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

Other Highlights Include:

--Average loan receivables were $53.3 billion, down $1.2 billion, or 2%, from the prior year and down $0.9 billion, or 2%, from the prior quarter.

--Average lease receivables of $7.6 billion declined $3.1 billion, or 29%, as planned.

--The net charge-off rate dropped to 0.60% from 0.69%.

Insurance operating earnings totaled $14 million, down $16 million from the prior year, on net revenues of $173 million. The decline was primarily due to an increase in mortality claims, investments in technology infrastructure and increased proprietary annuity sales commissions.

Other Highlights Include:

--Gross insurance-related revenues were $416 million, up $3 million, or 1%.

--Proprietary annuity sales were $119 million, up 57%.

--Term life premiums were $110 million, up 6%.

CARD SERVICES (CS)

Operating Results - CS                 1Q04 h- JPMC    1Q04  Proforma
($ millions)                  1Q05   $ O/(U) % O/(U)  $ O/(U)  % O/(U)
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Net Revenues                 $3,779   $2,222   143%    $155       4%
Provision for Credit Losses   1,636      930   132      (89)     (5)
Noninterest Expenses          1,313      714   119      (50)     (4)
Operating Earnings             $522     $360   222%    $186      55%
----------------------------------------------------------------------

Discussion of Historical Results:

Operating earnings of $522 million increased $360 million from the prior year due to the merger, higher net interest income, lower provision for credit losses and lower expenses, partially offset by higher marketing spend.

Total revenues of $3.8 billion increased $2.2 billion, primarily due to the merger. Net interest income of $3.0 billion increased $1.7 billion, primarily due to the merger, including the acquisition of a private label portfolio, and higher loan balances. Noninterest revenue of $772 million increased $488 million due to the merger and higher charge volume, which resulted in increased interchange income, partially offset by higher volume-driven payments to partners and higher rewards expense.

The managed provision for credit losses of $1.6 billion increased $930 million, primarily due to the merger, including the acquisition of a private label portfolio, and additions to the allowance for loan losses related to growth in on-balance sheet loans, partially offset by lower net charge-offs. Managed credit ratios remained strong, benefiting from lower bankruptcies and continued low level of delinquencies. The managed net charge-off rate for the quarter was 4.83%, down from 5.81% in the prior year. The 30-day managed delinquency rate was 3.54%, down from 4.41% in the prior year.

Expenses of $1.3 billion increased $714 million, primarily due to the merger, including the acquisition of a private label portfolio. Additionally, merger saves including lower compensation and processing cost were partially offset by higher marketing spend.

Discussion of Proforma Combined Results: