JPMorgan Chase Reports 2004 Fourth Quarter Net Income of $1.7 Billion after Merger and Conforming Accounting Charges of $650 Million

Business Wire, Jan 19, 2005

NEW YORK -- JPMorgan Chase & Co. (NYSE:JPM)

--REPORTED EPS of $0.46 per share and OPERATING EPS of $0.64 per share(1)

--INVESTMENT BANK - Improved Trading Results, Strong Investment Banking Fees

--RETAIL - Growth in Consumer Accounts, Deposits and Loans; Weakness in Home Finance

--CARD SERVICES - Growth in Loans and Charge Volume

--ASSET & WEALTH MANAGEMENT - Strong Results Driven by Net Inflows and Equity Markets

--PRIVATE EQUITY - Strong Gains

--CREDIT QUALITY & CAPITAL RATIOS - Remain Strong, Tier 1 Ratio 8.7%

JPMorgan Chase & Co. (NYSE:JPM) today reported 2004 fourth quarter net income of $1.7 billion, or $0.46 per share, compared to net income of $1.9 billion, or $0.89 per share, for the fourth quarter of 2003. Current period results include $650 million in after-tax charges, or $0.18 per share, comprised of merger costs of $324 million and charges of $326 million to conform accounting policies, reflecting the merger with Bank One Corporation ("the Merger") completed on July 1, 2004. Excluding these charges, operating earnings would have been $2.3 billion, or $0.64 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, "Operating results for the fourth quarter improved from the third quarter, but still reflected mixed performance. The Investment Bank generated strong investment banking fees and saw a moderate improvement in trading results. Card Services and Asset & Wealth Management generated double-digit earnings growth, and Private Equity gains were strong. In Retail Financial Services the branch business continued to experience good annual growth in accounts and deposits, which was more than offset by a decline in the prime production and servicing business of Home Finance."

James Dimon, President and Chief Operating Officer commenting on merger integration said, "Merger integration continues to progress well and we are on track to achieve the $3 billion of estimated annual cost saves; headcount was reduced by over six thousand since year-end 2003, conversion of Bank One's credit card portfolio was completed, other systems conversions are on schedule and the firm is prepared for large scale conversions in 2005 and 2006. We have essentially completed the strategic review of all of our businesses. We sold our $4 billion manufactured home loan portfolio, substantially reduced our auto lease originations, sold the majority of our third party private equity investments and subsequent to year-end sold our $2 billion recreational vehicle portfolio."

In the discussion of the business segments below, information is presented on an operating basis(1). Operating basis excludes the after-tax impact of litigation charges taken in the second quarter of 2004, merger costs, and conformance of accounting policies. In the case of Card Services, operating basis excludes the impact of credit card securitizations. For more information about operating basis, as well as other non-GAAP financial measures used by management, see Note 1 below.

The following discussion compares the fourth quarter of 2004 to the fourth quarter of 2003. Unless otherwise indicated, results for the 2003 fourth quarter are JPMorgan Chase (h-JPMC) on a standalone basis. The proforma combined historical lines of business information present the new business segments of the company as if these segments had existed as of the earliest date indicated and reflect (i) the firm's new business segments and (ii) 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 and January 19, 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 2 below.

INVESTMENT BANK (IB)

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Operating Results - IB                   4Q03 h-JPMC   4Q03  Proforma
($ millions)                    4Q04   $ O/(U) % O/(U) $ O/(U) % O/(U)
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Net Revenues                   $3,201    $303      10%  ($115)    (3%)
Provision for Credit Losses      (173)     68      28     223      56
Noninterest Expenses            2,390     589      33     461      24
Operating Earnings               $660   ($149)   (18%)  ($497)   (43%)
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Discussion of Historical Results: