false--12-31Q120192019-03-310000019617falseLarge Accelerated FilerJPMORGAN CHASE & COfalse137000000004729534729530.02580.03470.03250.0330.03780.03330.03320.03330.038three-month LIBORthree-month LIBORthree-month LIBORthree-month LIBORthree-month LIBORthree-month LIBORthree-month LIBORthree-month LIBORthree-month LIBOR0.00380.00162P9YP10YP5Y30.00550.00550.00550.030.560.801190000000009000000000410493389541049338950690.13960.0038520.00060.0016001143200000089073000000345700000010516000000153313000000309000000001969100000027792000000352600000040120000000963000000010277000000001200000000120000000033000000000210000004105000000210000004105000000829167674860960924

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended
Commission file
March 31, 2019
number 1-5805
JPMorgan Chase & Co.
(Exact name of registrant as specified in its charter)
Delaware
13-2624428
(State or other jurisdiction of
incorporation or organization)
(I.R.S. employer
identification no.)
 
 
383 Madison Avenue, New York, New York
10179
(Address of principal executive offices)
(Zip Code)
 
 
Registrant’s telephone number, including area code: (212) 270-6000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
Accelerated filer
o
 
 
 
Non-accelerated filer o
Smaller reporting company
o
 
 
 
 
Emerging growth company
o
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock
JPM
The New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 5.45% Non-Cumulative Preferred Stock, Series P
JPM PR A
The New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.30% Non-Cumulative Preferred Stock, Series W
JPM PR E
The New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.125% Non-Cumulative Preferred Stock, Series Y
JPM PR F
The New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.10% Non-Cumulative Preferred Stock, Series AA
JPM PR G
The New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.15% Non-Cumulative Preferred Stock, Series BB
JPM PR H
The New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 5.75% Non-Cumulative Preferred Stock, Series DD
JPM PR D
The New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.00% Non-Cumulative Preferred Stock, Series EE
JPM PR C
The New York Stock Exchange
Alerian MLP Index ETNs due May 24, 2024
AMJ
NYSE Arca, Inc.
Guarantee of Callable Step-Up Fixed Rate Notes due April 26, 2028 of JPMorgan Chase Financial Company LLC
JPM/28
The New York Stock Exchange
Guarantee of Cushing 30 MLP Index ETNs due June 15, 2037 of JPMorgan Chase Financial Company LLC
PPLN
NYSE Arca, Inc.

 
Number of shares of common stock outstanding as of March 31, 2019: 3,243,972,971
 



FORM 10-Q
TABLE OF CONTENTS
Page
Item 1.
 
 
 
 
69
 
70
 
71
 
72
 
73
 
74
 
149
 
150
 
151
Item 2.
 
 
3
 
4
 
5
 
9
 
11
 
14
 
15
 
17
 
31
 
32
 
41
 
43
 
48
 
57
 
58
 
63
 
64
 
67
 
68
Item 3.
159
Item 4.
159
 
Item 1.
159
Item 1A.
159
Item 2.
159
Item 3.
160
Item 4.
160
Item 5.
160
Item 6.
160


2


JPMorgan Chase & Co.
Consolidated financial highlights (unaudited)
As of or for the period ended, (in millions, except per share,
ratio, headcount data and where otherwise noted)

 
 
 
 
 
 
1Q19

4Q18

3Q18

2Q18

1Q18

 
Selected income statement data
 
 
 
 
 
 
Total net revenue
$
29,123

$
26,109

$
27,260

$
27,753

$
27,907

 
Total noninterest expense
16,395

15,720

15,623

15,971

16,080

 
Pre-provision profit
12,728

10,389

11,637

11,782

11,827

 
Provision for credit losses
1,495

1,548

948

1,210

1,165

 
Income before income tax expense
11,233

8,841

10,689

10,572

10,662

 
Income tax expense
2,054

1,775

2,309

2,256

1,950

 
Net income
$
9,179

$
7,066

$
8,380

$
8,316

$
8,712

 
Earnings per share data
 
 
 
 
 
 
Net income:    Basic
$
2.65

$
1.99

$
2.35

$
2.31

$
2.38

 
 Diluted
2.65

1.98

2.34

2.29

2.37

 
Average shares: Basic
3,298.0

3,335.8

3,376.1

3,415.2

3,458.3

 
 Diluted
3,308.2

3,347.3

3,394.3

3,434.7

3,479.5

 
Market and per common share data
 
 
 
 
 
 
Market capitalization
328,387

319,780

375,239

350,204

374,423

 
Common shares at period-end
3,244.0

3,275.8

3,325.4

3,360.9

3,404.8

 
Book value per share
71.78

70.35

69.52

68.85

67.59

 
Tangible book value per share (“TBVPS”)(a)
57.62

56.33

55.68

55.14

54.05

 
Cash dividends declared per share
0.80

0.80

0.80

0.56

0.56

 
Selected ratios and metrics
 
 
 
 
 
 
Return on common equity (“ROE”)(b)
16
%
12
%
14
%
14
%
15
%
 
Return on tangible common equity (“ROTCE”)(a)(b)
19

14

17

17

19

 
Return on assets(b)
1.39

1.06

1.28

1.28

1.37

 
Overhead ratio
56

60

57

58

58

 
Loans-to-deposits ratio
64

67

65

65

63

 
Liquidity coverage ratio (“LCR”) (average)
111

113

115

115

115

 
Common equity Tier 1 (“CET1”) capital ratio(c)
12.1

12.0

12.0

12.0

11.8

 
Tier 1 capital ratio(c)
13.8

13.7

13.6

13.6

13.5

 
Total capital ratio(c)
15.7

15.5

15.4

15.5

15.3

 
Tier 1 leverage ratio(c)
8.1

8.1

8.2

8.2

8.2

 
Supplementary leverage ratio (“SLR”)
6.4

6.4

6.5

6.5

6.5

 
Selected balance sheet data (period-end)
 
 
 
 
 
 
Trading assets
$
533,402

$
413,714

$
419,827

$
418,799

$
412,282

 
Investment securities
267,365

261,828

231,398

233,015

238,188

 
Loans
956,245

984,554

954,318

948,414

934,424

 
Core loans
905,943

931,856

899,006

889,433

870,536

 
Average core loans
916,567

907,271

894,279

877,640

861,089

 
Total assets
2,737,188

2,622,532

2,615,183

2,590,050

2,609,785

 
Deposits
1,493,441

1,470,666

1,458,762

1,452,122

1,486,961

 
Long-term debt
290,893

282,031

270,124

273,114

274,449

 
Common stockholders’ equity
232,844

230,447

231,192

231,390

230,133

 
Total stockholders’ equity
259,837

256,515

258,956

257,458

256,201

 
Headcount
255,998

256,105

255,313

252,942

253,707

 
Credit quality metrics
 
 
 
 
 
 
Allowance for credit losses
$
14,591

$
14,500

$
14,225

$
14,367

$
14,482

 
Allowance for loan losses to total retained loans
1.43
%
1.39
%
1.39
%
1.41
%
1.44
%
 
Allowance for loan losses to retained loans excluding purchased credit-impaired loans(d)
1.28

1.23

1.23

1.22

1.25

 
Nonperforming assets
$
5,616

$
5,190

$
5,034

$
5,767

$
6,364

 
Net charge-offs
1,361

1,236

1,033

1,252

1,335

 
Net charge-off rate
0.58
%
0.52
%
0.43
%
0.54
%
0.59
%
 
(a)
TBVPS and ROTCE are non-GAAP financial measures. For a further discussion of these measures, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 15–16.
(b)
Quarterly ratios are based upon annualized amounts.
(c)
Effective January 1, 2019, the capital adequacy of the Firm is now evaluated against the fully phased-in measures under Basel III and represents the lower of the Standardized or Advanced approaches. During 2018, the required capital measures were subject to the transitional rules and as of December 31, 2018 and September 30, 2018, were the same on a fully phased-in and on a transitional basis. Refer to Capital Risk Management on pages 32–36 for additional information on Basel III.
(d)
Excludes the impact of residential real estate purchased credit-impaired (“PCI”) loans, a non-GAAP financial measure. For a further discussion of these measures, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 15–16, and the Allowance for credit losses on pages 55–56.

