital requirements, including well-capitalized standards for the consolidated financial holding company. The OCC establishes similar capital requirements and standards for the Firms national banks, including JPMorgan Chase Bank, N.A., and Chase Bank USA, N.A. There are two categories of risk-based capital: Tier 1 capital and Tier 2 capital. Tier 1 capital includes common stockholders equity, qualifying preferred stock and minority interest less goodwill and other adjustments. Tier 2 capital consists of preferred stock not qualifying as Tier 1, subordinated long-term debt and other instruments qualifying as Tier 2, and the aggregate allowance for credit losses up to a certain percentage of risk-weighted assets. Total regulatory capital is subject to deductions for investments in certain subsidiaries. Under the risk-based capital guidelines of the Federal Reserve, JPMorgan Chase is required to maintain minimum ratios of Tier 1 and Total (Tier 1 plus Tier 2) capital to risk-weighted assets, as well as minimum leverage ratios (which are defined as Tier 1 capital to average adjusted on-balance sheet assets). Failure to meet these minimum requirements could cause the Federal Reserve to take action. Banking subsidiaries also are subject to these capital requirements by their respective primary regulators. As of December31, 2009 and 2008, JPMorgan Chase and all of its banking subsidiaries were well-capitalized and met all capital requirements to which each was subject. The following table presents the risk-based capital ratios for JPMorgan Chase and its significant banking subsidiaries at December31, 2009 and 2008. Well- Minimum JPMorgan Chase Co.(c) JPMorgan Chase Bank, N.A.(c) Chase Bank USA, N.A.(c) capitalized capital December 31, (in millions, except ratios) 2009 2008 2009 2008 2009 2008 ratios(f) ratios(f) Regulatory capital: Tier 1 $ 132,971 $ 136,104 $ 96,372 $ 100,597 $ 15,534 $ 11,190 Total 177,073 184,720 136,646 143,832 19,198 12,901 Assets: Risk-weighted(a) 1,198,006 (d) 1,244,659 (e) 1,011,995 1,150,938 (e) 114,693 101,472 Adjusted average(b) 1,933,767 (d) 1,966,895 (e) 1,609,081 1,705,754 (e) 74,087 87,286 < Capital ratios: Tier 1 capital 11.1 %(d) 10.9 % 9.5 % 8.7 % 13.5 % 11.0 % 6.0 % 4.0 % Total capital 14.8 14.8 13.5 12.5 16.7 12.7 10.0 8.0 Tier 1 leverage 6.9 6.9 6.0 5.9 21.0 12.8 5.0 (g) 3.0 (h) (a) Includes off-balance sheet risk-weighCommitments and contingencies(Commitments and contingencies [Abstract]� Note 30 Commitments and contingencies At December31, 2009, JPMorgan Chase and its subsidiaries were obligated under a number of noncancelable operating leases for premises and equipment used primarily for banking purposes, and for energy-related tolling service agreements. Certain leases contain renewal options or escalation clauses providing for increased rental payments based on maintenance, utility and tax increases, or they require the Firm to perform restoration work on leased premises. No lease agreement imposes restrictions on the Firms ability to pay dividends, engage in debt or equity financing transactions or enter into further lease agreements. The following table presents required future minimum rental payments under operating leases with noncancelable lease terms that expire after December31, 2009. Year ended December 31, (in millions) 2010 $ 1,652 2011 1,629 2012 1,550 2013 1,478 2014 1,379 After 2014 8,264 Total minimum payments required(a) 15,952 Less: Sublease rentals under noncancelable subleases (1,800 ) Net minimum payment required $ 14,152 (a) Lease restoration obligations are accrued in accordance with U.S. GAAP, and are not reported as a required minimum lease payment. Total rental expense was as follows. Year ended December 31, (in millions) 2009 2008 2007 Gross rental expense $ 1,884 $ 1,917 $ 1,380 Sublease rental income (172 ) (415 ) (175 ) Net rental expense $ 1,712 $ 1,502 $ 1,205 At December31, 2009, assets were pledged to secure public deposits and for other purposes. The significant components of the assets pledged were as follows. December 31, (in billions) 2009 2008 Reverse repurchase/securities borrowing agreements $ 392.9 $ 456.6 Securities 115.6 31.0 Loans 289.0 342.3 Trading assets and other 76.8 98.0 Total assets pledged(a) $ 874.3 $ 927.9 (a) Total assets pledged do not include assets of consolidated VIEs. These assets are not generally used to satisfy liabilities to third parties. See Note 16 on pages 206214 of this Annual Report for additional information on assets and liabilities of consolidated VIEs. In 2008, the Firm resolved with the IRS issues related to compliance with reporting and withholding requirements for certain accounts transferred to The Bank of New York Mellon Corporation (BNYM) in connection with the Firms sale to BNYM of its corporate trust business. The resolution of these issues did not have a material effect on the Firm. Litigation reserve The Firm maintains litigation reserves for certain of its outstanding litigation. JPMorgan Chase accrues for a litigation-related liability when it is probable that such a liability has been incurred and the amount of the loss can be reasonably estimated. When the Firm is named as a defendant in a litigation and may be subject to joint and several liability, and a judgment-sharing agreement is in place, the Firm recognizYOff-balance sheet lending-related financial instruments, guarantees and other commitmentsdOff-balance sheet lending-related financial instruments, guarantees and other commitments [Abstract]� Note 31 Off-balance sheet lending-related financial instruments, guarantees and other commitments JPMorgan Chase utilizes lending-related financial instruments (e.g., commitments and guar< antees) to meet the financing needs of its customers. The contractual amount of these financial instruments represents the maximum possible credit risk should the counterparties draw down the commitment or the Firm fulfill its obligation under the guarantee, and the counterparties subsequently fail to perform according to the terms of the contract. Most of these commitments and guarantees expire without a default occurring or without being drawn. As a result, the total contractual amount of these instruments is not, in the Firms view, representative of its actual future credit exposure or funding requirements. Further, certain commitments, predominantly related to consumer financings, are cancelable, upon notice, at the option of the Firm. To provide for the risk of loss inherent in wholesale-related contracts, an allowance for credit losses on lending-related commitments is maintained. See Note 14 on pages 196198 of this Annual Report for further discussion of the allowance for credit losses on lending-related commitments. The following table summarizes the contractual amounts of off-balance sheet lending-related financial instruments and guarantees and the related allowance for credit losses on lending-related commitments at December31, 2009 and 2008. The amounts in the table below for credit card and home equity lending-related commitments represent the total available credit for these products. The Firm has not experienced, and does not anticipate, that all available lines of credit for these products will be utilized at the same time. The Firm can reduce or cancel these lines of credit by providing the borrower prior notice or, in some cases, without notice as permitted by law. Off-balance sheet lending-related financial instruments, guarantees and other commitments Contractual amount Carrying Value(h) December 31, (in millions) 2009 2008 2009 2008 Lending-related Consumer: Home equity senior lien $ 19,246 $ 27,998 $ $ Home equity junior lien 37,231 67,745 Prime mortgage 1,654 5,079 Subprime mortgage Option ARMs Auto loans 5,467 4,726 7 3 Credit card 569,113 623,702 All other loans 11,229 12,257 5 22 Total consumer 643,940 741,507 12 25 Wholesale: Other unfunded commitments to extend credit(a) 192,145 189,563 356 349 Asset purchase agreements 22,685 53,729 126 147 Standby letters of credit and financial guarantees(a)(b)(c) 91,485 95,352 919 671 Unused advised lines of credit 35,673 36,300 Other letters of credit(a)(b) 5,167 4,927 1 2 Total Credit risk concentrations%Credit risk concentrations [Abstract]� Note 32 Credit risk concentrations Concentrations of credit risk arise when a number of customers are engaged in similar business activities or activities in the same geographic region, or when they have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. JPMorgan Chase regularly monitors various segments of its credit portfolio to assess potential concentration risks and to obtain collateral when deemed necessary. Senior management is significantly involved in the credit approval and review process, and risk levels are adjusted as needed to reflect managements risk tolerance. In the Firms wholesale portfolio, risk concentrations are evaluated primarily by industry and geographic region, and monitored regularly on both an aggregate portfolio level and on an individual customer basis. Management of the Firms wholesale exposure is accomplished through loan syndication and participation, loan sales, securitizations,< credit derivatives, use of master netting agreements, and collateral and other risk-reduction techniques. In the consumer portfolio, concentrations are evaluated primarily by product and by U.S. geographic region, with a key focus on trends and concentrations at the portfolio level, where potential risk concentrations can be remedied through changes in underwriting policies and portfolio guidelines. The Firm does not believe that its exposure to any particular loan product (e.g., option ARMs), portfolio segment (e.g., commercial real estate) or its exposure to residential real estate loans with high loan-to-value ratios results in a significant concentration of credit risk. Terms of loan products and collateral coverage are included in the Firms assessment when extending credit and establishing its allowance for loan losses. For further information regarding on-balance sheet credit concentrations by major product and geography, see Note 13 on pages 192-196 of this Annual Report. For information regarding concentrations of off-balance sheet lending-related financial instruments by major product, see Note 31 on pages 230-234 of this Annual Report. The table below presents both on-balance sheet and off-balance sheet wholesale- and consumer-related credit exposure as of December31, 2009 and 2008. 2009 2008 On-balance sheet On-balance sheet Credit Off-balance Credit Off-balance December 31, (in millions) exposure Loans Derivatives sheet(d) exposure Loans Derivatives sheet(d) Wholesale-related(a): Real estate $ 68,509 $ 57,195 $ 1,112 $ 10,202 $ 80,284 $ 64,510 $ 2,021 $ 13,753 Banks and finance companies 54,053 14,396 17,957 21,700 75,577 19,055 33,457 23,065 Healthcare 35,605 4,992 1,917 28,696 38,032 7,004 3,723 27,305 State and municipal governments International operations#International operations [Abstract]� Note 33 International operations The following table presents income statementrelated information for JPMorgan Chase by major international geographic area. The Firm defines international activities as business transactions that involve customers residing outside of the U.S., and the information presented below is based primarily upon the domicile of the customer, the location from which the customer relationship is managed or the location of the trading desk. However, many of the Firms U.S. operations serve international businesses. As the Firms operations are highly integrated, estimates and subjective assumptions have been made to apportion revenue and expense between U.S. and international operations. These estimates and assumptions are consistent with the allocations used for the Firms segment reporting as set forth in Note 34 on pages 237239 of this Annual Report. The Firms long-lived assets for the periods presented are not considered by management to be significant in relation to total assets. The majority of the Firms long-lived assets are located in the United States. Income before income tax expense/(benefit) Year ended December 31, (in millions) Revenue(a) Expense(b) and extraordinary