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1.0.0.3 false Business changes and developments false 1 $ false false Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 2 Business changes and developments [Abstract] 0 jpm_BusinessChangesAndDevelopmentsAbstract jpm false na duration string Business Changes And Developments Abstract. false false false false false true false false false 1 false false 0 0 false false Business Changes And Developments Abstract. false 3 Business changes and developments 1 jpm_BusinessCombinationDisclosureAndOtherBusinessEventsDisclosuresTextBlock jpm false na duration normalizedstring Description of a business combination (or a series of individually immaterial business combinations) completed during the... false false false false false false false false false 1 false false 0 0   <div style="font-family: Helvetica,Arial,sans-serif"> <div style="position: relative"> <div align="left" style="font-size: 12pt; margin-top: 12pt"><b>Note 2 – Business changes and developments</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Decrease in Common Stock Dividend</b><br /> On February 23, 2009, the Board of Directors reduced the Firm’s quarterly common stock dividend from $0.38 to $0.05 per share, effective for the dividend payable April 30, 2009, to shareholders of record on April 6, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Acquisition of the banking operations of Washington Mutual Bank</b><br /> On September 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual Bank (“Washington Mutual”) from the Federal Deposit Insurance Corporation (“FDIC”) for $1.9 billion. The acquisition expanded JPMorgan Chase’s 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 Firm’s 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. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In 2008, the $1.9 billion 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 $1.9 billion at December 31, 2008. The final total extraordinary gain that resulted from the Washington Mutual transaction was $2.0 billion. </div> </div> <div align="center"> <table style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="47%"></td> <td width="5%"></td> <td width="47%"></td> </tr>   <tr valign="bottom">  <td align="left" valign="top"></td> <td></td> <td align="right" valign="top"></td> </tr> <tr valign="bottom"> <td align="left" valign="top"></td> <td></td> <td align="right" valign="top"></td> </tr>  </table> </div>   </div>  <div style="font-family: Helvetica,Arial,sans-serif"> <div align="left" style="font-size: 12pt; margin-top: 0pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The final summary computation of the purchase price and the allocation of the final total purchase price of $1.9 billion to the net assets acquired of Washington Mutual – based on their respective fair values as of September 25, 2008, and the resulting final negative goodwill of $2.0 billion are presented below. </div> <div align="center"> <table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td align="left">(in millions)</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr>   <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Purchase price</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Purchase price </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,938</td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Direct acquisition costs </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Total purchase price</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">1,941</td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Net assets acquired</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Washington Mutual’s net assets before fair value adjustments </div></td> <td> </td> <td align="left">$</td> <td align="right">39,186</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:30px; text-indent:-15px">Washington Mutual’s goodwill and other intangible assets </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(7,566</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Subtotal </div></td> <td> </td> <td> </td> <td align="right">31,620</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="font-size: 6pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Adjustments to reflect assets acquired at fair value:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Securities </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(16</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Trading assets </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(591</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Loans </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(30,998</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Allowance for loan losses </div></td> <td> </td> <td> </td> <td align="right">8,216</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Premises and equipment </div></td> <td> </td> <td> </td> <td align="right">680</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Accrued interest and accounts receivable </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(243</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Other assets </div></td> <td> </td> <td> </td> <td align="right">4,010</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="font-size: 6pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Adjustments to reflect liabilities assumed at fair value:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Deposits </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(686</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Other borrowed funds </div></td> <td> </td> <td> </td> <td align="right">68</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Accounts payable, accrued expense and other liabilities </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,124</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Long-term debt </div></td> <td> </td> <td> </td> <td align="right">1,063</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="font-size: 6pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Fair value of net assets acquired</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">11,999</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Negative goodwill before allocation to nonfinancial assets </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(10,058</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Negative goodwill allocated to nonfinancial assets<sup>(a)</sup> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">8,076</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Negative goodwill resulting from the acquisition</b><sup>(b)</sup> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(1,982</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 6pt; width: 18%; border-top: 0px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>The acquisition was accounted for as a purchase business combination, which requires the assets (including identifiable intangible assets) and liabilities (including executory contracts and other commitments) of an acquired business to be recorded at their respective fair values as of the effective date of the acquisition and consolidated with those of JPMorgan Chase. The fair value of the net assets of Washington Mutual’s banking operations exceeded the $1.9 billion purchase price, resulting in negative goodwill. Noncurrent, nonfinancial assets not held-for-sale, such as premises and equipment and other intangibles, were written down against the negative goodwill. The negative goodwill that remained after writing down transaction-related core deposit intangibles of approximately $4.9 billion and premises and equipment of approximately $3.2 billion was recognized as an extraordinary gain of $2.0 billion.</td> </tr> <tr style="font-size: 1pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(b)</td> <td> </td> <td>The extraordinary gain was recorded net of tax expense in Corporate/Private Equity.</td> </tr> </table> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Condensed statement of net assets acquired</b><br /> The following condensed statement of net assets acquired reflects the final value assigned to the Washington Mutual net assets as of September 25, 2008. </div> <div align="center"> <table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="88%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(in millions)</td> <td> </td> <td nowrap="nowrap" align="right" colspan="2">September 25, 2008</td> <td> </td> </tr>   <tr style="font-size: 1px"> <td colspan="5" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Assets</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cash and due from banks </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>3,680</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Deposits with banks </div></td> <td> </td> <td> </td> <td align="right"><b>3,517</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Federal funds sold and securities purchased under resale agreements </div></td> <td> </td> <td> </td> <td align="right"><b>1,700</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Trading assets </div></td> <td> </td> <td> </td> <td align="right"><b>5,691</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Securities </div></td> <td> </td> <td> </td> <td align="right"><b>17,224</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Loans (net of allowance for loan losses) </div></td> <td> </td> <td> </td> <td align="right"><b>206,456</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Accrued interest and accounts receivable </div></td> <td> </td> <td> </td> <td align="right"><b>3,253</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Mortgage servicing rights </div></td> <td> </td> <td> </td> <td align="right"><b>5,874</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">All other assets </div></td> <td> </td> <td> </td> <td align="right"><b>16,596</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="5" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:30px; text-indent:-15px"><b>Total assets</b> </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>263,991</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="5" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Liabilities</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Deposits </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>159,872</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Federal funds purchased and securities loaned or sold under repurchase agreements </div></td> <td> </td> <td> </td> <td align="right"><b>4,549</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Other borrowed funds </div></td> <td> </td> <td> </td> <td align="right"><b>81,636</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Trading liabilities </div></td> <td> </td> <td> </td> <td align="right"><b>585</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Accounts payable, accrued expense and other liabilities </div></td> <td> </td> <td> </td> <td align="right"><b>6,708</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Long-term debt </div></td> <td> </td> <td> </td> <td align="right"><b>6,718</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="5" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:30px; text-indent:-15px"><b>Total liabilities</b> </div></td> <td> </td> <td> </td> <td align="right"><b>260,068</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="5" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Washington Mutual net assets acquired</b> </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>3,923</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="5" align="left" style="border-top: 1px solid #000000"> </td> </tr>  </table> </div> <div align="center"> <table style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="47%"></td> <td width="5%"></td> <td width="47%"></td> </tr>   <tr valign="bottom">  <td align="left" valign="top"></td> <td></td> <td align="right" valign="top"></td> </tr> <tr valign="bottom"> <td align="left" valign="top"></td> <td></td> <td align="right" valign="top"></td> </tr>  </table> </div>   </div>  <div style="font-family: Helvetica,Arial,sans-serif"> <div style="position: relative"> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Merger with The Bear Stearns Companies Inc.