<PAGE> 1
FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-5885
J.P. MORGAN & CO. INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 13-2625764
(State or other jurisdiction (I.R.S. Employer
of
incorporation or Identification No.)
organization)
60 Wall Street, New York, NY
(Address of principal executive offices)
10260-0060
(Zip Code)
(212) 483-2323
(Registrant's telephone number, including area code)
This Form 10-Q/A amends the following Items:
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Foreign-Country-
Related Outstandings
<PAGE> 2
PART I -- FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Discussion of the financial condition and results of
operations; Statements of consolidated average balances
and net interest earnings of J.P. Morgan & Co. Incorporated
("J.P. Morgan") for the three months and nine months ended
September 30, 1994; Table of asset and liability management
derivatives; and Table of interest rate sensitivity are set forth
on pages 3 through 16 herein.
SIGNATURES 17
<PAGE> 3
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
J.P. Morgan & Co. Incorporated reported 1994 third-quarter net income of
$327 million, 30% lower than net income of $468 million earned in the third
quarter of 1993. Earnings per share were $1.63, versus $2.30 in the same
period of 1993. For the nine months ended September 30, 1994, J.P. Morgan
earned $1.022 billion, compared with income (before the cumulative effect of
an accounting change) of $1.331 billion in the same period last year.
Earnings per share for the first nine months were $5.05, versus $6.57 (before
the cumulative effect of an accounting change) in the 1993 period.
<TABLE>
SUMMARY OF EARNINGS
<CAPTION>
($ in millions, Third quarter Nine months
except per share data) 1994 1993 1994 1993
_____________________________________________________________________________
_____
<S> <C> <C> <C> <C>
Net interest revenue $ 526 $ 439 $ 1,463 $ 1,295
Noninterest revenue 906 1,174 2,826 3,341
Operating expenses (941) (882) (2,729) (2,557)
Income taxes (164) (263) (538) (748)
_____________________________________________________________________________
_____
Income before cumulative effect
of accounting change 327 468 1,022 1,331
Cumulative effect of accounting
change -- -- -- (137)
Net income 327 468 1,022 1,194
_____________________________________________________________________________
_____
PER COMMON SHARE
Third quarter Nine months
1994 1993 1994 1993
_____________________________________________________________________________
_____
Income before cumulative effect
of accounting change $1.63 $2.30 $5.05 $6.57
Cumulative effect of accounting
change -- -- -- (0.68)
_____________________________________________________________________________
_____
Net income 1.63 2.30 5.05 5.89
_____________________________________________________________________________
_____
Dividends declared $0.68 $0.60 $2.04 $1.80
_____________________________________________________________________________
_____
</TABLE>
<PAGE> 4
SUMMARY OF RESULTS IN THE 1994 THIRD QUARTER:
- -Total revenue was $1.432 billion, compared with $1.613 billion in last
year's third quarter.
- - Total net interest revenue was $526 million, versus $439 million in the
1993 third quarter.
- -Total noninterest revenue was $906 million, compared with $1.174 billion in
the third quarter a year ago.
- Trading revenue was $282 million, versus last year's third-quarter
results of $464 million.
- Corporate finance revenue was $108 million, compared with $140 million a
year ago.
- Credit-related fees were $49 million, compared with $55 million in the
1993 third quarter.
- Investment management fees were $133 million, compared with $116 million
last year.
- Operational service fees were $135 million, compared with $122 million a
year ago.
- Net investment securities losses were $27 million in the quarter.
- Other revenue in the quarter was $226 million.
- - Operating expenses were $941 million in the quarter, versus $882 million
in the third quarter of 1993.
<PAGE> 5
NET INTEREST REVENUE
Net interest revenue was $526 million in the 1994 third quarter, an
increase of 20% from the $439 million earned in the third quarter of 1993,
principally due to higher trading-related net interest revenue. Net interest
revenue for the nine-month period of 1994 was $1.463 billion, compared with
$1.295 billion in the first nine months of 1993. Excluding past-due interest
on Brazilian and Argentine assets and interest on income tax refunds,
totaling $116 million, net interest revenue for the first nine months of 1994
was $1.347 billion. This figure compares with $1.216 billion earned in the
first nine months of 1993, after excluding $79 million related to Brazilian
assets.