gain Net income 2009 Europe/Middle East and Africa $ 16,915 $ 8,610 $ 8,290 $ 5,485 Asia and Pacific 5,088 3,438 1,646 1,119 Latin America and the Caribbean 1,982 1,112 861 513 Other 659 499 160 105 Total international 24,644 13,659 10,957 7,222 Total U.S. 75,790 70,708 5,110 4,506 Total $ 100,434 $ 84,367 $ 16,067 $ 11,728 2008 Europe/Middle East a< nd Africa $ 11,449 $ 8,403 $ 3,046 $ 2,483 Asia and Pacific 4,097 3,580 517 672 Latin America and the Caribbean 1,353 903 450 274 Other 499 410 89 21 Total international 17,398 13,296 4,102 3,450 Total U.S. 49,854 51,183 (1,329 ) 2,155 Total $ 67,252 $ 64,479 $ 2,773 $ 5,605 2007 Europe/Middle East and Africa $ 12,070 $ 8,445 $ 3,625 $ 2,585 Asia and Pacific 4,730 3,117 1,613 945 Latin America and the Caribbean 2,028 975 1,053 630 Other 407 289 118 79 Total international 19,235 12,826 6,409 4,239 Total U.S. 52,137 35,741 16,396 11,126 Total $ 71,372 $ 48,567 $ 22,805 $ 15,365 (a) Revenue is composed of net interest income and noninterest revenue. (b) Expense is composed of noninterest expense and the provision for credit losses. Business segmentsBusiness segments [Abstract]� Note 34 Business segments The Firm is managed on a line-of-business basis. There are six major reportable business segments Investment Bank, Retail Financial Services, Card Services, Commercial Banking, Treasury Securities Services and Asset Management, as well as a Corporate/Private Equity segment. The business segments are determined based on the products and services provided, or the type of customer served, and they reflect the manner in which financial information is currently evaluated by management. Results of these lines of business are presented on a managed basis. For a definition of managed basis, see Explanation and Reconciliation of the Firms use of non-GAAP financial measures, on pages 5052 of this Annual Report. For a further discussion concerning JPMorgan Chases business segments, see Business segment results on pages 5354 of this Annual Report. The following is a description of each of the Firms business segments: Investment Bank J.P. Morgan is one of the worlds leading investment banks, with deep client relationships and broad product capabilities. The clients of the Investment Bank (IB) are corporations, financial institutions, governments and institutional investors. The Firm offers a full range of investment banking products and services in all major capital markets, including advising on corporate strategy and structure, capital-raising in equity and debt markets, sophisticated risk management, market-making in cash securities and derivative instruments, prime brokerage, and research. IB also commits the Firms own capital to principal investing and trading activities on a limited basis. Retail Financial Services Retail Financial Services (RFS), which includes the Retail Banking and Consumer Lending businesses, serves consumers and businesses through personal service at bank branches and through ATMs, online banking and telephone banking as well as through auto dealerships and school financial-aid offices. Customers can use more than 5,100 bank branches (third-largest nationally) and 15,400 ATMs (second-largest nationally), as well as online and mobile banking around the clock. More than 23,900 branch salespeople assist customers with checking and savings accounts, mortgages, home equity and business loans, and investments across the 23-state footprint from New York and Florida to California. Consumers also can obtain loans through 15,700 auto dealerships and nearly 2,100 schools and universities nationwide. Card Services Card Services is one of the nations largest credit card issuers, with more than 145million credit cards in circulation and over $163billion in managed loans. Customers used Chase cards to meet more than $328billion of their spending needs in 2009. Chase continues to innovate, despite a very difficult business environment, launching new products and services such as Blueprint, Ultimate Rewards, Chase Sapphire and I<vnk from Chase, and earning a market