</b><br /> Effective May 30, 2008, BSC Merger Corporation, a wholly owned subsidiary of JPMorgan Chase, merged with The Bear Stearns Companies Inc. (“Bear Stearns”) pursuant to the Agreement and Plan of Merger, dated as of March 16, 2008, as amended March 24, 2008, and Bear Stearns became a wholly owned subsidiary of JPMorgan Chase. The merger provided the Firm with a leading global prime brokerage platform; strengthened the Firm’s equities and asset management businesses; enhanced capabilities in mortgage origination, securitization and servicing; and expanded the platform of the Firm’s energy business. The merger was accounted for under the purchase method of accounting, which requires that the assets and liabilities of Bear Stearns be fair valued. The final total purchase price to complete the merger was $1.5 billion. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The merger with Bear Stearns was accomplished through a series of transactions that were reflected as step acquisitions. On April 8, 2008, pursuant to the share exchange agreement, JPMorgan Chase acquired 95 million newly issued shares of Bear Stearns common stock (or 39.5% of Bear Stearns common stock after giving effect to the issuance) for 21 million shares of JPMorgan Chase common stock. Further, between March 24, 2008, and May 12, 2008, JPMorgan Chase acquired approximately 24 million shares of Bear Stearns common stock in the open market at an average purchase price of $12.37 per share. The share exchange and cash purchase transactions resulted in JPMorgan Chase owning approximately 49.4% of Bear Stearns common stock immediately prior to consummation of the merger. Finally, on May 30, 2008, JPMorgan Chase completed the merger. As a result of the merger, each outstanding share of Bear Stearns common stock (other than shares then held by JPMorgan Chase) was converted into the right to receive 0.21753 shares of common stock of JPMorgan Chase. Also, on May 30, 2008, the shares of common stock that JPMorgan Chase and Bear Stearns acquired from each other in the share exchange transaction were cancelled. From April 8, 2008, through May 30, 2008, JPMorgan Chase accounted for the investment in Bear Stearns under the equity method of accounting. During this period, JPMorgan Chase recorded reductions to its investment in Bear Stearns representing its share of Bear Stearns net losses, which was recorded in other income and accumulated other comprehensive income. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In conjunction with the Bear Stearns merger, in June 2008, the Federal Reserve Bank of New York (the “FRBNY”) took control, through a limited liability company (“LLC”) formed for this purpose, of a portfolio of $30 billion in assets acquired from Bear Stearns, based on the value of the portfolio as of March 14, 2008. The assets of the LLC were funded by a $28.85 billion term loan from the FRBNY, and a $1.15 billion subordinated loan from JPMorgan Chase. The JPMorgan Chase note is subordinated to the FRBNY loan and will bear the first $1.15 billion of any losses of the portfolio. Any remaining assets in the portfolio after repayment of the FRBNY loan, the JPMorgan Chase note and the expense of the LLC will be for the account of the FRBNY. </div> </div> <div align="center"> <table style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="47%"></td> <td width="5%"></td> <td width="47%"></td> </tr>   <tr valign="bottom" style="font-size: 12pt">  <td align="left" valign="top"></td> <td></td> <td align="right" valign="top"></td> </tr> <tr valign="bottom"> <td align="left" valign="top"></td> <td></td> <td align="right" valign="top"></td> </tr>  </table> </div>   </div>  <div style="font-family: Helvetica,Arial,sans-serif"> <div align="left" style="font-size: 12pt; margin-top: 0pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">As a result of step acquisition accounting, the final total purchase price of $1.5 billion was allocated to the Bear Stearns assets acquired and liabilities assumed using their fair values as of April 8, 2008, and May 30, 2008, respectively. The final summary computation of the purchase price and the allocation of the final total purchase price of $1.5 billion to the net assets acquired of Bear Stearns are presented below. </div> <div align="center"> <table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(in millions, except for shares (in thousands), per share amounts and where otherwise noted)</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr>   <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Purchase price</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Shares exchanged in the Share Exchange transaction (April 8, 2008) </div></td> <td> </td> <td> </td> <td align="right">95,000</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Other Bear Stearns shares outstanding </div></td> <td> </td> <td> </td> <td align="right">145,759</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total Bear Stearns stock outstanding </div></td> <td> </td> <td> </td> <td align="right">240,759</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Cancellation of shares issued in the Share Exchange transaction </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(95,000</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cancellation of shares acquired by JPMorgan Chase for cash in the open market </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(24,061</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Bear Stearns common stock exchanged as of May 30, 2008 </div></td> <td> </td> <td> </td> <td align="right">121,698</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Exchange ratio </div></td> <td> </td> <td> </td> <td align="right">0.21753</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">JPMorgan Chase common stock issued </div></td> <td> </td> <td> </td> <td align="right">26,473</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Average purchase price per JPMorgan Chase common share<sup style="font-size: 85%; vertical-align: text-top">(a)</sup> </div></td> <td> </td> <td align="left">$</td> <td align="right">45.26</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 6pt"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Total fair value of JPMorgan Chase common stock issued </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,198</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Bear Stearns common stock acquired for cash in the open market (24 million shares at an average share price of $12.37 per