3


INTRODUCTION
The following is Management’s discussion and analysis of the financial condition and results of operations (“MD&A”) of JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”) for the first quarter of 2019.
This Quarterly Report on Form 10-Q for the first quarter of 2019 (“Form 10-Q”) should be read together with JPMorgan Chase’s Annual Report on Form 10-K for the year ended December 31, 2018 (“2018 Form 10-K”), to which reference is hereby made, and which is referred to throughout this Form 10-Q. Refer to the Glossary of terms and acronyms and line of business metrics on pages 151–158 for definitions of terms and acronyms used throughout this Form 10-Q.
This document contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. For a further discussion of certain of those risks and uncertainties and the factors that could cause JPMorgan Chase’s actual results to differ materially because of those risks and uncertainties, refer to Forward-looking Statements on page 68 of this Form 10-Q and Part I, Item 1A, Risk factors, on pages 7–28 of the 2018 Form 10-K.
JPMorgan Chase & Co. (NYSE: JPM), 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; JPMorgan Chase had $2.7 trillion in assets and $259.8 billion in stockholders’ equity as of March 31, 2019. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the U.S. and many of the world’s most prominent corporate, institutional and government clients.
 
JPMorgan Chase’s principal bank subsidiaries are JPMorgan Chase Bank, National Association (“JPMorgan Chase Bank, N.A.”), a national banking association with U.S. branches in 27 states and Washington, D.C. as of March 31, 2019, and Chase Bank USA, National Association (“Chase Bank USA, N.A.”), a national banking association that is the Firm’s principal credit card-issuing bank. In January 2019, the OCC approved an application of merger which was filed by JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. and which contemplates that Chase Bank USA, N.A. will merge with and into JPMorgan Chase Bank, N.A., with JPMorgan Chase Bank, N.A. as the surviving bank. Completion of the merger is expected to occur in the second quarter of 2019. JPMorgan Chase’s principal nonbank subsidiary is J.P. Morgan Securities LLC (“J.P. Morgan Securities”), a U.S. broker-dealer. The bank and non-bank subsidiaries of JPMorgan Chase operate nationally as well as through overseas branches and subsidiaries, representative offices and subsidiary foreign banks. The Firm’s principal operating subsidiary in the United Kingdom (U.K.) is J.P. Morgan Securities plc, a subsidiary of JPMorgan Chase Bank, N.A.
For management reporting purposes, the Firm’s activities are organized into four major reportable business segments, as well as a Corporate segment. The Firm’s consumer business segment is Consumer & Community Banking (CCB). The Firm’s wholesale business segments are Corporate & Investment Bank (CIB), Commercial Banking (CB), and Asset & Wealth Management (AWM). For a description of the Firm’s business segments and the products and services they provide to their respective
client bases, refer to Note 31 of JPMorgan Chase’s 2018 Form 10-K.




4


EXECUTIVE OVERVIEW
This executive overview of the MD&A highlights selected information and does not contain all of the information that is important to readers of this Form 10-Q. For a complete description of the trends and uncertainties, as well as the risks and critical accounting estimates affecting the Firm and its various lines of business, this Form 10-Q and the 2018 Form 10-K should be read together and in their entirety.
Financial performance of JPMorgan Chase
 
 
(unaudited)
As of or for the period ended,
(in millions, except per share data and ratios)
Three months ended March 31,
2019

 
2018

 
Change

Selected income statement data
 
 
 
 
 
Total net revenue
$
29,123

 
$
27,907

 
4
%
Total noninterest expense
16,395

 
16,080

 
2

Pre-provision profit
12,728

 
11,827

 
8

Provision for credit losses
1,495

 
1,165

 
28

Net income
9,179

 
8,712

 
5

Diluted earnings per share
$
2.65

 
$
2.37

 
12

Selected ratios and metrics
 
 
 
 
 
Return on common equity
16
%
 
15
%
 
 
Return on tangible common equity
19

 
19

 
 
Book value per share
$
71.78

 
$
67.59

 
6

Tangible book value per share
57.62

 
54.05

 
7

Capital ratios(a)
 
 
 
 
 
CET1
12.1
%
 
11.8
%
 
 
Tier 1 capital
13.8

 
13.5

 
 
Total capital
15.7

 
15.3

 
 
(a)
Effective January 1, 2019, the capital adequacy of the Firm is now evaluated against the fully phased-in measures under Basel III and represents the lower of the Standardized or Advanced approaches. During 2018, the required capital measures were subject to the transitional rules. Refer to Capital Risk Management on pages 32–36 for additional information on Basel III.


 
Comparisons noted in the sections below are for the first quarter of 2019 versus the first quarter of 2018, unless otherwise specified.
Firmwide overview
JPMorgan Chase reported strong results in the first quarter of 2019, with record net income and EPS of $9.2 billion, or $2.65 per share, on record net revenue of $29.1 billion. The Firm reported ROE of 16% and ROTCE of 19%.
The Firm had record net income of $9.2 billion, up 5%, driven by strong revenue growth, partially offset by increases in the provision for credit losses and noninterest expense.
Total net revenue increased 4%. Net interest income was $14.5 billion, up 9%, predominantly driven by the impact of higher rates, as well as balance sheet growth and change in mix. Noninterest revenue was $14.7 billion, up 1%. The prior year included $505 million of fair value gains related to the adoption of the recognition and measurement accounting guidance. Excluding these gains, noninterest revenue was up 4%, driven by higher auto lease income and investment banking fees, as well as the absence of net losses on investment securities and certain legacy private equity investments in the prior year, with lower Markets revenue more than offset by lower funding spreads on derivatives.
Noninterest expense was $16.4 billion, up 2%, driven by investments in the business, including technology, marketing, real estate and front office hires, as well as higher auto lease depreciation, partially offset by the absence of the prior-year FDIC surcharge and lower performance-based compensation.
The provision for credit losses was $1.5 billion, an increase of $330 million. The increase was driven by the wholesale portfolio, reflecting a net addition to the allowance for credit losses of $135 million on select Commercial and Industrial client downgrades. This compares to a net reduction in the allowance for credit losses of $170 million in the prior year driven by a single name in the Oil & Gas Portfolio.
The total allowance for credit losses was $14.6 billion at March 31, 2019, and the Firm had a loan loss coverage ratio, excluding the PCI portfolio, of 1.28%, compared with 1.25% in the prior year. The Firm’s nonperforming assets totaled $5.6 billion at March 31, 2019, a decrease from $6.4 billion in the prior year, reflecting improved credit performance in the consumer portfolio.
Firmwide average core loans increased 6%, and excluding CIB, core loans increased 5%.