<TABLE>
AVERAGE INTEREST-EARNING ASSETS AND YIELDS
<CAPTION>
Sept. 30 June 30 Dec. 31 Sept. 30
(for quarters ending) 1994 1994 1993 1993
_____________________________________________________________________________
_____
<S> <C> <C> <C> <C>
Average interest-earning assets
($ in billions) $129.1 $134.2 $129.7 $135.6
Net yield 1.71% 1.70 % 1.55% 1.39%
NONINTEREST REVENUE
<CAPTION>
Third quarter Nine months
($ in millions) 1994 1993 1994 1993
_____________________________________________________________________________
_____
<S> <C> <C> <C> <C>
Trading revenue $ 282 $ 464 $ 866 $1,453
Corporate finance revenue 108 140 312 374
Credit-related fees 49 55 160 167
Investment management fees 133 116 387 341
Operational service fees 135 122 419 359
Net investment securities
gains(losses) (27) 98 99 291
Other revenue 226 179 583 356
_____________________________________________________________________________
_____
Total noninterest revenue 906 1,174 2,826 3,341
_____________________________________________________________________________
_____
</TABLE>
Total noninterest revenue for the third quarter was $906 million, a 23%
decline from the $1.174 billion reported in the third quarter of 1993. For
the first nine months of 1994 noninterest revenue was $2.826 billion, versus
$3.341 billion reported for the same period last year.
<PAGE> 6
Trading revenue in the 1994 third quarter was $282 million, compared with
$464 million in the 1993 third quarter. Trading revenue does not include net
interest revenue derived from the firm's trading activities, which totaled
$73 million in the third quarter of this year, versus $10 million in the
third quarter of 1993. Swaps and other interest rate contracts and debt
instruments, particularly in emerging markets, were the major contributors to
trading revenue in the 1994 third quarter. In the first nine months of 1994,
trading revenue was $866 million, compared with $1.453 billion in the 1993
period. Trading-related net interest revenue for the first nine months of
1994 was $192 million, compared with $89 million in the same period in 1993.
The following represents an analysis of trading results, including the
related amount of net interest revenue, for the three months and nine months
ended September 30, 1994, in the principal markets in which J.P. Morgan
participates.
Swaps and Foreign
other exchang
e
interest Debt spot Equities
and
rate instru- option commoditie
s,
In millions contracts ments contrac and other Tota
ts l
________________________________________________________________________________
THIRD QUARTER
1994
Trading revenue $127 $80 $16 $59 $282
Net interest
revenue (54) 127 10 (10) 73
(expense)
________________________________________________________________________________
Combined total 73 207 26 49 355
________________________________________________________________________________
NINE MONTHS 1994
Trading revenue $519 $113 $53 $181 $
866
Net interest
revenue (39) 271 - (40) 192
(expense)
________________________________________________________________________________
Combined total 480 384 53 141 1,05
8
________________________________________________________________________________
Corporate finance revenue in the third quarter was $108 million, compared
with the previous year's third-quarter result of $140 million, because of an
overall market decline in the volume of underwriting business. Underwriting
revenue in the third quarter of 1994 was $22 million, compared with $56
million in the 1993 third quarter. Corporate finance revenue for the first
nine months of 1994 was $312 million, compared with $374 million for the nine
months of 1993. For the first nine months, underwriting revenue was $92
million, versus $180 million in the 1993 period. Lower underwriting revenue
for the nine-month period was partially offset by higher advisory services
fees, which increased $26 million from the same period of 1993.
Credit-related fees were $49 million in the third quarter of 1994,
compared with $55 million in the third quarter of 1993. In the first nine
months of this year credit-related fees were $160 million, compared with $167
million in the comparable 1993 period.
Investment management fees increased 15% in the third quarter to $133
million, from $116 million in the 1993 third quarter. The nine-month total
was 13% higher at $387 million, primarily because of increased assets under
management from net new business.
Operational service fees grew 11% to $135 million, compared with $122
million in last year's third quarter. The total grew 17% to $419 million for
the first three quarters of 1994, reflecting increases in custody, clearing,
and brokerage fees.
Net investment securities losses were $27 million in the third quarter,
principally because of sales of foreign government securities. This figure
compares with gains of $98 million in the year earlier period. For the 1994
nine-month period net investment securities gains were $99 million, compared
with $291 million in the 1993 period.
<PAGE> 7
Other revenue was $226 million, compared with $179 million in the 1993
third quarter. Contributing to other revenue were $148 million of net equity
investment securities gains and $54 million related to the previously
announced sale of the firm's domestic corporate trust business. For the
first nine months of 1994 other revenue increased by $227 million to $583
million, versus the comparable 1993 period. Net equity investment securities
gains in the first nine months were $509 million, compared with $214 million
for the first nine months of 1993.