share) </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">298</td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Fair value of employee stock awards (largely to be settled by shares held in the RSU Trust<sup style="font-size: 85%; vertical-align: text-top">(b)</sup>) </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">242</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Direct acquisition costs </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">27</td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Less: Fair value of Bear Stearns common stock held in the RSU Trust and included in the exchange of common stock </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(269</td> <td nowrap="nowrap">)<sup style="font-size: 85%; vertical-align: text-top">(b)</sup></td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Total purchase price</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">1,496</td> <td> </td> </tr> <tr style="font-size: 6pt"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Net assets acquired</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Bear Stearns common stockholders’ equity </div></td> <td> </td> <td align="left">$</td> <td align="right">6,052</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 6pt"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Adjustments to reflect assets acquired at fair value:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Trading assets </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(3,877</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Premises and equipment </div></td> <td> </td> <td> </td> <td align="right">509</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Other assets </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(288</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 6pt"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Adjustments to reflect liabilities assumed at fair value:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Long-term debt </div></td> <td> </td> <td> </td> <td align="right">504</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Other liabilities </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(2,289</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Fair value of net assets acquired excluding goodwill</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">611</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Goodwill resulting from the merger</b><sup style="font-size: 85%; vertical-align: text-top">(c)</sup> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">885</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 2px solid #000000"> </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 1pt; margin-top: 6pt; width: 18%; border-top: 0px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>The value of JPMorgan Chase common stock was determined by averaging the closing prices of JPMorgan Chase’s common stock for the four trading days during the period March 19 through 25, 2008.</td> </tr> <tr style="font-size: 1pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(b)</td> <td> </td> <td>Represents shares of Bear Stearns common stock held in an irrevocable grantor trust (the “RSU Trust”), to be used to settle stock awards granted to selected employees and certain key executives under certain heritage Bear Stearns employee stock plans. Shares in the RSU Trust were exchanged for 6 million shares of JPMorgan Chase common stock at the merger exchange ratio of 0.21753. For further discussion of the RSU Trust, see Note 9 on pages 184–186 of this Annual Report.</td> </tr> <tr style="font-size: 1pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(c)</td> <td> </td> <td>The goodwill was recorded in Investment Bank (“IB”) and is not tax-deductible.</td> </tr> </table> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Condensed statement of net assets acquired</b><br /> The following condensed statement of net assets acquired reflects the final values assigned to the Bear Stearns net assets as of May 30, 2008. </div> <div align="center"> <table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="88%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(in millions)</td> <td> </td> <td nowrap="nowrap" align="right" colspan="2">May 30, 2008</td> <td> </td> </tr>   <tr style="font-size: 1px"> <td colspan="5" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Assets</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cash and due from banks </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>534</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Federal funds sold and securities purchased under resale agreements </div></td> <td> </td> <td> </td> <td align="right"><b>21,204</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Securities borrowed </div></td> <td> </td> <td> </td> <td align="right"><b>55,195</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Trading assets </div></td> <td> </td> <td> </td> <td align="right"><b>136,489</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Loans </div></td> <td> </td> <td> </td> <td align="right"><b>4,407</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Accrued interest and accounts receivable </div></td> <td> </td> <td> </td> <td align="right"><b>34,677</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Goodwill </div></td> <td> </td> <td> </td> <td align="right"><b>885</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">All other assets </div></td> <td> </td> <td> </td> <td align="right"><b>35,377</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="5" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Total assets</b> </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>288,768</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="5" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Liabilities</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Federal funds purchased and securities loaned or sold under repurchase agreements </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>54,643</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Other borrowings </div></td> <td> </td> <td> </td> <td align="right"><b>16,166</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Trading liabilities </div></td> <td> </td> <td> </td> <td align="right"><b>24,267</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Beneficial interests issued by consolidated VIEs </div></td> <td> </td> <td> </td> <td align="right"><b>47,042</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Long-term debt </div></td> <td> </td> <td> </td> <td align="right"><b>67,015</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Accounts payable and other liabilities </div></td> <td> </td> <td> </td> <td align="right"><b>78,569</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="5" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Total liabilities</b> </div></td> <td> </td> <td> </td> <td align="right"><b>287,702</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="5" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Bear Stearns net assets</b><sup style="font-size: 85%; vertical-align: text-top">(a)</sup> </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>1,066</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="5" align="left" style="border-top: 2px solid #000000"> </td> </tr>  </table> </div> <div align="center"> <table style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="47%"></td> <td width="5%"></td> <td width="47%"></td> </tr>   <tr valign="bottom">  <td align="left" valign="top"></td> <td></td> <td align="right" valign="top"></td> </tr> <tr valign="bottom"> <td align="left" valign="top"></td> <td></td> <td align="right" valign="top"></td> </tr>  </table> </div>   </div>  <div style="font-family: Helvetica,Arial,sans-serif"> <div align="left"> <div style="font-size: 3pt; margin-top: 6pt; width: 18%; border-top: 0px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>Reflects the fair value assigned to 49.4% of the Bear Stearns net assets acquired on April 8, 2008 (net of related amortization), and the fair value assigned to the remaining 50.6% of the Bear Stearns net assets acquired on May 30, 2008. The difference between the net assets acquired, as presented above, and the fair value of the net assets acquired (including goodwill), presented in the previous table, represents JPMorgan Chase’s net losses recorded under the equity method of accounting.</td> </tr> </table> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Unaudited pro forma condensed combined financial information reflecting the Bear Stearns merger and Washington Mutual transaction</b> </div> <div align="left" style="font-size: 10pt; margin-top: 0pt">The following unaudited pro forma condensed combined financial information presents the 2008 and 2007 results of operations of the Firm as they may have appeared, if the Bear Stearns merger and the Washington Mutual transaction had been completed on January 1, 2008, and January 1, 2007. </div> <div align="center"> <table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">Year ended December 31,</td> <td> </td> <td nowrap="nowrap" align="right" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="right" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(in millions, except per share data)</td> <td> </td> <td nowrap="nowrap" align="right" colspan="2">2008</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right" colspan="2">2007</td> <td> </td> </tr>   <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Total net revenue</b> </div></td> <td> </td> <td align="left">$</td> <td align="right">68,149</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">92,052</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Income/(loss) before extraordinary gain</b> </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(14,090</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">17,733</td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Net income/(loss)</b> </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(12,184</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">17,733</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Net income per common share data:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Basic earnings per share</b><sup>(a)</sup> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Income/(loss) before extraordinary gain </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(4.26</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">5.02</td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Net income/(loss) </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(3.72</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">5.02</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Diluted earnings per share</b><sup>(a)(b)</sup> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px">Income/(loss) before extraordinary gain </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(4.26</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">4.96</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net income/(loss) </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(3.72</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">4.96</td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Average common shares issued and outstanding</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Basic </div></td> <td> </td> <td> </td> <td align="right">3,510.5</td> <td> </td> <td> </td> <td> </td> <td align="right">3,429.6</td> <td> </td> </tr> <tr valign="bottom" style="background: #ffffff"> <td> <div style="margin-left:30px; text-indent:-15px">Diluted </div></td> <td> </td> <td> </td> <td align="right">3,510.5</td> <td> </td> <td> </td> <td> </td> <td align="right">3,471.3</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 1pt; margin-top: 3pt; width: 18%; border-top: 0px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>Effective January 1, 2009, the Firm implemented FASB guidance for participating securities. Accordingly, prior-period amounts have been revised. For further discussion of the guidance, see Note 25 on page 224 of this Annual Report.</td> </tr> <tr style="font-size: 1pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(b)</td> <td> </td> <td>Common equivalent shares have been excluded from the pro forma computation of diluted loss per share for the year ended December 31, 2008, as the effect would be antidilutive.