JPMorgan Chase & Co. reported third- quarter 2008 net income of $527 million, compared with net income of $3.4 billion in the third quarter of 2007. Earnings per share were $0.11, compared with $0.97 in the third quarter of 2007. Current-quarter results include a charge of $1.2 billion (after-tax) to conform loan loss reserves and an extraordinary gain of $581 million (after-tax), related to the acquisition of Washington Mutual’s banking operations, which closed on 25 September 2008.
“Our third quarter financial results declined sharply, driven by markdowns on mortgage trading positions and leveraged loans, and higher credit costs due to continued deterioration in our home-lending portfolio,” says Jamie Dimon, chairman and chief executive officer. “In this environment, we have kept our focus on meeting our clients’ needs and deploying capital wisely. We continue to see numerous examples of organic growth, including in Investment Banking market share, new checking accounts, net flows in Asset Management and increased loan and liability balances in Commercial Banking and Treasury & Securities Services.”
“I am pleased that we were in a position during the quarter to purchase Washington Mutual’s banking operations, becoming the largest US depository institution, with more than $900 billion in deposits,” says Dimon. “We welcome Washington Mutual employees to JPMorgan Chase and look forward to bringing together the best of both firms. This acquisition adds more than 2,200 branches, allowing us to expand nationwide – both in our existing markets and into attractive new ones, in states like California, Florida and Washington – and to further grow our other business lines through our enhanced branch network.”
“We expect the Washington Mutual transaction to create long-term value for shareholders while also being immediately accretive, adding 50 cents per share to earnings in 2009. In light of the unprecedented challenges and risks facing the housing market, we have incorporated expectations of significant credit losses from Washington Mutual’s home-lending portfolio into the structure of the transaction. We also raised $11.5 billion of common equity to support the transaction and add to our already substantial capital base.”
To view the full report please visit JPMorgan Chase web-site: www.jpmorganchase.com
D.C.