leadership position in building loyalty and rewards programs. Through its merchant acquiring business, Chase Paymentech Solutions, Chase is one of the leading processors of credit-card payments. Commercial Banking Commercial BankiParent companyParent company [Abstract]� Note 35 Parent company Parent company statements of income Year ended December 31, (in millions) 2009 2008 2007 Income Dividends from subsidiaries: Bank and bank holding company $ 15,235 $ 3,085 $ 5,834 Nonbank(a) 1,036 1,687 2,463 Interest income from subsidiaries 1,501 4,539 5,082 Other interest income 266 212 263 Other income from subsidiaries, primarily fees: Bank and bank holding company 233 244 182 Nonbank 742 95 960 Other income/(loss) 844 (1,038 ) (131 ) Total income 19,857 8,824 14,653 Expense Interest expense to subsidiaries(a) 1,118 1,302 1,239 Other interest expense 4,696 6,879 6,427 Compensation expense 574 43 125 Other noninterest expense 414 732 329 Total expense 6,802 8,956 8,120 Income/(loss) before income tax benefit and undistributed net income of subsidiaries 13,055 (132 ) 6,533 Income tax benefit 1,269 2,582 589 Equity in undistributed net income of subsidiaries (2,596 ) 3,155 8,243 Net income $ 11,728 $ 5,605 $ 15,365 Parent company balance sheets December 31, (in millions) 2009 2008 Assets Cash and due from banks $ 102 $ 35 Deposits with banking subsidiaries 87,893 60,551 Trading assets 14,808 12,487 Available-for-sale securities 2,647 1,587 Loans 1,316 1,525 Advances to, and receivables from, subsidiaries: Bank and bank holding company 54,152 33,293 Nonbank 81,365 131,032 Investments (at equity) in subsidiaries: Bank and bank holding company 157,412 153,140 Nonbank(a) 32,547 27,968 Goodwill and other intangibles 1,104 1,616 Other assets 14,793 12,934 Total assets $ 448,139 $ 436,168 Liabilities and stockholders equity Borrowings from, and payables to, subsidiaries(a) $ 39,532 $ 44,467 Other borrowed funds, primarily commercial paper 41,454 39,560 Other liabilities 8,035 9,363 Long-term debt(b) 193,753 175,894 Total liabilities 282,774 269,284 Total stockholders equity 165,365 166,884 Total liabilities and stockholders equity $ 448,139 $ 436,168 Parent company statements of cash flows Year ended December 31, (in millions) 2009 2008 2007 Operating activities Net income $ 11,728 $ 5,605 $ 15,365 Less: Net income of subsidiaries(a) 13,675 7,927 16,540 Parent company net loss (1,947 ) (2,322 ) (1,175 ) Add: Cash dividends from subsidiaries(a) 16,054 4,648 8,061 Other, net 1,852 1�b��r��N��h � ��$�P'��,8|0��5];��= �@��C�}F�aH��L��O�S�-V;�X�3[A{]� a Ydg�f�j��y ��?c*��; n�[R�e�g��$��Nb�F F��ܷ d��MbP?_*+��%��" dFXX�?�?U}�<}�}�$ �� .�?B� ��A�"�4 >�@�dd�7 F��++�m� d��MbP?_*+��%��" dFXX�?�?U}�<}�}�}�}�}�}�}�$ +�� ~ ��@~ ��@~ �@� ~ "�@~ ��~ ��@� !~ ��@~ �@~ Į@� "~ ~�@~ �;�@~ �@� #~ X�@� $~ `�@� $~ �d@� $� %~ ��@~ �@~ ��@� &~ ƻ@ ~ ��@ ~ ��@ � '~ ��@ ~ �@ ~ ��@ � (~ @�@~ @��@~ ��@� )~ �2�@~ ��@~ �m�@� *~ ��@ ~ ��@ ~ ��@ � +~ ��@~ `��@~ ��@� ,~ ��@~ @k�@~ �l�@� -~ �C�@~ �|�@~ к@� .� /~ L�@~ �6�@~ @(�@� 0~ ��@~ ��@~ `�@� 1~ �@~ ۰@~ ��@� 2~ X�@~ ��@~ �@� 3~ ě@~ �@~ ,�@� 4~ ��@~ 8�@~ ̭@� 5~ h�@~ ��@~ ȕ@� 6~ ~@~ {@~ j@� 7~ ��@~ �=�@~ �\�@� 8~ �a�@~ ��@~ @E�@� 9~ ?�@~ ��~ �@� :~ ��@~ �@~ ��@� ;~ S@~ ȝ@~ � <~ ��@~ �@~ ��@�D�l8,VVVVbVVVVVVVVV,VVVVVVVVVVVVV �!�"�#�$�%�&�'�(�)�*�� =~ !#�@ ~ !��@ ~ !�'�@ � !>!!!� ":~ "@"~ "@T@"~ "`{@"� #<~ #`l@#~ #�`@#~ #`{@#� $?$$$� %:%�Q��@%~ %@T@%~ %{@%� &<&�G�z@&~ &�`@&~ &{@&� '@~ '.�@'~ 'Z�@'~ '��@'� (A~ (P�@(~ (��@(~ (�@(� )B~ )"4@)~ )"c@)~ )"�b@)� *C��V,VV,ZZVVV>�@�dd� **�7 F�� d��MbP?_*+��%��" dFXX�?�?U}�<}�}�$ �� D� E� � � F~ �@� G~ ��@� H~ w@�d>�@�dd�7 F��'�� d��MbP?_*+��%��" dFXX�?�?U}�<}�}�$ '�� I� E� J� K� L� M��@�C�@� N��@��A� O�`�AX�A� P��4�@F�@� Q��A| A� R��A�# A� S� �T#A��&A� T� �� U�^"A�&A� V�0v�@`��@� W� ��@��@� X��@`s�@� Y��U�@�]�@� Z� �@͵@� [� 0%�@ &�@� \� �| 2�� ]� ^��E9��=� _�(�A�A� `�@h�@�z�@� a��7�@�)A� b��@�^A� c�@�AP�A� d��@��@� e� 8AA l�A� f� �{A� g� h�ؿ@�0�@� i� �@̮@�D�l*$$$$$$$$$$$$$$$$$$$$$$$$$$ �!�"�#�$�%�&�� j� ��@�~�@� !k�! 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