5


Selected capital-related metrics
The Firm’s CET1 capital was $186 billion, and the Standardized and Advanced CET1 ratios were 12.1% and 13.0%, respectively.
The Firm’s supplementary leverage ratio (“SLR”) was 6.4% at March 31, 2019.
The Firm continued to grow tangible book value per share (“TBVPS”), ending the first quarter of 2019 at $57.62, up 7%.
ROTCE and TBVPS are non-GAAP financial measures. Core loans is a key performance measure. For a further discussion of each of these measures, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 15–16.
Lines of business highlights
Selected business metrics for each of the Firm’s four lines of business are presented below for the first quarter of 2019.
CCB
ROE 30%
 
Average core loans up 4%; average deposits up 3%
Client investment assets of $312 billion, up 13%
Credit card sales volume up 10% and merchant processing volume up 13%
CIB
ROE 16%
 
Maintained #1 ranking for Global Investment Banking fees with 9.6% wallet share in the first quarter of 2019
Debt underwriting revenue of $935 million, up 21%; Advisory revenue of $644 million, up 12%
Total Markets revenue of $5.5 billion, down 17%, or 10% adjusted(a)
CB
ROE 19%
 
Record gross Investment Banking revenue of $818 million, up 44%
Strong credit performance with net charge-offs of 2 bps
AWM
ROE 25%
 
Average loan balances up 10%
Record assets under management (“AUM”) of $2.1 trillion, up 4%
(a)
Adjusted Markets revenue excludes approximately $500 million of fair value gains related to the adoption of the recognition and measurement accounting guidance in the first quarter of 2018.
For a detailed discussion of results by line of business, refer to the Business Segment Results on pages 17–30.
 
Credit provided and capital raised
JPMorgan Chase continues to support consumers, businesses and communities around the globe. The Firm provided credit and raised capital for wholesale and consumer clients during the first three months of 2019, consisting of:
$529 billion
 
Total credit provided and capital raised
 
 
 
$55
billion
 
Credit for consumers
 
 
 
$7
billion
 
Credit for U.S. small businesses
 
 
 
$196 billion
 
Credit for corporations
 
 
 
$256 billion
 
Capital raised for corporate clients and non-U.S. government entities
 
 
 
$15 billion
 
Credit and capital raised for U.S. government and nonprofit entities(a)
(a)
Includes states, municipalities, hospitals and universities.

6


Recent events
On April 17, 2019, JPMorgan Chase announced that Jennifer A. Piepszak, formerly Chief Executive Officer (“CEO”) of Credit Card, would become Chief Financial Officer and a member of the Operating Committee reporting to the Firm’s CEO. Marianne Lake would continue as a member of the Operating Committee and would become CEO of Consumer Lending, which includes Credit Card, Home Lending and Auto, reporting to Gordon Smith, CEO of CCB. All changes became effective May 1, 2019.
On March 29, 2019, JPMorgan Chase announced that it has received approval from the China Securities Regulatory Commission to establish a new majority owned and controlled securities company in China, J.P. Morgan Securities (China) Company Limited.
On March 18, 2019, JPMorgan Chase announced a $350 million, five-year global initiative to prepare for the future of work and meet the growing demand for skilled workers. Building on the Firm’s original, five year $250 million commitment in 2013, this New Skills at Work investment will provide substantial support to community college and other non-traditional career pathway programs.
On March 13, 2019, Chase announced that it plans to expand its retail branches and open up to 90 branches this year in new markets.
On February 11, 2019, JPMorgan Chase announced Advancing Black Pathways to build on the Firm’s existing efforts helping black Americans achieve economic success. As part of this, the Firm is expanding its Entrepreneurs of Color Fund model to Greater Washington, D.C., providing capital and business training to underserved minority entrepreneurs in the region.
2019 outlook
There are no updates to the information provided in the 2019 outlook section of the 2018 Form 10-K.

7


Business Developments
Expected departure of the U.K. from the EU
The U.K.’s expected departure from the EU, which is commonly referred to as “Brexit,” is scheduled to occur not later than October 31, 2019.
The Firm continues to execute the relevant elements of its Firmwide Brexit Implementation program with the objective of delivering the Firm’s capabilities to its EU clients on “day one” of any departure by the U.K. from the EU, whether or not an agreement has been reached to allow an orderly withdrawal.
The principal operational risks associated with Brexit continue to be the potential for disruption caused by insufficient preparations by individual market participants or in the overall market ecosystem, and risks related to potential disruptions of connectivity among market participants. Although legislative and regulatory actions taken by the EU and the U.K. have mitigated some of the most significant market-wide risks, there continues to be regulatory and legal uncertainty with respect to various matters including contract continuity and access by market participants to liquidity in certain products, such as equities that are listed on both U.K. and EU exchanges.
As discussed in Business Developments on page 46 of the 2018 Form 10-K, the Firm is focused on the following key areas to ensure continuation of service to its EU clients: regulatory and legal entity readiness; client readiness; and business and operational readiness. Following are the significant updates from the matters discussed in the 2018 Form 10-K.
 
Regulatory and legal entity readiness
The Firm’s legal entities in Germany, Luxembourg and Ireland are now prepared and licensed to provide continuity of services to the Firm’s EU clients, including after any departure by the U.K. from the EU.
Client readiness
A significant proportion of the Firm’s EU client agreements have been re-documented to other EU legal entities to help facilitate continuation of service. The Firm continues to actively engage with clients that have not completed re-documentation to ensure preparedness both in terms of documentation and any operational changes that may be required. The Firm may be negatively impacted by any operational disruption stemming from delays of or lapses in the readiness of other market participants or market infrastructures.
Business and operational readiness
The Firm relocated certain employees during the first quarter of 2019. However, the Firm’s final staffing plan will depend upon the timing and terms of any withdrawal by the U.K. from the EU.
If Brexit is further delayed due to a transition deal or another mechanism, the Firm will continue to review the timing and extent of any further expansion of activities in its EU legal entities, as appropriate. The Firm continues to closely monitor legislative developments, and its implementation plan allows for flexibility given the continued uncertainties.

8


CONSOLIDATED RESULTS OF OPERATIONS
This section provides a comparative discussion of JPMorgan Chase’s Consolidated Results of Operations on a reported basis for the three months ended March 31, 2019 and 2018, unless otherwise specified. Factors that relate primarily to a single business segment are discussed in more detail within that business segment. For a discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Results of Operations, refer to pages 64–66 of this Form 10-Q and pages 141-143 of JPMorgan Chase’s 2018 Form 10-K.
Revenue
 
 
 
 
 
 
Three months ended March 31,
(in millions)
2019

 
2018

 
Change

Investment banking fees
$
1,840

 
$
1,736

 
6
 %
Principal transactions
4,076

 
3,952

 
3

Lending- and deposit-related fees
1,482

 
1,477

 

Asset management, administration and commissions
4,114

 
4,309

 
(5
)
Investment securities gains/(losses)
13

 
(245
)
 
NM

Mortgage fees and related income
396

 
465

 
(15
)
Card income
1,274

 
1,275

 

Other income(a)
1,475

 
1,626

 
(9
)
Noninterest revenue
14,670

 
14,595

 
1

Net interest income
14,453

 
13,312

 
9

Total net revenue
$
29,123

 
$
27,907

 
4
 %
(a)
Included operating lease income of $1.3 billion and $1.0 billion for the three months ended March 31, 2019 and 2018,
Investment banking fees increased, with overall share gains, reflecting:
higher debt underwriting fees driven by large acquisition financing deals
higher advisory fees compared to a strong prior year, driven by a higher number of large completed transactions
partially offset by
lower equity underwriting fees driven by declines in industry-wide fee levels.
For additional information, refer to CIB segment results on pages 21–25 and Note 5.
Principal transactions revenue increased reflecting in CIB:
a gain from lower funding spreads on derivatives in Credit Adjustments & Other, predominantly offset by
lower Fixed Income Markets revenue primarily driven by lower client activity in Currencies & Emerging Markets, and
lower Equity Markets revenue driven by lower client activity in derivatives compared to a strong prior year.
the increase in CIB was offset by
lower revenue related to hedges on certain investments in AWM, which was more than offset by higher investment valuation gains in other income, and
 
losses on cash deployment transactions in Treasury and Chief Investment Office (“CIO”), which were more than offset by the net interest income earned on those transactions.
The increase also reflects the absence of net losses on certain legacy private equity investments in the prior year in Corporate.
For additional information, refer to CIB, AWM and Corporate segment results on pages 21–25, pages 28–29 and page 30, and Note 5.
Asset management, administration and commissions revenue decreased reflecting:
lower asset management fees in AWM driven by lower average market levels
lower brokerage commissions in CIB and AWM on lower activity.
For additional information, refer to AWM and CIB segment results on pages 28–29 and pages 21–25, respectively, and Note 5.
For information on lending- and deposit-related fees, refer to the segment results for CCB on pages 28–29, CIB on pages 18–20 and CB on pages 21–25 and Note 5.
Investment securities gains/(losses) increased due to the absence of net losses related to the repositioning of the investment securities portfolio in the prior year. For additional information, refer to Corporate segment results on page 30 and Note 9.
Mortgage fees and related income decreased driven by:
lower net mortgage servicing revenue reflecting a lower level of third-party loans serviced and lower MSR risk management results
largely offset by
higher net mortgage production revenue reflecting higher mortgage production margins, as well as the impact of a loan sale.
For further information, refer to CCB segment results on pages 18–20, Note 5 and 14 .
For information on card income, refer to Note 5.

9


Other income reflects:
higher operating lease income from growth in auto operating lease volume in CCB, and
higher investment valuation gains in AWM, which were largely offset by the impact of the related hedges in principal transactions revenue
which were more than offset by
the absence of the $505 million of fair value gains related to the adoption of the recognition and measurement accounting guidance in the first quarter of 2018.
For further information, refer to Note 5.
Net interest income increased driven by the impact of higher rates, as well as balance sheet growth and change in mix, partially offset by lower CIB Markets net interest income. The Firm’s average interest-earning assets were $2.3 trillion, up $110 billion, and the net interest yield on these assets, on a fully taxable-equivalent (“FTE”) basis, was 2.56%, an increase of 8 basis points. The net interest yield excluding CIB Markets was 3.43%, an increase of 30 basis points. Net interest yield excluding CIB markets is a non-GAAP financial measure. For a further discussion of this measure, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 15–16.
Provision for credit losses
 
 
 
 
 
Three months ended March 31,
(in millions)

2019

 
2018

 
Change

Consumer, excluding credit card
$
114

 
$
146

 
(22
)%
Credit card
1,202

 
1,170

 
3

Total consumer
1,316

 
1,316

 

Wholesale
179

 
(151
)
 
NM

Total provision for credit losses
$
1,495

 
$
1,165

 
28
 %
The provision for credit losses increased driven by wholesale, reflecting a net addition to the allowance for credit losses of $135 million on select Commercial and Industrial ("C&I") client downgrades. The prior period was a benefit reflecting a net reduction of $170 million in the allowance for credit losses driven by a single name in the Oil & Gas portfolio.
The total consumer provision was flat reflecting lower net charge-offs in the residential real estate and auto portfolios, offset by higher net charge-offs in the credit card portfolio, driven by loan growth.
For additional information on the credit portfolio and the allowance for credit losses, refer to the segment discussions of CCB on pages 18–20, CIB on pages 21–25, CB on pages 26–27, the Allowance for Credit Losses on pages 55–56 and Note 12.
 
Noninterest expense
 
 
 
 
 
 
Three months ended March 31,
(in millions)

2019

 
2018

 
Change

Compensation expense
$
8,937

 
$
8,862

 
1
 %
Noncompensation expense:
 
 
 
 
 
Occupancy
1,068

 
888

 
20

Technology, communications and equipment
2,364

 
2,054

 
15

Professional and outside services
2,039

 
2,121

 
(4
)
Marketing
879

 
800

 
10

Other expense(a)(b)
1,108

 
1,355

 
(18
)
Total noncompensation expense
7,458

 
7,218

 
3

Total noninterest expense
$
16,395

 
$
16,080

 
2
 %
(a)
Included Firmwide legal expense/(benefit) of $(81) million and $70 million for the three months ended March 31, 2019 and 2018, respectively.
(b)
Included FDIC-related expense of $143 million and $383 million for the three months ended March 31, 2019 and 2018, respectively.
Compensation expense increased driven by investments in the businesses, including front office hires, as well as technology staff, largely offset by lower performance-related compensation in CIB.
Noncompensation expense increased as a result of:
higher investments in the businesses, including real estate, technology, and marketing
higher depreciation expense from growth in auto operating lease volume in CCB
a contribution to the Firm’s Foundation
largely offset by
lower FDIC-related expense as a result of the elimination of the surcharge at the end of the third quarter of 2018, and
a net legal benefit compared with an expense in the prior year.
Income tax expense
 
 
Three months ended March 31,
(in millions)

2019

 
2018

 
Change

Income before income tax expense
$
11,233

 
$
10,662

 
5
%
Income tax expense
2,054

 
1,950

 
5

Effective tax rate
18.3
%
 
18.3
%
 
 
The effective tax rate was in-line with the prior year and lower than the U.S. Federal statutory rate largely due to tax benefits related to the vesting of employee stock-based awards.

10


CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS
Consolidated balance sheets analysis
The following is a discussion of the significant changes between March 31, 2019, and December 31, 2018.
Selected Consolidated balance sheets data
(in millions)
Mar 31,
2019

 
Dec 31,
2018

Change

Assets
 
 
 
 
Cash and due from banks
$
21,946

 
$
22,324

(2
)%
Deposits with banks
280,658

 
256,469

9

Federal funds sold and securities purchased under resale agreements
299,140

 
321,588

(7
)
Securities borrowed
123,186

 
111,995

10

Trading assets
533,402

 
413,714

29

Investment securities
267,365

 
261,828

2

Loans
956,245

 
984,554

(3
)
Allowance for loan losses
(13,533
)
 
(13,445
)
1

Loans, net of allowance for loan losses
942,712

 
971,109

(3
)
Accrued interest and accounts receivable
72,240

 
73,200

(1
)
Premises and equipment
24,160

 
14,934

62

Goodwill, MSRs and other intangible assets
54,168

 
54,349


Other assets
118,211

 
121,022

(2
)
Total assets
$
2,737,188

 
$
2,622,532

4
 %
Cash and due from banks and deposits with banks increased primarily as a result of a shift in the deployment of cash in Treasury and CIO from securities purchased under resale agreements to deposits with banks. Deposits with banks reflect the Firm’s placements of its excess cash with various central banks, including the Federal Reserve Banks.
Federal funds sold and securities purchased under resale agreements decreased primarily as a result of a shift in the deployment of cash in Treasury and CIO from securities purchased under resale agreements to deposits with banks, the impact of a decline in securities used to collateralize deposits in CB, and client-driven market-making activities in CIB. For additional information on the Firm’s Liquidity Risk Management, refer to pages 37–41.
Securities borrowed increased driven by higher demand for securities to cover short positions related to client-driven market-making activities in CIB.
Trading assets increased predominantly related to client-driven market-making activities in CIB, reflecting the impact of improved market conditions and when compared with lower levels at year-end. This resulted in higher levels of debt instruments in Fixed Income Markets, and equity instruments in Equity Markets, including prime brokerage. In addition, but to a lesser extent, trading assets increased in Treasury and CIO associated with the deployment of excess cash into short-term instruments. For additional information, refer to Notes 2 and 4.
Investment securities increased primarily reflecting net purchases of U.S. government agency mortgage-backed securities (“MBS”) in Treasury and CIO. For additional
 
information on Investment securities, refer to Corporate segment results on page 30, Investment Portfolio Risk Management on page 57, and Notes 2 and 9.
Loans decreased reflecting:
lower consumer loans due to a decline in the residential real estate portfolio, predominantly driven by a loan sale, and a seasonal decline in credit card balances and
lower loans across the wholesale businesses, primarily driven by a loan syndication in CIB, and seasonality and paydowns in AWM.
The allowance for loan losses was relatively flat, with the increase in the wholesale allowance reflecting a net addition to the allowance of $132 million on select C&I client downgrades, partially offset by a decline in the consumer allowance as a result of write-offs of PCI loans.
For a more detailed discussion of loans and the allowance for loan losses, refer to Credit and Investment Risk Management on pages 42–57, and Notes 2, 3, 11 and 12.
Accrued interest and accounts receivable was relatively flat and reflected lower client receivables related to client-driven activities in CIB, partially offset by higher receivables in CCB related to the timing of payment activities in Card Services, due to the end of the quarter falling on a weekend.
Premises and equipment increased due to the adoption of the new lease accounting guidance effective January 1, 2019. For additional information, refer to Note 16.
For information on Goodwill and MSRs, refer to Note 14.

11


Selected Consolidated balance sheets data (continued)
 
(in millions)
Mar 31,
2019

 
Dec 31,
2018

Change

Liabilities
 
 
 
 
Deposits
$
1,493,441

 
$
1,470,666

2
%
Federal funds purchased and securities loaned or sold under repurchase agreements
222,677

 
182,320

22

Short-term borrowings
71,305

 
69,276

3

Trading liabilities
156,907

 
144,773

8

Accounts payable and other liabilities
216,173

 
196,710

10

Beneficial interests issued by consolidated variable interest entities (“VIEs”)
25,955

 
20,241

28

Long-term debt
290,893

 
282,031

3

Total liabilities
2,477,351

 
2,366,017

5

Stockholders’ equity
259,837

 
256,515

1

Total liabilities and stockholders’ equity
$
2,737,188

 
$
2,622,532

4
%
Deposits increased driven by the impact of seasonality in CCB, short-term inflows and growth in time deposits in AWM, and the net issuance of structured notes in CIB. The increase was partially offset by a decline from seasonally higher year-end balances in CB, and lower deposits in Treasury Services in CIB. For more information, refer to the Liquidity Risk Management discussion on pages 37–41; and Notes 2 and 15.
Federal funds purchased and securities loaned or sold under repurchase agreements increased primarily due to client-driven market-making activities and higher secured financing of trading assets-debt and equity instruments in CIB.
Trading liabilities increased as a result of client-driven market-making activities in CIB, which resulted in higher levels of short positions in debt instruments in Fixed Income Markets, partially offset by a decline in equity instruments in prime brokerage.
For additional information, refer to Derivative contracts on pages 53–54, and Notes 2 and 4.
 
Accounts payable and other liabilities increased reflecting:
higher client payables related to client-driven market-making activities in CIB,
the impact of the adoption of the new lease accounting guidance, and
higher payables in CCB related to the timing of payment activities in Card Services, due to the end of the quarter falling on a weekend.
For additional information about Leases, refer to Note 16.
Beneficial interests issued by consolidated VIEs increased due to lower levels of CIB conduit-issued commercial paper held by the Firm, in line with the Firm’s short-term funding plans. For further information on Firm-sponsored VIEs and loan securitization trusts, refer to Off-Balance Sheet Arrangements on page 14 and Notes 13 and 22.
Long-term debt increased primarily driven by the net issuance of structured notes in CIB and senior debt in Treasury and CIO. For additional information on the Firm’s long-term debt activities, refer to Liquidity Risk Management on pages 37–41.
For information on changes in stockholders’ equity, refer to page 72, and on the Firm’s capital actions, refer to Capital actions on pages 34–35.


12


Consolidated cash flows analysis
The following is a discussion of cash flow activities during the three months ended March 31, 2019 and 2018.
(in millions)
 
Three months ended March 31,
 
2019

 
2018

Net cash provided by/(used in)
 
 
 
 
Operating activities
 
$
(80,880
)
 
$
(35,109
)
Investing activities
 
36,301

 
(45,021
)
Financing activities
 
69,435

 
60,589

Effect of exchange rate changes on cash
 
(1,045
)
 
3,049

Net increase/(decrease) in cash and due from banks and deposits with banks
 
$
23,811

 
$
(16,492
)
Operating activities
In 2019, cash used primarily reflected an increase in trading assets-debt and equity instruments and higher securities borrowed, partially offset by increased trading liabilities and accounts payable and other liabilities, and net proceeds from loans held-for-sale.
In 2018, cash used primarily reflected increases in trading assets-debt and equity instruments, and securities borrowed.
 
Investing activities
In 2019, cash provided reflected a decrease in securities purchased under resale agreements, and net proceeds from sales of loans held-for-investment.
In 2018, cash used reflected an increase in securities purchased under resale agreements, partially offset by lower investment securities.
Financing activities
In 2019, cash provided reflected higher securities loaned or sold under repurchase agreements and higher deposits.
In 2018, cash provided reflected higher deposits, and securities loaned or sold under repurchase agreements, partially offset by a decrease in long-term borrowings.
For both periods, cash was used for repurchases of common stock and cash dividends on common and preferred stock.
* * *
For a further discussion of the activities affecting the Firm’s cash flows, refer to Consolidated Balance Sheets Analysis on pages 11–13, Capital Risk Management on pages 32–36, and Liquidity Risk Management on pages 37–41 of this Form 10-Q, and pages 95–100 of JPMorgan Chase’s 2018 Form 10-K.


13


OFF-BALANCE SHEET ARRANGEMENTS
In the normal course of business, the Firm enters into various off-balance sheet arrangements and contractual obligations that may require future cash payments. Certain obligations are recognized on-balance sheet, while others are disclosed off-balance sheet under accounting principles generally accepted in the U.S. (“U.S. GAAP”).
Special-purpose entities
The Firm has several types of off–balance sheet arrangements, including through nonconsolidated special-purpose entities (“SPEs”), which are a type of VIE, and through lending-related financial instruments (e.g., commitments and guarantees).
The Firm holds capital, as appropriate, against all SPE-related transactions and related exposures, such as derivative contracts and lending-related commitments and guarantees.
The Firm has no commitments to issue its own stock to support any SPE transaction, and its policies require that transactions with SPEs be conducted at arm’s length and reflect market pricing. Consistent with this policy, no JPMorgan Chase employee is permitted to invest in SPEs with which the Firm is involved where such investment would violate the Firm’s Code of Conduct.
The table below provides an index of where in this Form 10-Q a discussion of the Firm’s various off-balance sheet arrangements can be found. In addition, refer to Note 1 for information about the Firm’s consolidation policies.
Type of off-balance sheet arrangement
Location of disclosure
Page references
Special-purpose entities: variable interests and other obligations, including contingent obligations, arising from variable interests in nonconsolidated VIEs
Refer to Note 13
123-128
Off-balance sheet lending-related financial instruments, guarantees, and other commitments
Refer to Note 22
140-143



14


EXPLANATION AND RECONCILIATION OF THE FIRM’S USE OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES
The Firm prepares its Consolidated Financial Statements in accordance with U.S. GAAP and this presentation is referred to as “reported” basis; these financial statements appear on pages 69-73.
In addition to analyzing the Firm’s results on a reported basis, the Firm also reviews and uses certain non-GAAP financial measures at the Firmwide and segment level. These non-GAAP measures include:
Firmwide “managed” basis results, including the overhead ratio, which include certain reclassifications to present total net revenue from investments that receive tax credits and tax-exempt securities on a basis comparable to taxable investments and securities (“FTE” basis)
 
Net interest income and net yield excluding CIB’s Markets businesses
Certain credit metrics and ratios, which exclude PCI loans
Tangible common equity (“TCE”), ROTCE, and TBVPS.
In addition, core loans is a key performance measure utilized by the Firm and its investors and analysts in assessing actual growth in the loan portfolio.
For a further discussion of management’s use of non-GAAP financial measures and key performance measures, refer to Explanation and Reconciliation Of the Firm’s Use Of Non-GAAP Financial Measures and Key Performance Measures on pages 57-59 of JPMorgan Chase’s 2018 Form 10-K.
The following summary table provides a reconciliation from the Firm’s reported U.S. GAAP results to managed basis.
 
Three months ended March 31,
 
2019
 
2018
(in millions, except ratios)
Reported
results
 
Fully taxable-equivalent adjustments(a)
 
Managed
basis
 
Reported
results
 
Fully taxable-equivalent adjustments(a)
 
Managed
basis
Other income
$
1,475

 
$
585

 
 
$
2,060

 
$
1,626

 
$
455

 
 
$
2,081

Total noninterest revenue
14,670

 
585

 
 
15,255

 
14,595

 
455

 
 
15,050

Net interest income
14,453

 
143

 
 
14,596

 
13,312

 
158

 
 
13,470

Total net revenue
29,123

 
728

 
 
29,851

 
27,907

 
613

 
 
28,520

Pre-provision profit
12,728

 
728

 
 
13,456

 
11,827

 
613

 
 
12,440

Income before income tax expense
11,233

 
728

 
 
11,961

 
10,662

 
613

 
 
11,275

Income tax expense
$
2,054

 
$
728

 
 
$
2,782

 
$
1,950

 
$
613

 
 
$
2,563

Overhead ratio
56
%
 
NM

 
 
55
%
 
58
%
 
NM

 
 
56
%
(a)
Predominantly recognized in CIB, CB and Corporate.
The following table provides information on net interest income and net yield excluding CIB’s Markets businesses.

(in millions, except rates)
Three months ended March 31,
2019

2018

 
Change

Net interest income – managed basis(a)(b)
$
14,596

$
13,470

 
8
 %
Less: CIB Markets net interest income(c)
624

1,030

 
(39
)
Net interest income excluding CIB Markets(a)
$
13,972

$
12,440

 
12

 
 
 
 
 
Average interest-earning assets
$
2,313,103

$
2,203,413

 
5

Less: Average CIB Markets interest-earning assets(c)
663,389

591,547

 
12

Average interest-earning assets excluding CIB Markets
$
1,649,714

$
1,611,866

 
2
 %
Net interest yield on average interest-earning assets – managed basis
2.56
%
2.48
%
 
 
Net interest yield on average CIB Markets interest-earning assets(c)
0.38

0.71

 
 
Net interest yield on average interest-earning assets excluding CIB Markets
3.43
%
3.13
%
 
 
(a)
Interest includes the effect of related hedges. Taxable-equivalent amounts are used where applicable.
(b)
For a reconciliation of net interest income on a reported and managed basis, refer to the table above relating to the reconciliation from the Firm’s reported U.S. GAAP results to managed basis.
(c)
For further information on CIB’s Markets businesses, refer to page 24.

15


The following summary table provides a reconciliation from the Firm’s common stockholders’ equity to TCE.
 
Period-end
 
Average
 
(in millions, except per share and ratio data)
Mar 31,
2019

Dec 31,
2018

 
Three months ended March 31,
 
 
2019

2018

 
Common stockholders’ equity
$
232,844

$
230,447

 
$
230,051

$
227,615

 
Less: Goodwill
47,474

47,471

 
47,475

47,504

 
Less: Other intangible assets
737

748

 
744

845

 
Add: Certain Deferred tax liabilities(a)
2,293

2,280

 
2,287

2,210

 
Tangible common equity
$
186,926

$
184,508

 
$
184,119

$
181,476

 
 
 
 
 
 
 
 
Return on tangible common equity
NA

NA

 
19
%
19
%
 
Tangible book value per share
$
57.62

$
56.33

 
NA

NA

 
(a)
Represents deferred tax liabilities related to tax-deductible goodwill and to identifiable intangibles created in nontaxable transactions, which are netted against goodwill and other intangibles when calculating TCE.


16


BUSINESS SEGMENT RESULTS
The Firm is managed on a line of business basis. There are four major reportable business segments – Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking and Asset & Wealth Management. In addition, there is a Corporate 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 the Firm’s Operating Committee. Segment results are presented on a managed basis. For a definition of managed basis, refer to Explanation and Reconciliation of the Firm’s use of Non-GAAP Financial Measures and Key Performance Measures on pages 15–16.
Description of business segment reporting methodology
Results of the business segments are intended to present each segment as if it were essentially a stand-alone business. The management reporting process that derives business segment results includes the allocation of certain
 
income and expense items. For further information about line of business capital, refer to Line of business equity on page 34. The Firm periodically assesses the assumptions, methodologies and reporting classifications used for segment reporting, and further refinements may be implemented in future periods.
Business segment capital allocation
The amount of capital assigned to each business is referred to as equity. On at least an annual basis, the assumptions and methodologies used in capital allocation are assessed and as a result, the capital allocated to lines of business may change. For additional information on business segment capital allocation, refer to Line of business equity on page 91 of JPMorgan Chase’s 2018 Form 10-K.
For a further discussion of those methodologies, refer to Business Segment Results – Description of business segment reporting methodology on pages 60–61 of JPMorgan Chase’s 2018 Form 10-K.
Segment results – managed basis
The following tables summarize the Firm’s results by segment for the periods indicated.
Three months ended March 31,
Consumer & Community Banking
 