</td> </tr> </table> <div style="position: relative"> <div align="left" style="font-size: 10pt; margin-top: 12pt">The unaudited pro forma combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined company had the companies actually been combined as of January 1, 2008, and as of January 1, 2007, nor is it indicative of the results of operations in future periods. Included in the unaudited pro forma combined financial information for the years ended December 31, 2008 and 2007, were pro forma adjustments to reflect the results of operations of Bear Stearns and Washington Mutual’s banking operations, considering the purchase accounting, valuation and accounting conformity adjustments related to each transaction. For the Washington Mutual transaction, the amortization of purchase accounting adjustments to report interest-earning assets acquired and interest-bearing liabilities assumed at current interest rates is reflected for the years ended December 31, 2008 and 2007. Valuation adjustments and the adjustment to conform allowance methodologies in the Washington Mutual transaction, and valuation and accounting conformity adjustments related to the Bear Stearns merger are reflected in the results for the years ended December 31, 2008 and 2007. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Internal reorganization related to the Bear Stearns merger</b><br /> On June 30, 2008, JPMorgan Chase fully and unconditionally guaranteed each series of outstanding preferred stock of Bear Stearns, as well as all of Bear Stearns’ outstanding U.S. Securities and Exchange Commission (“SEC”) registered U.S. debt securities and obligations relating to trust preferred capital debt securities. Subsequently, on July 15, 2008, JPMorgan Chase completed an internal merger transaction, which resulted in each series of outstanding preferred stock of Bear Stearns being automatically exchanged into newly-issued shares of JPMorgan Chase preferred stock having substantially identical terms. Depositary shares, which formerly had represented a one-fourth interest in a share of Bear Stearns preferred stock, continue to trade on the New York Stock Exchange but following completion of this internal merger transaction, represent a one-fourth interest in a share of JPMorgan Chase preferred stock. In addition, pursuant to internal transactions in July 2008 and the first quarter 2009, JPMorgan Chase assumed or guaranteed the remaining outstanding securities of Bear Stearns and its subsidiaries, in each case in accordance with the indentures and other agreements governing those securities. </div> <div align="left" style="font-size: 12pt; margin-top: 12pt"><b>Other business events</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Purchase of remaining interest in J.P. Morgan Cazenove</b><br /> On January 4, 2010, JPMorgan Chase purchased the remaining interest in J.P. Morgan Cazenove, an investment banking business partnership formed in 2005, which will result in an adjustment to the Firm’s capital surplus. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Termination of Chase Paymentech Solutions joint venture</b><br /> The dissolution of Chase Paymentech Solutions joint venture, a global payments and merchant acquiring joint venture between JPMorgan Chase and First Data Corporation, was completed on November 1, 2008. JPMorgan Chase retained approximately 51% of the business, which it operates under the name Chase Paymentech Solutions. The dissolution of the Chase Paymentech Solutions joint venture was accounted for as a step acquisition in accordance with U.S. GAAP for business combinations, and the Firm recognized an after-tax gain of $627 million in the fourth quarter of 2008 as a result of the dissolution. The gain represents the amount by which the fair value of the net assets acquired (predominantly intangible assets and goodwill) exceeded JPMorgan Chase’s carrying value in the net assets transferred to First Data Corporation. Upon dissolution, the Firm consolidated the retained Chase Paymentech Solutions business. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Proceeds from Visa Inc. shares</b><br /> On March 19, 2008, Visa Inc. (“Visa”) completed its initial public offering (“IPO”). Prior to the IPO, JPMorgan Chase held approximately a 13% equity interest in Visa. On March 28, 2008, Visa used a portion of the proceeds from the offering to redeem a portion of the Firm’s equity interest, which resulted in the recognition of a pretax gain of $1.5 billion (recorded in other income). In conjunction with the IPO, Visa placed $3.0 billion in escrow to cover liabilities related to certain litigation matters. The escrow was increased by $1.1 billion in 2008 and by $700 million in 2009. JPMorgan Chase’s interest in the escrow was recorded as a reduction of other expense and reported net to the extent of established litigation reserves. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Purchase of remaining interest in Highbridge Capital Management</b><br /> In January 2008, JPMorgan Chase purchased an additional equity interest in Highbridge Capital Management, LLC (“Highbridge”), which resulted in the Firm owning 77.5% of Highbridge. In July 2009, JPMorgan Chase completed its purchase of the remaining interest in Highbridge, which resulted in a $228 million adjustment to capital surplus. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Subsequent events</b><br /> The Firm has performed an evaluation of events that have occurred subsequent to December 31, 2009, and through February 24, 2010 (the date of the filing of this Annual Report). There have been no material subsequent events that occurred during such period that would require disclosure in this Annual Report, or would be required to be recognized in the Consolidated Financial Statements, as of or for the year ended December 31, 2009. </div> </div> </div>  <!-- Begin Block Tagged Note false false Description of a business combination (or a series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. Also, description of other business events and subsequent events. Subsequent events are material events or transactions that sometimes occur subsequent to the balance sheet date, but prior to the issuance of the financial statements. Examples of subsequent events include purchase of a business, settlement of litigation and others. No authoritative reference available. false false 1 2 false UnKnown UnKnown UnKnown false true