<PAGE> 1
___________________________________________________________________________
___________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
______________
Date of Report (Date of earliest event reported) July 11, 1996
J.P. MORGAN & CO. INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 1-5885 13-2625764
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
60 WALL STREET, NEW YORK, NEW YORK 10260-0060
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 483-2323
_________________________________________________________________
(Former name or former address, if changed since last report)
___________________________________________________________________________
___________________________________________________________________________
<PAGE> 2
ITEM 5. OTHER EVENTS
On July 11, 1996, the Registrant issued a press release announcing
its earnings for the three-month period ended June 30, 1996. A copy of
such press release is filed herein as Exhibit 99.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements
NONE. The financial statements included in this report are not
required to be filed as part of this report.
(b) Pro Forma Financial Information
NONE.
(c) Exhibits
99. Copy of press release of J.P. Morgan & Co. Incorporated
dated July 11, 1996.
<PAGE> 3
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 hereunto duly authorized.
J.P. MORGAN & CO. INCORPORATED
______________________________
(REGISTRANT)
/s/ PATRICIA A. JONES
____________________________
NAME: PATRICIA A. JONES
TITLE: MANAGING DIRECTOR
DATE: July 11, 1996
<PAGE> 4
EXHIBIT INDEX
-------------
Exhibit 99. Copy of press release of J.P. Morgan & Co. Incorporated
dated July 11, 1996.
<PAGE> 1
July 11, 1996
J.P. MORGAN REPORTS 1996 SECOND QUARTER RESULTS
J.P. Morgan & Co. Incorporated reported net income of $440 million in the
second quarter of 1996, 40% higher than in the second quarter of 1995.
Earnings per share for the quarter were $2.14 versus $1.56 a year ago.
Net income for the first six months of 1996 totaled $879 million, up 54% from
$570 million a year earlier. Earnings per share in the first six months were
$4.28 versus $2.83 a year ago. Six-month earnings in 1995 included a first
quarter charge of $55 million ($33 million after tax), or $0.17 per share,
related primarily to severance.
"The global expansion of our business with clients generated strong,
diversified earnings growth in the first half of the year," said Douglas A.
Warner III, chairman. "We have made it a priority to earn an increasing share
of our clients' business, and that drive is producing results across the range
of J.P. Morgan's market-making, investment banking, and investment management
activities."
<TABLE>
<CAPTION>
SECOND QUARTER RESULTS AT A GLANCE First
Second quarter quarter
In millions of dollars, except per share data 1996 1995 1996
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 1,761 $ 1,449 $ 1,740
Operating expenses (1,104) (984) (1,085)
Income taxes (217) (150) (216)
----------------------------------------------------------------------------------------------------
Net income $ 440 $ 315 $ 439
Net income per share $2.14 $1.56 $2.13
----------------------------------------------------------------------------------------------------
Dividends declared per share $0.81 $0.75 $0.81
</TABLE>
REVENUES rose 22% in the second quarter from a year ago.
- Trading revenue more than doubled to $697 million as client
activity remained strong. Combined trading and related net
interest revenue rose to $739 million from $333 million.
- Investment banking revenue rose 79% to $210 million.
- Investment management fees grew 25%. Operational service and
credit-related fees were lower as a result of the sale of the
firm's custody business in late 1995.
- Net interest revenue declined 22% to $397 million.
OPERATING EXPENSES were up 12% from a year ago, as incentive compensation
accruals for the second quarter increased in line with higher earnings.
IN OTHER DEVELOPMENTS, Morgan announced in May an agreement in principle
to form a strategic alliance to manage activities that represent about a
third of the firm's $1 billion of annual technology expenditures. Morgan
expects to achieve aggregate savings of about 15% on projected technology
costs over the seven-year life of the agreement.
The remainder of this release contains information on specific areas of
results, a financial summary, and the consolidated financial statements.
- --------------------------------------------------------------------------------
Press contact: William McBride 212/648-9537
Investor contact: Ann B. Patton 212/648-9446
<PAGE> 2
2
REVENUES
Revenues totaled $1.761 billion in the second quarter of 1996, up 22% from
$1.449 billion a year earlier.
NET INTEREST REVENUE, the aggregate of interest revenue and expense generated
by the firm's asset and liability management, credit-related, and trading
activities, declined 22% to $397 million from the second quarter of 1995.
Asset and liability management was the principal factor in the decline as
higher-yielding positions continued to mature.
TRADING REVENUE rose to $697 million in the second quarter from $305 million a
year earlier. First-half trading revenue also more than doubled from the first
six months of 1995. Revenues in both developed and emerging markets were strong
and diversified across nearly all the firm's trading products. Reported trading
revenue does not include net interest revenue associated with trading
activities, which was $42 million in the second quarter of 1996 and $28 million
a year ago.
Combined trading and related net interest revenue rose to $739 million from
$333 million a year earlier. (For details, see the table of combined trading
and related net interest revenue by principal product groupings on page 10.)
Combined revenue from fixed income rose to $385 million in the second quarter
from $152 million in the year-earlier quarter, driven by continued client
demand for swaps and for government and corporate securities. Combined
revenue from equities more than doubled to $115 million from $56 million a
year earlier, reflecting strong demand for equity derivative products. Foreign
exchange combined revenue totaled $114 million versus $65 million in the
second quarter of 1995. Commodities trading, which posted combined revenue of
$11 million in the second quarter a year ago, broke even on a combined revenue
basis in the period just ended. Combined revenue from the firm's proprietary
trading unit more than doubled to $125 million from $49 million in the second
quarter of 1995, due to favorable positioning, primarily in the United States
and Europe.
INVESTMENT BANKING REVENUE increased 79% to $210 million in the second
quarter. Underwriting revenue grew to $111 million from $41 million a year
ago, as Morgan raised more debt and equity capital for a broad range of
clients. Advisory fees in the second quarter rose to $99 million from $76
million a year earlier.
For the first half of 1996, J.P. Morgan ranked as the sixth largest
underwriter of U.S. debt and equity issues, according to Securities Data Co.
In advisory activities, Securities Data Co. ranked J.P. Morgan seventh in
completed mergers and acquisitions worldwide and fourth in pending
transactions in the first half.
CREDIT-RELATED FEES were $38 million in the second quarter, 7% lower than in
the second quarter of 1995 because of the sale of the custody business.
INVESTMENT MANAGEMENT FEES advanced 25% to $172 million from a year ago, as
assets under management rose, primarily from net new business. Assets under
management at June 30, 1996, were approximately $190 billion.
OPERATIONAL SERVICE FEES in the second quarter totaled $104 million, 26% lower
than in the second quarter of 1995. Excluding revenues associated with the
custody business, which was sold in 1995, operational service fees for the
second quarter rose 5% on increased brokerage commissions.
<PAGE> 3
3
NET INVESTMENT SECURITIES LOSSES were $51 million in the second quarter,
versus net gains of $33 million in the second quarter of 1995. The losses in
the second quarter of 1996 resulted primarily from the sale of government
agency securities to realign the risk profile of the portfolio.
OTHER REVENUE was $194 million in the second quarter, compared with $167
million in the 1995 second quarter. The 1996 second quarter reflected net
equity investment securities gains of $118 million, compared with $132 million
in the same quarter of 1995.
OPERATING EXPENSES
Operating expenses were $1.104 billion in the second quarter of 1996, up 12%
from a year earlier, primarily reflecting higher incentive compensation
accruals in line with higher earnings. Excluding the 1995 expenses associated
with the custody business, operating expenses were up 18%. Expenses other
than employee compensation and benefits increased due to higher levels of
business activity.
As previously reported, the firm has agreed in principle to form a strategic
alliance to manage parts of the firm's global technology infrastructure.
Morgan expects to achieve aggregate savings of approximately 15% on projected
technology costs over the life of the agreement, after an estimated $100
million transition expense. The transition expense is expected to be recorded
in the 1996 third quarter upon completion of a final agreement. With the
establishment of the alliance, some costs previously included in employee
compensation and benefits will be reflected in technology and communications
expenses.
At June 30, 1996, staff totaled 15,391 employees compared with 16,267
employees at June 30, 1995.
Income tax expense of $217 million in the second quarter was based on an
effective tax rate of 33% versus 32% in the second quarter of 1995.
ASSETS
Total assets were $199 billion at June 30, 1996, compared with $205 billion at
March 31, 1996. Nonperforming assets decreased by $22 million to $134 million
during the second quarter as assets newly classified as nonperforming were
more than offset by repayments and loan sales. No provision for credit losses
was deemed necessary in the 1996 second quarter. The allowance for credit
losses was $1.125 billion at June 30, 1996. (For details, see asset quality
tables on page 11.)