OPERATING EXPENSES
Operating expenses rose 7% to $941 million in the third quarter, and also
by 7% for the first nine months of 1994, to $2.729 billion. Increased staff
levels from the year earlier period were a major driver of higher expenses.
Higher technology and communications costs in the third quarter also
reflected continued investments, particularly in the firm's swaps, emerging
markets, and equities activities. Employee compensation and benefits
expenses declined overall, as lower incentive compensation accruals more than
offset higher expenses related to increased staff levels. For the first nine
months of 1994 employee compensation and benefits costs, technology and
communications expenditures, and other operating expenses were higher.
INCOME TAXES
Income taxes for the third quarter of 1994 decreased to $164 million from
$263 million in the 1993 third quarter. The decline primarily reflects lower
pre-tax income. The 1994 third-quarter effective tax rate was 33%, compared
with 36% in the same quarter last year. For the first nine months of 1994
the effective tax rate was 35%, versus 36% for the comparable 1993 period.
ASSETS
Total assets were $155 billion at September 30, 1994, compared with $158
billion at June 30, 1994. Nonperforming assets were $214 million, declining
from $248 million at June 30, 1994, as new classifications were more than
offset by proceeds from loan repayments and charge-offs. No provision for
credit losses was deemed necessary in the 1994 third quarter. The allowance
for credit losses was $1.133 billion at September 30, 1994.
<PAGE> 8
<TABLE>
ASSET QUALITY
J.P. Morgan & Co. Incorporated
_____________________________________________________________________________
_____
NONPERFORMING ASSETS
<CAPTION>
Sept. 30June 30 Dec. 31 Sept. 30
Dollars in millions 1994 1994 1993 1993
_____________________________________________________________________________
_____
<S> <C> <C> <C> <C>
Nonaccrual loans:
Commercial and industrial $148 $157 $182 $183
Other 62 82 92 109
_____________________________________________________________________________
_____
210 239 274 292
Restructuring countries 2 7 8 4
_____________________________________________________________________________
_____
Total nonaccrual loans 212 246 282 296
Other nonperforming assets 2 2 13 10
_____________________________________________________________________________
_____
Total nonperforming assets 214 248 295 306
_____________________________________________________________________________
_____
ALLOWANCE FOR CREDIT LOSSES
<CAPTION>
Sept. 30June 30 Dec. 31 Sept. 30
Dollars in millions 1994 1994 1993 1993
_____________________________________________________________________________
_____
<S> <C> <C> <C> <C>
Allowance for credit losses$1,133 (a) $1,141 $1,157 $1,163
_____________________________________________________________________________
_____
<CAPTION>
Third quarter Nine months
19941993 19941993
_____________________________________________________________________________
_____
<S> <C> <C> <C> <C>
Charge-offs :
Commercial and industrial ($9) ($33) ($30) ($66)
Restructuring countries - - (17) (34)
Other (5) (2) (12) (32)
Recoveries 6 10 34 37
_____________________________________________________________________________
_____
</TABLE>
(a) At September 30, 1994, the allocation of the allowance for credit losses
was as follows: Specific allocation - borrowers in the U.S. $131 million,
Specific allocation - borrowers outside the U.S. $76 million, Allocation to
general risk $926 million.
On January 1, 1994, the company adopted Financial Accounting Standards
Board Interpretation No. 39 (FIN No. 39), Offsetting of Amounts Related to
Certain Contracts, which increased both trading-related assets and trading-
related liabilities by approximately $13 billion at September 30, 1994.
While implementation reduced J.P. Morgan's asset-based ratios, including the
leverage ratio, net income and the risk-based capital ratios were not
affected.
<PAGE> 9
FOREIGN-COUNTRY-RELATED OUTSTANDINGS
Foreign-country-related outstandings represent outstandings to foreign
borrowers that are denominated in U.S. dollars or currencies other than the
borrower's local currency or, in the case of a guarantee, other than the
guarantor's local currency. Countries in which J.P. Morgan's outstandings
exceeded 0.75% of total assets at September 30, 1994, are listed in the
following table. Outstandings include loans, interest-earning deposits with
banks, debt investment securities, customers' acceptance liability,
securities purchased under agreements to resell, trading account securities,
accrued interest, and other monetary assets. Outstandings generally are
distributed according to the location of the borrower. In the case of
guaranteed outstandings or when tangible, liquid collateral is held and
realizable outside the obligor's country, distribution is generally made
according to the location of the guarantor or the location where the
collateral is held and realizable.
In millions Cross-border outstandings
(b)
_____________________________________________________________________
United Kingdom $ 4,489
France 1,909
Switzerland 1,204
Belgium 1,175 (a
)
_____________________________________________________________________
(a) Includes credit-related exposures of Morgan Guaranty's Brussels
office to borrowers domiciled in various countries, which are
secured by marketable securities of issuers in various countries.
(b) Mexican cross-border outstandings at September 30, 1994 and June
30, 1994, were $473 million and $918 million, respectively, less
than 0.75% of total assets, compared with $1,276 million at March
31, 1994. Not included in Mexican cross-border outstandings are
United Mexican States (UMS) bonds, substantially all of which
have been sold forward, that are collateralized by U.S. Treasury
securities, which are listed in the following table. The zero-
coupon U.S. Treasury collateral has a face value equal to the
face value of the underlying UMS bonds. The collateral, which
will only become available when the UMS bonds mature, is pledged
to the holders of the bonds and is held by the Federal Reserve
Bank of New York.
U.S.
Treasury
($ in millions) UMS collatera
bonds l
___________________________ ________________
Book Face Market Fair
value value value value
_____________________________________________________________________________
_____________
September 30,
1994
Due in 2008 $1,117 $1,152 $1,138 $383
Due in 2019 991 1,229 1,038 153
_____________________________________________________________________________
_____________
June 30, 1994
Due in 2008 $1,093 $1,128 $1,098 $395
Due in 2019 1,029 1,314 1,028 183
_____________________________________________________________________________
_____________
March 31, 1994
Due in 2008 $1,030 $1,06 $1,028 $370
3
Due in 2019 191 233 192 33
_____________________________________________________________________________
_____________
<PAGE> 10
<TABLE>
CAPITAL
<CAPTION>
Sept. 30 June 30 Dec. 31 Sept. 30
1994 1994 1993 1993
_____________________________________________________________________________
______
<S> <C> <C> <C> <C>
Stockholders' equity ($ in billions)$9.7 $9.7 $9.9 $8.4
As a percent of total period-end
assets 6.3% 6.1 % 7.4% 6.5%
Risk-based capital:
Tier 1 risk-based capital $ 8.1 $ 8.2 $ 7.8 $ 7.7
Total risk-based capital 12.0 11.9 10.9 11.1
Risk adjusted assets 84.5 87.9 83.3 83.0
Tier 1 9.6% 9.3 % 9.3% 9.3%
Total 14.3 13.5 13.0 13.3
Leverage ratio 6.3 6.2 7.3 7.0
</TABLE>
J.P. Morgan's risk-based capital and leverage ratios remain above the
minimum standards set by the Federal Reserve Board. As of December 31, 1993,
the firm adopted SFAS No. 115, Accounting for Certain Investments in Debt and
Equity Securities, which requires that both debt and marketable equity
investment securities be carried at fair value. The risk-based capital and
leverage ratios stated above do not reflect the increase in stockholders'
equity caused by the implementation of this standard. The Federal Reserve
Board has requested public comment on a proposal to include this adjustment
in regulatory capital, but this proposal has not been finalized.
At September 30, 1994, stockholders' equity included approximately $614
million, reflecting the unrealized appreciation on debt investment securities
of $249 million, and $738 million on marketable equity investment securities,
net the related deferred tax liability. The unrealized appreciation on debt
investment securities decreased $120 million from $369 million at June 30,
1994, mainly because of the rising interest rate environment.
In accordance with SFAS No. 107, Disclosures about Fair Value of Financial
Instruments,
J.P. Morgan estimates that the amount by which the aggregate net fair value
of all balance-sheet and off-balance-sheet financial instruments exceeded
associated net carrying values was $2.8 billion at September 30, 1994 and
June 30, 1994, compared with $2.6 billion at December 31, 1993. The
aggregate net fair value was primarily attributable to net loans and asset
and liability management swaps.
<PAGE> 11
<TABLE>
CONSOLIDATED AVERAGE BALANCES AND NET INTEREST EARNINGS
J.P. Morgan & Co. Incorporated
_____________________________________________________________________________
_______________
<CAPTION>
Dollars in millions, Three months ended
interest and average rates ______________________________________________
_________
on a taxable-equivalent September 30, 1994 September 30, 1993
basis
______________________________________________
_________
Avera Averag Avera Avera
ge e ge ge
balan Intere rate balan Intere rate
ce st ce st
______________________________________________
_________
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning deposits
with banks, $2,33 $ 50 8.50 % $2,75 $ 56 8.07 %
mainly in offices outside 5 4
the U.S.
Debt investment securities
in
offices in the U.S. (a):
U.S. Treasury 1,057 17 6.38 1,653 18 4.32
U.S. state and political
subdivision 2,201 66 11.90 2,112 67 12.59
Other 11,50 169 5.83 10,15 137 5.35
8 7
Debt investment securities
in offices 5,493 98 7.08 9,046 161 7.06
outside the U.S. (a)
Trading account assets:
In offices in the U.S. 15,07 249 6.55 15,01 202 5.34
1 1
In offices outside the 21,40 461 8.54 17,20 334 7.70
U.S. 7 3
Securities purchased under
agreements
to resell and federal 29,32 404 5.47 34,58 405 4.65
funds sold, 6 9
mainly in offices in the
U.S.
Securities borrowed in
offices in 15,76 160 4.03 16,61 125 2.99
the U.S. 3 5
Loans:
In offices in the U.S. 7,689 117 6.04 8,000 118 5.85
In offices outside the 15,75 248 6.24 17,38 264 6.02
U.S. 9 9
Other interest-earning
assets (b):
In offices in the U.S. 1,082 78 * 870 40 *
In offices outside the 456 55 * 159 58 *
U.S.
_____________________________________________________________________________
_______________
Total interest-earning 129,1 2,172 6.67 135,5 1,985 5.81
assets 47 58
Allowance for credit losses (1,14 (1,18
0) 4)
Cash and due from banks 1,740 2,573
Other noninterest-earning 40,52 19,50
assets (c) 0 8
_____________________________________________________________________________
_______________
Total assets 170,2 156,4
67 55
_____________________________________________________________________________
_______________
<FN>
Interest and average rates applying to the following asset categories have
been adjusted to a taxable-equivalent basis: Debt investment securities in
offices in the U.S., Trading account assets in offices in the U.S., and Loans
in offices in the U.S. The applicable tax rate used to determine these
adjustments was approximately 41% for the three months ended September 30,
1994 and 1993.
(a) For the three months ended September 30, 1994, average debt investment
securities are computed based on historical amortized cost, excluding the
effects of SFAS No. 115 adjustments.
(b) Interest revenue includes the effect of certain off-balance-sheet
transactions.
(c) For the three months ended September 30, 1994, Other noninterest-earning
assets include the impact of adopting FIN No. 39 and SFAS No. 115.
* Not meaningful
</TABLE>
<PAGE> 12
<TABLE>
CONSOLIDATED AVERAGE BALANCES AND NET INTEREST EARNINGS
J.P. Morgan & Co. Incorporated
____________________________________________________________________________
________________
<CAPTION>
Dollars in millions, Three months ended
interest and average rates ______________________________________________
_________
on a taxable-equivalent September 30, 1994 September 30, 1993
basis
______________________________________________
_________
Avera Averag Avera Averag
ge e ge e
balan Intere rate balan Intere rate
ce st ce st
______________________________________________
_________
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing deposits:
In offices in the U.S. $ $ 25 4.72 % $ $ 30 5.01 %
2,103 2,375
In offices outside the 39,77 492 4.91 31,24 427 5.42
U.S. 0 6
Trading account liabilities:
In offices in the U.S. 8,102 131 6.41 9,904 130 5.21
In offices outside the 10,34 202 7.75 8,072 143 7.03
U.S. 6
Securities sold under
agreements to
repurchase and federal
funds 42,30 501 4.70 55,94 590 4.18
purchased, mainly in 9 5
offices in
the U.S.
Commercial paper, mainly in
offices 4,615 54 4.64 3,210 26 3.21
in the U.S.
Other interest-bearing
liabilities:
In offices in the U.S. 8,044 100 4.93 8,077 70 3.44
In offices outside the 2,201 36 6.49 2,715 45 6.58
U.S.
Long-term debt,
mainly in offices in the 5,976 75 4.98 5,401 50 3.67
U.S.
_____________________________________________________________________________
_______________
Total interest-bearing 123,4 1,616 5.19 126,9 1,511 4.72
liabilities 66 45
Noninterest-bearing
deposits:
In offices in the U.S. 3,550 5,010
In offices outside the 1,163 1,091
U.S.
