JPMorgan Chase Reports 2005 First-Quarter Net Income of $2.3 Billion after Litigation Charge of $558 Million and Merger Charge of $90 Million

Business Wire, April 20, 2005

NEW YORK -- JPMorgan Chase & Co.

--REPORTED EARNINGS of $0.63 per share and OPERATING EARNINGS of $0.81 per share(1)

--INVESTMENT BANK trading revenues rebound to $2.2 billion

--RETAIL, CARD, TSS and AWM show revenue and earnings growth

--Significant items include (after-tax):

--$505 million gain in Private Equity

--$243 million reduction in wholesale allowance

--$(544) million loss in Treasury portfolio

--$1.3 billion of stock repurchases; capital ratios strong, with Tier 1 ratio of 8.6% (est.)

JPMorgan Chase & Co. (NYSE: JPM) today reported 2005 first-quarter net income of $2.3 billion, or $0.63 per share, compared to net income of $1.9 billion, or $0.92 per share, for the first quarter of 2004. Current period results include a $558 million (after-tax) litigation charge, or $0.15 per share, and $90 million (after-tax) of merger charges, or $0.03 per share, reflecting the merger with Bank One Corporation completed on July 1, 2004. Excluding these charges, operating earnings would have been $2.9 billion, or $0.81 per share. Prior-year reported results do not include Bank One. Refer to the "Merger and other financial information" section of this press release for additional information concerning the merger.

William B. Harrison, Jr., Chairman and Chief Executive Officer, commented, "Results for the first quarter showed marked improvement from the fourth quarter. Given the organizational changes in the Investment Bank last year, we were especially pleased to see the rebound in trading results from the fourth quarter, accompanied with continued strength in investment banking fees. Business momentum over the last year was also evident in Retail Financial Services, Card, Treasury & Securities Services and Asset & Wealth Management, with each business achieving double-digit earnings growth." Mr. Harrison, commenting on the litigation charge, said, "We made the decision to settle the WorldCom litigation, which resulted in an additional litigation charge this quarter. We felt this decision was in the best interests of the firm and our shareholders."

James Dimon, President and Chief Operating Officer, said, "The strong operating results this quarter provide a window into the potential of our franchise. We remain focused on achieving efficiencies to help fund investment spending, executing our business growth strategies and implementing the complex systems conversions. We are also gratified that we have maintained momentum in virtually all of our businesses."

In the discussion of the business segments below, information is presented on an operating basis. Operating basis excludes the after-tax impact of litigation charges taken in the second quarter of 2004 and first quarter of 2005, merger costs and conformance of accounting policies. In the case of Card Services, operating basis also excludes the impact of credit card securitizations. In addition revenues are shown on a tax equivalent basis. For more information about operating basis, as well as other non-GAAP financial measures used by management, see Note 2 below.

The following discussion compares the first quarter of 2005 to the first quarter of 2004. Unless otherwise indicated, results for the 2004 first quarter are JPMorgan Chase (h-JPMC) on a standalone basis. The proforma combined historical lines of business information present the business segments of the company as if these segments had existed as of the earliest date indicated and reflect purchase accounting adjustments, reporting reclassifications and management accounting policy changes. For further information regarding the proforma combined historical financial information, including reconciliation to JPMorgan Chase GAAP financial information, see information furnished pursuant to Regulation FD by JPMorgan Chase on Form 8-K dated October 1, 2004, as amended on October 20, 2004, January 19, 2005, and April 20, 2005. In management's view, the proforma combined historical financial results provide investors with information to enable them to understand better the underlying dynamics of each of the lines of business. For a description of the firm's business segments, see Note 3 below.

In the first quarter of 2005, the Corporate sector and the firm's operating results have been restated to be presented on a tax-equivalent basis. Previously, only the segments' operating results were presented on a tax-equivalent basis and the impact of the segment's tax-equivalent adjustments were eliminated in the Corporate sector. This restatement has no impact on the Corporate sector's or the firm's operating earnings.

INVESTMENT BANK (IB)

Operating Results - IB                 1Q04 h-JPMC    1Q04  Proforma
($ millions)                  1Q05  $ O/(U) % O/(U)  $ O/(U) % O/(U)
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Net Revenues                 $4,180    $416      11%    ($27)    (1%)
Provision for Credit Losses    (366)   (178)    (95)     (63)    (21)
Noninterest Expenses          2,525     199       9       97       4
Operating Earnings           $1,325    $308      30%    ($26)    (2%)
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