CAPITAL
At June 30, 1996, J.P. Morgan's estimated Tier 1 and total risk-based capital
ratios were 8.0% and 11.7%, respectively, compared with Tier 1 and total risk-
based capital ratios of 8.3% and 12.2%, respectively, at March 31, 1996. The
June 30, 1996, leverage ratio was 6.2%, unchanged from March 31, 1996.
At June 30, 1996, stockholders' equity included approximately $367 million of
net unrealized appreciation on debt investment and marketable equity
investment securities, net the related deferred tax liability of $202 million.
Net unrealized appreciation was $470 million at March 31, 1996. The
unrealized appreciation on debt investment securities was $226 million and
$331 million at June 30, 1996, and March 31, 1996, respectively. The
unrealized appreciation on marketable equity investment securities was $343
million and $429 million at June 30, 1996, and March 31, 1996, respectively.
<PAGE> 4
4
# # #
J.P. Morgan is a global banking firm that serves clients with complex
financial needs through an integrated range of advisory, financing, trading,
investment, and related capabilities.
Attached are the financial summary, the financial statements, the combined
trading and related net interest revenue table, and the asset quality tables.
J.P. Morgan news releases, including quarterly financial results, are
available on the Internet (http://www.jpmorgan.com).
<PAGE> 5
5
FINANCIAL SUMMARY
J.P. Morgan & Co. Incorporated
Dollars in millions, except per share data
<TABLE>
<CAPTION>
Second Quarter First Six Months
--------------------------- Quarter ----------------------------
1996 1995 1996 1996 1995
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net income $440 $315 $439 $879 $570
PER COMMON SHARE
Net income (a) $ 2.14 $ 1.56 $ 2.13 $4.28 $2.83
Dividends declared 0.81 0.75 0.81 1.62 1.50
Book value (b) 52.40 48.14 51.57
- --------------------------------------------------------------------------------------------------------------------
Weighted-average number of common and
common equivalent shares outstanding 202,063,927 198,241,301 202,133,593 202,048,817 197,724,069
- --------------------------------------------------------------------------------------------------------------------
Dividends declared on common stock $151 $141 $152 $303 $282
Dividends declared on preferred stock 8 6 8 16 12
SELECTED RATIOS
Annualized rate of return on average
common stockholders' equity (c) 17.1 % 13.4 % 17.2 % 17.1 % 12.3 %
As % of period-end total assets:
Common equity 5.2 5.6 5.0
Total equity 5.5 5.9 5.3
Regulatory capital ratios (d)
Tier 1 risk-based capital ratio 8.0 8.7 8.3
Total risk-based capital ratio 11.7 12.8 12.2
Leverage ratio 6.2 6.0 6.2
- ----------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES
Debt investment securities (e) $ 25,880 $ 20,659 $ 24,298 $ 25,096 $ 21,684
Loans 28,514 24,639 27,326 27,920 24,156
Total interest-earning assets 167,087 128,235 162,606 164,854 132,169
Total assets 209,691 174,502 204,836 207,284 175,095
Total interest-bearing liabilities 158,123 124,177 154,804 156,448 126,714
Total liabilities 198,807 164,753 194,160 196,504 165,437
Common stockholders' equity 10,190 9,255 10,065 10,127 9,164
Total stockholders' equity 10,884 9,749 10,676 10,780 9,658
Net interest earnings (fully taxable basis) 419 535 418 837 1,064
Net yield on interest-earning assets 1.01 % 1.67 % 1.03 % 1.02 % 1.62 %
- ------------------------------------------------------------------------------------------------------------------
Employees at period-end 15,391 16,267 15,431
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Earnings per share amounts represent both primary and fully diluted
earnings per share, except for the six months ended June 30, 1996 and 1995.
Fully diluted earnings per share were $4.27 and $2.81 for the six months ended
June 30, 1996 and 1995, respectively.
(b) Excluding the impact of SFAS No. 115, book value per common share would
have been $50.54, $45.78, and $49.18 for the three months ended June 30, 1996,
June 30, 1995, and March 31, 1996, respectively.
(c) Excluding the impact of SFAS No. 115, the annualized rate of return on
average common stockholders' equity would have been 17.8%, 14.1%, and 18.1% for
the three months ended June 30, 1996, June 30, 1995, and March 31, 1996,
respectively, and 18.0% and 12.9% for the six months ended June 30, 1996 and
1995, respectively.
(d) In accordance with Federal Reserve Board guidelines, these ratios exclude
the equity, assets and off-balance-sheet exposures of J.P. Morgan Securities,
Inc. and the effect of SFAS No. 115. Risk-based capital ratios for June 30,
1996, are estimates.
(e) Average debt investment securities are computed based on historical
amortized cost, excluding the effects of SFAS No. 115 adjustments.
<PAGE> 6
6
CONSOLIDATED STATEMENT OF INCOME
J.P. Morgan & Co. Incorporated
In millions, except per share data
<TABLE>
<CAPTION>
Three months ended
---------------------------------------------------------------------------------
June 30 June 30 Increase/ March 31 Increase/
1996 1995 (Decrease) 1996 (Decrease)
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET INTEREST REVENUE
Interest revenue $2,559 $2,405 $154 $2,554 $ 5
Interest expense 2,162 1,897 265 2,158 4
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest revenue 397 508 (111) 396 1
NONINTEREST REVENUE
Trading revenue 697 305 392 758 (61)
Investment banking revenue 210 117 93 201 9
Credit-related fees 38 41 (3) 38 -
Investment management fees 172 138 34 157 15
Operational service fees 104 140 (36) 113 (9)
Net investment securities gains (losses) (51) 33 (84) 12 (63)
Other revenue 194 167 27 65 129
- ---------------------------------------------------------------------------------------------------------------------------------
Total noninterest revenue 1,364 941 423 1,344 20
Total revenue 1,761 1,449 312 1,740 21
OPERATING EXPENSES
Employee compensation and benefits 737 616 121 730 7
Net occupancy 76 79 (3) 73 3
Technology and communications 158 165 (7) 158 -
Other expenses 133 124 9 124 9
- ---------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 1,104 984 120 1,085 19
Income before income taxes 657 465 192 655 2
Income taxes 217 150 67 216 1
- ---------------------------------------------------------------------------------------------------------------------------------
Net income 440 315 125 439 1
PER COMMON SHARE
Net income (a) $2.14 $1.56 $0.58 $2.13 $0.01
Dividends declared 0.81 0.75 0.06 0.81 -
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Earnings per share amounts represent both primary and fully diluted earnings
per share.
<PAGE> 7
7
CONSOLIDATED STATEMENT OF INCOME
J.P. Morgan & Co. Incorporated
In millions, except per share data
<TABLE>
<CAPTION>
Six months ended
---------------------------------------------------
June 30 June 30 Increase/
1996 1995 (Decrease)
---------------------------------------------------
<S> <C> <C> <C>
NET INTEREST REVENUE
Interest revenue $5,113 $4,875 $238
Interest expense 4,320 3,867 453
- --------------------------------------------------------------------------------------------------------
Net interest revenue 793 1,008 (215)
NONINTEREST REVENUE
Trading revenue 1,455 608 847
Investment banking revenue 411 231 180
Credit-related fees 76 84 (8)
Investment management fees 329 268 61
Operational service fees 217 280 (63)
Net investment securities gains (losses) (39) 42 (81)
Other revenue 259 316 (57)
- --------------------------------------------------------------------------------------------------------
Total noninterest revenue 2,708 1,829 879
Total revenue 3,501 2,837 664
OPERATING EXPENSES
Employee compensation and benefits 1,467 1,242 225
Net occupancy 149 159 (10)
Technology and communications 316 337 (21)
Other expenses 257 248 9
- --------------------------------------------------------------------------------------------------------
Total operating expenses 2,189 1,986 203
Income before income taxes 1,312 851 461
Income taxes 433 281 152
- --------------------------------------------------------------------------------------------------------
Net income 879 570 309
PER COMMON SHARE
Net income (a) $4.28 $2.83 $1.45
Dividends declared 1.62 1.50 0.12
- --------------------------------------------------------------------------------------------------------
</TABLE>
(a) See Financial summary for per common share data assuming full dilution.