Corporate & Investment Bank
 
Commercial Banking
(in millions, except ratios)
2019

2018

Change

 
2019

2018

Change

 
2019

2018

Change
Total net revenue
$
13,751

$
12,597

9
 %
 
$
9,848

$
10,483

(6
)%
 
$
2,338

$
2,166

8
Total noninterest expense
7,211

6,909

4

 
5,453

5,659

(4
)
 
873

844

3
Pre-provision profit/(loss)
6,540

5,688

15

 
4,395

4,824

(9
)
 
1,465

1,322

11
Provision for credit losses
1,314

1,317


 
87

(158
)
NM

 
90

(5
)
NM
Net income/(loss)
3,963

3,326

19

 
3,251

3,974

(18
)
 
1,053

1,025

3
Return on equity (“ROE”)
30
%
25
%
 
 
16
%
22
%
 
 
19
%
20
%
 
Three months ended March 31,
Asset & Wealth Management
 
Corporate
 
Total
(in millions, except ratios)
2019

2018

Change

 
2019

2018

Change
 
2019

2018

Change
Total net revenue
$
3,489

$
3,506


 
$
425

$
(232
)
NM
 
$
29,851

$
28,520

5
Total noninterest expense
2,647

2,581

3

 
211

87

143
 
16,395

16,080

2
Pre-provision profit/(loss)
842

925

(9
)
 
214

(319
)
NM
 
13,456

12,440

8
Provision for credit losses
2

15

(87
)
 
2

(4
)
NM
 
1,495

1,165

28
Net income/(loss)
661

770

(14
)
 
251

(383
)
NM
 
9,179

8,712

5
Return on equity (“ROE”)
25
%
34
%
 
 
NM

NM

 
 
16
%
15
%
 
The following sections provide a comparative discussion of the Firm’s results by segment as of or for the three months ended March 31, 2019 versus the corresponding period in the prior year, unless otherwise specified.


17



CONSUMER & COMMUNITY BANKING
For a discussion of the business profile of CCB, refer to pages 62–65 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on page 156.
Selected income statement data
 
 
 
 
 
Three months ended March 31,
(in millions, except ratios)
2019

 
2018

 
Change

Revenue
 
 
 
 
 
Lending- and deposit-related fees
$
873

 
$
857

 
2
 %
Asset management, administration and commissions
618

 
575

 
7

Mortgage fees and related income
396

 
465

 
(15
)
Card income
1,168

 
1,170

 

All other income
1,278

 
1,072

 
19

Noninterest revenue
4,333

 
4,139

 
5

Net interest income
9,418

 
8,458

 
11

Total net revenue
13,751

 
12,597

 
9

 
 
 
 
 
 
Provision for credit losses
1,314

 
1,317

 

 
 
 
 
 
 
Noninterest expense
 
 
 
 
 
Compensation expense
2,708

 
2,660

 
2

Noncompensation expense(a)
4,503

 
4,249

 
6

Total noninterest expense
7,211

 
6,909

 
4

Income before income tax expense
5,226

 
4,371

 
20

Income tax expense
1,263

 
1,045

 
21

Net income
$
3,963

 
$
3,326

 
19

 
 
 
 
 
 
Revenue by line of business
 
 
 
 
 
Consumer & Business Banking
$
6,568

 
$
5,722

 
15

Home Lending
1,346

 
1,509

 
(11
)
Card, Merchant Services & Auto
5,837

 
5,366

 
9

 
 
 
 
 
 
Mortgage fees and related income details:
 
 
 
 
 
Net production revenue
200

 
95

 
111

Net mortgage servicing revenue(b)
196

 
370

 
(47
)
Mortgage fees and related income
$
396

 
$
465

 
(15
)%
 
 
 
 
 
 
Financial ratios
 
 
 
 
 
Return on equity
30
%
 
25
%
 
 
Overhead ratio
52

 
55

 
 
Note: In the discussion and the tables which follow, CCB presents certain financial measures which exclude the impact of PCI loans; these are non-GAAP financial measures.
(a)
Included operating lease depreciation expense of $969 million and $777 million for the three months ended March 31, 2019 and 2018, respectively.
(b)
Included MSR risk management results of $(9) million and $17 million for the three months ended March 31, 2019 and 2018, respectively.

 
Quarterly results
Net income was $4.0 billion, an increase of 19%.
Net revenue was $13.8 billion, an increase of 9%.
Net interest income was $9.4 billion, up 11%, driven by:
higher deposit margins and balance growth in CBB, as well as higher loan balances and margin expansion in Card,
partially offset by
higher rates driving loan spread compression in Home Lending.
Noninterest revenue was $4.3 billion, up 5%, driven by:
higher auto lease volume and
higher net mortgage production revenue reflecting higher mortgage production margins, as well as the impact of a loan sale,
partially offset by
lower net mortgage servicing revenue reflecting a lower level of third-party loans serviced and lower MSR risk management results.
Refer to Note 14 for further information regarding changes in value of the MSR asset and related hedges, and mortgage fees and related income.
Noninterest expense was $7.2 billion, up 4%, driven by:
technology, marketing and other investments in the business, as well as higher auto lease depreciation,
partially offset by
expense efficiencies and the absence of the prior-year FDIC surcharge.
The provision for credit losses was $1.3 billion, flat compared with the prior year, reflecting:
lower net charge-offs in the residential real estate and auto portfolios, offset by higher net charge-offs in the credit card portfolio, driven by loan growth.


18



Selected metrics
 
 
 
 
 
 
As of or for the three months
ended March 31,
(in millions, except headcount)
2019

 
2018

 
Change

Selected balance sheet data (period-end)
 
 
 
 
 
Total assets
$
552,486

 
$
540,659

 
2
 %
Loans:
 
 
 
 
 
Consumer & Business Banking
26,492

 
25,856

 
2

Home equity
34,417

 
40,777

 
(16
)
Residential mortgage
196,182

 
199,548

 
(2
)
Home Lending
230,599

 
240,325

 
(4
)
Card
150,527

 
140,414

 
7

Auto
62,786

 
66,042

 
(5
)
Total loans
470,404

 
472,637

 

Core loans
420,417

 
409,296

 
3

Deposits
702,587

 
685,170

 
3

Equity
52,000

 
51,000

 
2

 
 
 
 
 
 
Selected balance sheet data (average)
 
 
 
 
 
Total assets
$
553,832

 
$
538,938

 
3

Loans:
 
 
 
 
 
Consumer & Business Banking
26,488

 
25,845

 
2

Home equity
35,224

 
41,786

 
(16
)
Residential mortgage
203,725

 
198,653

 
3

Home Lending
238,949

 
240,439

 
(1
)
Card
151,134

 
142,927

 
6

Auto
62,763

 
65,863

 
(5
)
Total loans
479,334

 
475,074

 
1

Core loans
428,215

 
410,147

 
4

Deposits
681,013

 
659,599

 
3

Equity
52,000

 
51,000

 
2

 
 
 
 
 
 
Headcount(a)
128,419

 
133,408

 
(4
)%
(a)
During the third quarter of 2018, approximately 1,200 employees transferred from CCB to CIB as part of the reorganization of the Commercial Card business.
 