Other noninterest-bearing 32,37 15,21
liabilities 2 9
_____________________________________________________________________________
_______________
Total liabilities 160,5 148,2
51 65
Stockholders' equity 9,716 8,190
_____________________________________________________________________________
_______________
Total liabilities and
stockholders' 170,2 156,4
equity 67 55
Net yield on interest- 1.71 1.39
earning assets
_____________________________________________________________________________
_______________
Net interest earnings 556 474
_____________________________________________________________________________
_______________
</TABLE>
<PAGE> 13
<TABLE>
CONSOLIDATED AVERAGE BALANCES AND NET INTEREST EARNINGS
J.P. Morgan & Co. Incorporated
_____________________________________________________________________________
_______________
<CAPTION>
Dollars in millions, Nine months ended
interest and average rates ______________________________________________
_________
on a taxable-equivalent September 30, 1994 September 30, 1993
basis
______________________________________________
_________
Avera Averag Avera Averag
ge e ge e
balan Intere rate balan Intere rate
ce st ce st
______________________________________________
_________
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning deposits
with banks, $ $ 145 8.39 % $ $ 178 8.87 %
mainly in offices outside 2,310 2,683
the U.S.
Debt investment securities
in
offices in the U.S. (a):
U.S. Treasury 1,264 55 5.82 3,011 103 4.57
U.S. state and political
subdivision 2,219 201 12.11 2,184 207 12.67
Other 10,21 387 5.07 8,825 345 5.23
4
Debt investment securities
in offices 6,260 318 6.79 9,583 551 7.69
outside the U.S. (a)
Trading account assets:
In offices in the U.S. 14,46 682 6.30 13,55 568 5.60
3 9
In offices outside the 23,22 1,303 7.50 15,59 897 7.69
U.S. 0 8
Securities purchased under
agreements
to resell and federal 32,51 1,151 4.73 29,09 1,038 4.77
funds sold, 5 7
mainly in offices in the
U.S.
Securities borrowed in
offices in 15,24 411 3.60 13,99 314 3.00
the U.S. 8 1
Loans:
In offices in the U.S. 7,926 322 5.43 8,435 342 5.42
In offices outside the 16,22 726 5.98 18,27 928 6.79
U.S. 2 8
Other interest-earning
assets (b):
In offices in the U.S. 868 164 * 567 156 *
In offices outside the 658 234 * 163 93 *
U.S.
_____________________________________________________________________________
_______________
Total interest-earning 133,3 6,099 6.11 125,9 5,720 6.07
assets 87 74
Allowance for credit losses (1,14 (1,21
6) 3)
Cash and due from banks 1,822 2,385
Other noninterest-earning 39,13 18,17
assets (c) 9 7
_____________________________________________________________________________
_______________
Total assets 173,2 145,3
02 23
_____________________________________________________________________________
_______________
<FN>
Interest and average rates applying to the following asset categories have
been adjusted to a taxable-equivalent basis: Debt investment securities in
offices in the U.S., Trading account assets in offices in the U.S., and Loans
in offices in the U.S. The applicable tax rate used to determine these
adjustments was approximately 41% for the nine months ended September 30,
1994 and 1993.
(a) For the nine months ended September 30, 1994, average debt investment
securities are computed based on historical amortized cost, excluding the
effects of SFAS No. 115 adjustments.
(b) Interest revenue includes the effect of certain off-balance-sheet
transactions.
(c) For the nine months ended September 30, 1994, Other noninterest-earning
assets include the impact of adopting FIN No. 39 and SFAS No. 115.
* Not meaningful
</TABLE>
<PAGE> 14
<TABLE>
CONSOLIDATED AVERAGE BALANCES AND NET INTEREST EARNINGS
J.P. Morgan & Co. Incorporated
____________________________________________________________________________
________________
<CAPTION>
Dollars in millions, Nine months ended
interest and average rates ______________________________________________
_________
on a taxable-equivalent September 30, 1994 September 30, 1993
basis
______________________________________________
_________
Avera Averag Avera Averag
ge e ge e
balan Intere rate balan Intere rate
ce st ce st
______________________________________________
_________
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing deposits:
In offices in the U.S. $ $ 78 4.61 % $ $ 96 5.08 %
2,261 2,525
In offices outside the 36,52 1,308 4.79 31,51 1,384 5.87
U.S. 6 6
Trading account liabilities:
In offices in the U.S. 7,801 357 6.12 8,153 333 5.46
In offices outside the 10,33 537 6.95 6,587 355 7.21
U.S. 6
Securities sold under
agreements to
repurchase and federal
funds 49,54 1,604 4.33 49,09 1,548 4.22
purchased, mainly in 7 5
offices in
the U.S.
Commercial paper, mainly in
offices 4,205 127 4.04 3,685 88 3.19
in the U.S.
Other interest-bearing
liabilities:
In offices in the U.S. 7,769 241 4.15 8,345 219 3.51
In offices outside the 2,426 100 5.51 2,947 121 5.49
U.S.