<PAGE> 8
8
CONSOLIDATED BALANCE SHEET
J.P. Morgan & Co. Incorporated
<TABLE>
<CAPTION>
Dollars in millions June 30 March 31 December 31
1996 1996 1995
--------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 651 $ 732 $ 1,535
Interest-earning deposits with banks 1,427 1,183 1,986
Debt investment securities available for sale carried at fair value
(Cost: $22,486 at June 1996, $27,115 at March 1996, and $24,154
at December 1995) 22,712 27,446 24,638
Trading account assets 69,375 69,844 69,408
Securities purchased under agreements to resell ( $36,488 at June 1996,
$39,683 at March 1996, and $32,157 at December 1995) and federal funds sold 36,544 39,692 32,157
Securities borrowed 25,620 22,901 19,830
Loans 29,588 28,645 23,453
Less: allowance for credit losses 1,125 1,117 1,130
- ------------------------------------------------------------------------------------------------------------------------
Net loans 28,463 27,528 22,323
Customers' acceptance liability 236 339 237
Accrued interest and accounts receivable 3,738 4,766 3,539
Premises and equipment 3,387 3,354 3,339
Less: accumulated depreciation 1,492 1,445 1,412
- ------------------------------------------------------------------------------------------------------------------------
Premises and equipment, net 1,895 1,909 1,927
Other assets 8,104 8,407 7,299
- ------------------------------------------------------------------------------------------------------------------------
Total assets 198,765 204,747 184,879
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Noninterest-bearing deposits:
In offices in the U.S. 1,906 2,784 3,287
In offices outside the U.S. 750 677 744
Interest-bearing deposits:
In offices in the U.S. 2,498 1,765 2,003
In offices outside the U.S. 43,303 44,978 40,404
- ------------------------------------------------------------------------------------------------------------------------
Total deposits 48,457 50,204 46,438
Trading account liabilities 44,267 46,766 45,289
Securities sold under agreements to repurchase ( $51,604 at June 1996,
$55,952 at March 1996, and $40,803 at December 1995) and federal funds
purchased 55,114 58,765 45,099
Commercial paper 5,102 4,229 2,801
Other liabilities for borrowed money 16,510 15,659 15,129
Accounts payable and accrued expenses 6,159 7,265 5,643
Liability on acceptances 236 339 237
Long-term debt not qualifying as risk-based capital 6,109 5,710 5,737
Other liabilities 2,047 1,272 4,465
- ------------------------------------------------------------------------------------------------------------------------
184,001 190,209 170,838
Long-term debt qualifying as risk-based capital 3,733 3,691 3,590
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities 187,734 193,900 174,428
STOCKHOLDERS' EQUITY
Preferred stock (authorized shares: 10,400,000 at June 1996 and
March 1996, and 10,000,000 at December 1995):
Adjustable rate cumulative preferred stock, $100 par value (issued
and outstanding: 2,444,300) 244 244 244
Variable cumulative preferred stock, $1,000 par value (issued and
outstanding: 250,000) 250 250 250
Fixed cumulative preferred stock, $500 par value (issued and
outstanding: 400,000) 200 200 --
Common stock, $2.50 par value (authorized shares: 500,000,000;
issued: 200,683,373 at June 1996, 200,682,873 at March 1996, and
200,678,373 at December 1995) 502 502 502
Capital surplus 1,435 1,432 1,430
Retained earnings 8,281 8,006 7,731
Net unrealized gains on investment securities, net of taxes 367 470 566
Other 686 593 552
- ------------------------------------------------------------------------------------------------------------------------
11,965 11,697 11,275
Less: treasury stock (14,083,799 shares at June 1996, 13,382,388 shares
at March 1996 and 13,562,755 shares at December 1995) at cost 934 850 824
- ------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 11,031 10,847 10,451
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity 198,765 204,747 184,879
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 9
9
CONSOLIDATED STATEMENT OF CONDITION
Morgan Guaranty Trust Company of New York
<TABLE>
<CAPTION>
Dollars in millions June 30 December 31
1996 1995
---------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 659 $ 1,429
Interest-earning deposits with banks 1,428 1,995
Debt investment securities available for sale carried at fair value 17,824 23,767
Trading account assets 55,999 55,373
Securities purchased under agreements to resell and federal
funds sold 23,613 20,996
Loans 29,437 23,319
Less: allowance for credit losses 1,125 1,129
- ------------------------------------------------------------------------------------------------------------------------
Net loans 28,312 22,190
Customers' acceptance liability 236 237
Accrued interest and accounts receivable 3,651 3,420
Premises and equipment 2,999 2,967
Less: accumulated depreciation 1,294 1,232
- ------------------------------------------------------------------------------------------------------------------------
Premises and equipment, net 1,705 1,735
Other assets 5,061 4,571
- ------------------------------------------------------------------------------------------------------------------------