Selected metrics
 
 
 
 
 
As of or for the three months
ended March 31,
(in millions, except ratio data)
2019


2018

 
Change

Credit data and quality statistics
 
 
 
 
 
Nonaccrual loans(a)(b)
$
3,265


$
4,104


(20)%
 
 
 
 
 
 
Net charge-offs/(recoveries)(c)
 
 
 
 
 
Consumer & Business Banking
59

 
53

 
11

Home equity

 
16

 
NM

Residential mortgage
(5
)
 
2

 
NM

Home Lending
(5
)
 
18

 
NM

Card
1,202

 
1,170

 
3

Auto
58

 
76

 
(24
)
Total net charge-offs/(recoveries)
$
1,314

 
$
1,317

 

 
 
 
 
 
 
Net charge-off/(recovery) rate(c)
 
 
 
 
 
Consumer & Business Banking
0.90
 %
 
0.83
%
 
 
Home equity(d)

 
0.21

 
 
Residential mortgage(d)
(0.01
)
 

 
 
Home Lending(d)
(0.01
)
 
0.03

 
 
Card
3.23

 
3.32

 
 
Auto
0.37

 
0.47

 
 
Total net charge-off/(recovery) rate(d)
1.17

 
1.20

 
 
 
 
 
 
 
 
30+ day delinquency rate
 
 
 
 
 
Home Lending(e)(f)
0.77
 %
 
0.98
%
 
 
Card
1.85

 
1.82

 
 
Auto
0.63

 
0.71

 
 
 
 
 
 
 
 
90+ day delinquency rate — Card
0.97

 
0.95

 
 
 
 
 
 
 
 
Allowance for loan losses
 
 
 
 
 
Consumer & Business Banking
$
796

 
$
796

 

Home Lending, excluding PCI loans
1,003

 
1,003

 

Home Lending — PCI loans(c)
1,738

 
2,205

 
(21
)
Card
5,183

 
4,884

 
6

Auto
465

 
464

 

Total allowance for loan losses(c)
$
9,185

 
$
9,352

 
(2
)%
(a)
Excludes PCI loans. The Firm is recognizing interest income on each pool of PCI loans as each of the pools is performing.
(b)
At March 31, 2019 and 2018, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $2.2 billion and $4.0 billion, respectively. These amounts have been excluded based upon the government guarantee.
(c)
Net charge-offs/(recoveries) and the net charge-off/(recovery) rates for the three months ended March 31, 2019 and 2018, excluded $50 million and $20 million, respectively, of write-offs in the PCI portfolio. These write-offs decreased the allowance for loan losses for PCI loans. For further information on PCI write-offs, refer to Summary of changes in the allowance for credit losses on page 56.
(d)
Excludes the impact of PCI loans. For the three months ended March 31, 2019 and 2018, the net charge-off/(recovery) rates including the impact of PCI loans were as follows: (1) home equity of –% and 0.16%, respectively; (2) residential mortgage of (0.01)% and –%, respectively; (3) Home Lending of (0.01)% and 0.03%, respectively; and (4) total CCB of 1.11% and 1.12%, respectively.
(e)
At March 31, 2019 and 2018, excluded mortgage loans insured by U.S. government agencies of $3.2 billion and $5.7 billion, respectively, that are 30 or more days past due. These amounts have been excluded based upon the government guarantee.
(f)
Excludes PCI loans. The 30+ day delinquency rate for PCI loans was 8.90% and 9.49% at March 31, 2019 and 2018, respectively.

19



Selected metrics
 
 
 
 
 
As of or for the three months
ended March 31,
(in billions, except ratios and where otherwise noted)
2019

 
2018

 
Change

Business Metrics
 
 
 
 
 
Number of branches
5,028

 
5,106

 
(2
)%
Active digital customers
(in thousands)(a)
50,651

 
47,911

 
6

Active mobile customers
(in thousands)(b)
34,371

 
30,924

 
11

Debit and credit card sales volume
$
255.1


$
232.4


10

 
 
 
 
 
 
Consumer & Business Banking
 
 
 
 
 
Average deposits
$
668.5

 
$
646.4

 
3

Deposit margin
2.62
%
 
2.20
%
 
 
Business banking origination volume
$
1.5

 
$
1.7

 
(11
)
Client investment assets
312.3

 
276.2

 
13

 
 
 
 
 
 
Home Lending
 
 
 
 
 
Mortgage origination volume by channel
 
 
 
 
 
Retail
$
7.9

 
$
8.3

 
(5
)
Correspondent
7.1

 
9.9

 
(28
)
Total mortgage origination volume(c)
$
15.0

 
$
18.2

 
(18
)
 
 
 
 
 
 
Total loans serviced (period-end)
$
791.5

 
$
804.9

 
(2
)
Third-party mortgage loans serviced (period-end)
529.6

 
539.0

 
(2
)
MSR carrying value (period-end)
6.0

 
6.2

 
(3
)
Ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end)
1.13
%
 
1.15
%
 
 
 
 
 
 
 
 
MSR revenue multiple(d)
3.32
x
 
3.19
x
 
 
 
 
 
 
 
 
Card, excluding Commercial Card
 
 
 
 
 
Credit card sales volume
$
172.5

 
$
157.1

 
10

 
 
 
 
 
 
Card Services
 
 
 
 
 
Net revenue rate
11.63
%
 
11.61
%
 
 
 
 
 
 
 
 
Merchant Services
 
 
 
 
 
Merchant processing volume
$
356.5

 
$
316.3

 
13

 
 
 
 
 
 
Auto
 
 
 
 
 
Loan and lease origination volume
$
7.9

 
$
8.4

 
(6
)
Average auto operating lease assets
20.8

 
17.6

 
18
 %
(a)
Users of all web and/or mobile platforms who have logged in within the past 90 days.
(b)
Users of all mobile platforms who have logged in within the past 90 days.
(c)
Firmwide mortgage origination volume was $16.4 billion and $20.0 billion for the three months ended March 31, 2019 and 2018, respectively.
(d)
Represents the ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end) divided by the ratio of annualized loan servicing-related revenue to third-party mortgage loans serviced (average).


20


CORPORATE & INVESTMENT BANK
For a discussion of the business profile of CIB, refer to pages 66–70 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on page 156.
Selected income statement data
 
 
 
Three months ended March 31,
(in millions, except ratios)
2019
 
2018
 
Change
Revenue
 
 
 
 
 
Investment banking fees
$
1,844

 
$
1,696

 
9
 %
Principal transactions
4,163

 
4,029

 
3

Lending- and deposit-related fees
361

 
381

 
(5
)
Asset management, administration and commissions
1,101

 
1,131

 
(3
)
All other income
194

 
680

 
(71
)
Noninterest revenue
7,663

 
7,917

 
(3
)
Net interest income
2,185

 
2,566

 
(15
)
Total net revenue(a)
9,848

 
10,483

 
(6
)
 
 
 
 
 
 
Provision for credit losses
87

 
(158
)
 
NM

 
 
 
 
 
 
Noninterest expense
 
 
 
 
 
Compensation expense
2,949

 
3,036

 
(3
)
Noncompensation expense
2,504

 
2,623

 
(5
)
Total noninterest expense
5,453

 
5,659

 
(4
)
Income before income tax expense
4,308

 
4,982

 
(14
)
Income tax expense
1,057

 
1,008

 
5

Net income
$
3,251

 
$
3,974

 
(18
)%
Financial ratios
 
 
 
 
 
Return on equity
16
%
 
22
%
 
 
Overhead ratio
55

 
54