Long-term debt,
mainly in offices in the 5,667 195 4.60 5,487 173 4.22
U.S.
_____________________________________________________________________________
_______________
Total interest-bearing 126,5 4,547 4.80 118,3 4,317 4.88
liabilities 38 40
Noninterest-bearing
deposits:
In offices in the U.S. 3,965 4,607
In offices outside the 1,484 1,309
U.S.
Other noninterest-bearing 31,42 13,25
liabilities 0 0
_____________________________________________________________________________
_______________
Total liabilities 163,4 137,5
07 06
Stockholders' equity 9,795 7,817
_____________________________________________________________________________
_______________
Total liabilities and
stockholders' 173,2 145,3
equity 02 23
Net yield on interest- 1.56 1.49
earning assets
_____________________________________________________________________________
_______________
Net interest earnings 1,552 1,403
_____________________________________________________________________________
_______________
</TABLE>
<PAGE> 15
ASSET AND LIABILITY MANAGEMENT DERIVATIVES
The objective of asset and liability management activities is to maximize
total return over the longer term. J.P. Morgan utilizes a variety of
financial instruments, including derivatives, in its asset and liability
management activities. J.P. Morgan believes the results of its asset and
liability management activities should be considered on an integrated
basis, not instrument by instrument, however, in response to requests from
regulators, additional information on asset and liability management
derivatives, primarily interest rate swaps, is provided below. For more
information about asset and liability management activities, see Note 8,
Off-balance-sheet financial instruments.
The table below summarizes maturities and weighted average interest
rates to be received and paid on U.S. dollar and non-U.S. dollar asset and
liability management interest rate swaps at September 30, 1994. Included in
the table are swaps entered into to meet longer-term asset and liability
management objectives, including the maximization of net interest revenue.
Also included in the table are swaps designated as hedges or used to modify
the interest rate characteristics of assets and liabilities. In addition, a
portion of the swaps included in the table may be hedged by other
derivatives. Variable rates presented are generally based on the London
Interbank Offered Rate (LIBOR) and reset at predetermined dates. The
variable rates presented are those in effect at September 30, 1994. The
table was prepared under the assumption that these variable interest rates
remain constant. The variable interest rates to be received or paid will
change to the extent that rates fluctuate. Such changes may be substantial.
Other derivatives used for asset and liability management purposes,
including currency swaps, foreign exchange contracts, purchased options,
interest rate futures, and debt securities contracts, totaled $33.3 billion
at September 30, 1994. The contractual maturities of these derivative
contracts are primarily less than one year.
<TABLE>
<CAPTION>
By expected maturities
_____________________________________________________________________________
________
Aft Aft Aft Aft
er er er er
one two thr fou
Dollars in billions Wit yea yea ee r Aft
hin r rs yea yea er
one but but rs rs fiv Tota
yea wit wit but but e l
r hin hin wit wit yea
two thr hin hin rs
ee fou fiv
r e
_____________________________________________________________________________
_______
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE SWAPS
-
U.S. DOLLAR
Receive fixed
swaps
Notional amount $18 $10 $5. $2. $2. $2. $41.
.6 .4 5 2 6 3 6
Weighted average:
Receive rate 5.9 % 6.4 % 6.1 % 8.1 % 7.6 % 7.2 % 6.37 %
4 2 0 7 5 2
Pay rate 4.8 4.9 4.9 4.9 4.9 4.9 4.92
9 5 3 2 6 4
Pay fixed swaps
Notional amount $16 $11 $5. $7. $2. $4. $46.
.4 .1 3 5 1 3 7
Weighted average:
Receive rate 4.9 % 4.9 % 4.9 % 5.0 % 4.9 % 4.9 % 4.94 %
0 5 5 0 6 2
Pay rate 4.5 5.0 5.6 5.9 6.6 6.4 5.30
8 7 1 7 3 9
INTEREST RATE SWAPS
-
NON-U.S. DOLLAR
Receive fixed
swaps
Notional amount $23 $21 $13 $8. $4. $5. $76.
.0 .4 .7 8 7 3 9
Weighted average:
Receive rate 6.5 % 5.6 % 6.8 % 6.3 % 5.5 % 7.3 % 6.33 %
4 5 5 9 7 7
Pay rate 4.8 4.2 5.2 4.7 3.8 5.6 4.74
5 9 2 2 6 5
Pay fixed swaps
Notional amount $21 $15 $13 $8. $4. $5. $69.