Total assets 138,488 135,713
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Noninterest-bearing deposits:
In offices in the U.S. 1,908 3,275
In offices outside the U.S. 788 839
Interest-bearing deposits:
In offices in the U.S. 2,510 1,975
In offices outside the U.S. 43,670 40,985
- ------------------------------------------------------------------------------------------------------------------------
Total deposits 48,876 47,074
Trading account liabilities 39,240 39,197
Securities sold under agreements to repurchase and federal
funds purchased 18,456 20,274
Other liabilities for borrowed money 10,606 8,509
Accounts payable and accrued expenses 4,346 4,187
Liability on acceptances 236 237
Long-term debt not qualifying as risk-based capital 2,809 2,786
Other liabilities 1,974 3,324
- ------------------------------------------------------------------------------------------------------------------------
126,543 125,588
Long-term debt qualifying as risk-based capital 2,596 1,659
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities 129,139 127,247
STOCKHOLDER'S EQUITY
Preferred stock, $100 par value (authorized shares: 2,500,000) - -
Common stock, $25 par value (authorized shares: 11,000,000;
outstanding: 10,599,027 at June 1996, and authorized and
outstanding: 10,000,000 at December 1995) 265 250
Surplus 3,155 2,820
Undivided profits 5,797 5,136
Net unrealized gains on investment securities, net of taxes 135 264
Foreign currency translation (3) (4)
- ------------------------------------------------------------------------------------------------------------------------
Total stockholder's equity 9,349 8,466
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholder's equity 138,488 135,713
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Prior period balances were restated to reflect the merger of J.P. Morgan
Delaware with Morgan Guaranty Trust Company effective June 1996.
Member of the Federal Reserve System and the Federal Deposit Insurance
Corporation.
<PAGE> 10
10
COMBINED TRADING AND RELATED NET INTEREST REVENUE
J.P. Morgan & Co. Incorporated
Dollars in millions
<TABLE>
<CAPTION>
Fixed Foreign Proprietary
Income Equities Exchange Commodities Unit Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Second Quarter 1996
Trading revenue $331 $124 $109 $5 $128 $697
Net interest revenue* 54 (9) 5 (5) (3) 42
- --------------------------------------------------------------------------------------------------------------------------
Combined total 385 115 114 - 125 739
- --------------------------------------------------------------------------------------------------------------------------
Second Quarter 1995
Trading revenue 96 96 62 12 39 305
Net interest revenue 56 (40) 3 (1) 10 28
- --------------------------------------------------------------------------------------------------------------------------
Combined total 152 56 65 11 49 333
- --------------------------------------------------------------------------------------------------------------------------
Six Months 1996
Trading revenue 864 218 177 39 157 1,455
Net interest revenue* 123 (52) 10 (7) (2) 72
- --------------------------------------------------------------------------------------------------------------------------
Combined total 987 166 187 32 155 1,527
- --------------------------------------------------------------------------------------------------------------------------
Six Months 1995
Trading revenue 153 138 164 31 122 608
Net interest revenue 122 (57) 7 2 15 89
- --------------------------------------------------------------------------------------------------------------------------
Combined total 275 81 171 33 137 697
</TABLE>
* Estimated
<PAGE> 11
11
ASSET QUALITY
J.P. Morgan & Co. Incorporated
NONPERFORMING ASSETS
<TABLE>
<CAPTION>
June 30 March 31 December 31 June 30
Dollars in millions 1996 1996 1995 1995
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Impaired loans:
Commercial and industrial $ 96 $110 $ 67 $127
Other 36 42 48 56
- --------------------------------------------------------------------------------------
132 152 115 183
Restructuring countries 2 4 2 3
- --------------------------------------------------------------------------------------
Total impaired loans 134 156 117 186
Other nonperforming assets - - 1 1
- --------------------------------------------------------------------------------------
Total nonperforming assets 134 156 118 187
- --------------------------------------------------------------------------------------
</TABLE>
ALLOWANCE FOR CREDIT LOSSES
<TABLE>
<CAPTION>
June 30 March 31 December 31 June 30
Dollars in millions 1996 1996 1995 1995
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Allowance for credit losses $1,125 $1,117 $1,130 $1,132
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Second Quarter Six Months
----------------------- -----------------------
1996 1995 1996 1995
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Charge-offs:
Commercial and industrial ($1) ($14) ($16) ($20)
Other - (4) (3) (6)
Recoveries 9 18 14 27
- --------------------------------------------------------------------------------------
</TABLE>