.2 .8 .3 6 5 7 1
Weighted average:
Receive rate 4.8 % 4.2 % 5.2 % 4.7 % 3.8 % 5.6 % 4.78 %
5 9 2 2 6 5
Pay rate 6.4 6.3 6.4 5.6 5.5 7.5 6.35
8 3 1 6 3 1
_____________________________________________________________________________
________
<FN>
There is $2.0 billion and $3.9 billion of notional amounts related to
currency
swaps and basis swaps, respectively, not included in the table above.
</TABLE>
<PAGE> 16
INTEREST-RATE SENSITIVITY
J. P. Morgan's interest-rate sensitive positions at September 30, 1994, are
presented in the following table. The positions in the table include assets,
liabilities, and off-balance-sheet instruments in various currencies and are
reflective of J.P. Morgan's market outlook at September 30, 1994.
Significant variations in interest-rate sensitivity may exist at other times
during the period.
Management considers a portion of net noninterest-bearing deposits to be
stable and hence a constant source of funding. These noninterest-bearing
deposits as well as stockholders' equity reduce the amount of purchased funds
J.P. Morgan needs to fund its interest-earning as well as noninterest-earning
assets.
<TABLE>
<CAPTION>
By repricing or maturity
dates
_____________________________________________________________________________
_______________
Afte After Afte
r six r
thre month one Non-
In millions: With e s but year Afte intere
September 30, in mont withi but r st-
1994 thre hs n one with five bearin Tota
e but year in year g l
mont with five s funds
hs in
six
_____________________________________________________________________________
_______________
<S> <C> <C> <C> <C> <C> <C>
<C>
ASSETS
Interest-earning
deposits with $ $ $ 7 - - - $
banks 2,34 130 2,47
0 7
Debt investment
securities (a) 298 646 957 $ $ $ 249 18,6
5,72 10,80 81
9 2
Trading account 58,3 - - - - - 58,3
assets 47 47
Resale agreements
and 25,8 - - - - - 25,8
federal funds 19 19
sold
Securities 11,5 - - - - - 11,5
borrowed 17 17
Loans, net 18,3 1,78 866 1,08 510 (1,133 21,4
37 5 4 ) 49
Other assets 993 395 28 22 - 14,940 16,3
78
_____________________________________________________________________________
_________________________________
Total assets 117, 2,95 1,858 6,83 11,31 14,056 154,
651 6 5 2 668
_____________________________________________________________________________
_________________________________
LIABILITIES AND
EQUITY
Interest-bearing
deposits 38,4 1,59 970 677 - - 41,6
07 4 48
Other money
market 46,6 453 223 303 59 - 47,6
liabilities 45 83
Trading account
liabilities 37,7 - - - - - 37,7
09 09
Long-term debt 1,76 262 268 1,60 2,390 - 6,28
6 1 7
Noninterest-
bearing - - - - - 3,909 3,90
deposits 9
Other liabilities - - - - - 7,699 7,69
9
Stockholders' - - - - - 9,733 9,73
equity 3
_____________________________________________________________________________
_________________________________
Total liabilities
and equity 124, 2,30 1,461 2,58 2,44 21,341 154,
527 9 1 9 668
_____________________________________________________________________________
_________________________________
Asset/liability
interval gap (6,8 647 397 4,25 8,86 (7,285 -
76) 4 3 )
Derivatives
affecting
interest-rate
sensitivity:
Interest rate 11,2 (7,6 (1,74 990 (2,9 - -
swaps 69 07) 3) 09)
Other 2,98 417 (338) (926 (2,1 - -
9 ) 42)
_____________________________________________________________________________
_________________________________
Total derivatives 14,2 (7,1 (2,08 64 (5,0 - -
58 90) 1) 51)
_____________________________________________________________________________
_________________________________
Interest-rate
-sensitivity 7,38 (6,5 (1,68 4,31 3,81 (7,285 -
gap 2 43) 4) 8 2 )
_____________________________________________________________________________
_________________________________
Cumulative
interest- 7,38 839 (845) 3,47 7,28 - -
rate- 2 3 5
sensitivity gap
_____________________________________________________________________________
_______________
(a) Mortgage-backed investment securities are included based on their
weighted-average
lives, reflecting anticipated future prepayments based on a consensus of
dealers
in the market.
</TABLE>
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
(REGISTRANT) J.P. MORGAN & CO. INCORPORATED
BY (SIGNATURE)
/s/ JAMES T. FLYNN
_______________________________________
(NAME AND TITLE) JAMES T. FLYNN
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER)
DATE: January 17, 1995
