<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) April 10, 1997
J.P. MORGAN & CO. INCORPORATED
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-5885 13-2625764
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
</TABLE>
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)
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<PAGE> 2
ITEM 5. OTHER EVENTS
On April 10, 1997, the Registrant issued a press release announcing its
earnings for the three-month period ended March 31, 1997. 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
April 10, 1997.
<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: April 10, 1997
<PAGE> 4
EXHIBIT INDEX
Item No. Description
- -------- -----------
99. Copy of press release of J.P. Morgan & Co. Incorporated dated
April 10, 1997.
<PAGE> 1
IMMEDIATE April 10, 1997
J.P. MORGAN REPORTS 1997 FIRST QUARTER RESULTS
J.P. Morgan & Co. Incorporated reported net income of $424 million in the first
quarter of 1997, compared with $439 million in the first quarter of 1996.
Earnings per share for the quarter were $2.04 compared with $2.13 a year ago.
Douglas A. Warner III, chairman, said: "J.P. Morgan produced good results in the
first quarter. Revenues were up, without the exceptional fixed income results of
a year ago, thanks to the strength and global diversification of our business.
We are spending on capabilities that have clear growth potential. Momentum with
clients remains strong."
FIRST QUARTER 1997 RESULTS AT A GLANCE
<TABLE>
<CAPTION>
Fourth
First quarter quarter
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In millions of dollars, except per share data 1997 1996 1996
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 1,833 $ 1,740 $ 1,805
Operating expenses (1,191) (1,085) (1,197)
Income taxes (218) (216) (189)
-----------------------------------------------------------------------------------------------------
Net income 424 439 419
Net income per share $2.04 $2.13 $2.04
-----------------------------------------------------------------------------------------------------
Dividends declared per share $0.88 $0.81 $0.88
</TABLE>
REVENUES rose 5% in the first quarter from a year ago.
- Finance and Advisory revenues increased 8% to $451 million, mainly
as a result of higher debt and equity underwriting revenues.
- Market Making revenues totaled $733 million, a decline of $38
million. Revenues in emerging markets, equities, and foreign
exchange were up strongly; fixed income revenues in developed
markets were down from the high levels of 1996.
- Asset Management and Servicing revenues increased 9% to $375
million, primarily reflecting gains in investment management and
private client activities.
- Proprietary Investing and Trading revenues, well diversified, rose
28% to $276 million.
- Equity Investments revenues declined to $49
million from $66 million.
OPERATING EXPENSES rose 10% in the 1997 first quarter from a year ago.
The remainder of this release contains information on specific areas of results,
a financial summary, and the consolidated financial statements. A summary of
business sector results is included on page 9.
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Press contact: Joseph M. Evangelisti 212/648-9589
Investor contact: Ann B. Patton 212/648-9446
<PAGE> 2
2
REVENUES BY BUSINESS SECTOR
REVENUES rose to $1.833 billion, up 5% from the first quarter of 1996. Revenues
from client-focused activities, which are reported in the Finance and Advisory,
Market Making, and Asset Management and Servicing sectors, totaled $1.559
billion, up from $1.532 billion. Revenues from Equity Investments and
Proprietary Investing and Trading activities increased 16% to $325 million.
FINANCE AND ADVISORY (Advisory, Debt and Equity Underwriting, and Credit)
revenues increased 8% to $451 million. Revenues from debt and equity
underwriting in both developed and emerging markets were up sharply, growing
61%, as issuers took advantage of favorable market conditions. Advisory revenues
declined 26% from the first quarter of 1996, when fees from several large
transactions were recorded. Revenues from global credit activities rose 9% to
$230 million, primarily attributable to higher loan syndication revenues.
For the first quarter of 1997, Securities Data Co. ranked J.P. Morgan fourth in
U.S. debt and equity underwriting, up from eighth a year ago. Morgan ranked
fifth in completed mergers and acquisitions transactions worldwide, compared
with fourth in the first quarter of 1996.
MARKET MAKING (Fixed Income, Equities, Foreign Exchange, and Commodities)
revenues totaled $733 million, down from $771 million. While most markets showed
strength early in the quarter, activity slowed in mid-March as a result of the
directional shift in U.S. monetary policy.
Fixed income revenues of $264 million in developed markets declined from the
very strong first-quarter 1996 level of $456 million. Revenues in the first
quarter of last year benefited from gains on positions arising from
client-related swap transactions. Overall, the volume of client transactions
grew, but the number of higher-yielding, customized transactions declined.
In emerging markets, revenues rose nearly 50% to $186 million, as a result of
short-term positioning gains and greater client demand.
Market making revenues in equities were up 63% to $152 million, as a result of
strong demand in both the cash and derivative markets. Equity derivative
revenues grew 64%, and equity commissions were up 47%, reflecting higher volumes
and growing market share, primarily on U.S. and European exchanges.
Foreign exchange revenues rose 78%, with strong client demand in active markets.
Commodities revenues were $12 million, down from $31 million a year ago.
ASSET MANAGEMENT AND SERVICING (Investment Management, Private Client Services,
Futures and Options Brokerage, and Euroclear System) revenues rose 9% to $375
million in the first quarter. Revenues generated from institutional investment
management activities and services for private clients increased 13% to $243
million. Assets under management grew 15% from a year ago to approximately $213
billion at March 31, 1997, due to net new business and, to a lesser extent,
market appreciation.
EQUITY INVESTMENTS (Equity Portfolio Management for Morgan's own account)
reported revenues of $49 million in the first quarter, compared with $66 million
a year ago. Included in reported revenues are net gains on equity investments of
$33 million in 1997, compared with $64 million in the 1996 first quarter, when
gains were realized from the sale of a large investment. On a total return
basis, combining reported revenues with the change in net unrealized
appreciation, there was a loss of $25 million in the 1997 first quarter,
<PAGE> 3
3
reflecting a decline in the market value of the firm's investment portfolio,
primarily related to insurance industry investments. This compares with a gain
of $54 million a year ago.
PROPRIETARY INVESTING AND TRADING (Market Risk Positioning and Capital and
Liquidity Management) revenues totaled $276 million for the 1997 first quarter
compared with $215 million a year earlier and were broadly diversified across
markets. The 28% increase in reported revenues reflects higher trading revenues,
partially offset by lower net interest revenue from investing activities as
higher-yielding investments, principally interest rate swaps, continue to
mature. Total return - reported revenues plus the change in net unrealized
appreciation - for the 1997 first quarter increased to $365 million from $106
million, as most trading and investing strategies produced higher returns.
CORPORATE ITEMS (Revenues and expenses not allocated to business sectors,
intercompany eliminations, the taxable-equivalent adjustment, and results of
sold or discontinued businesses) include revenues of $59 million in the first
quarter of 1997 related to gains on hedges used to manage nontrading foreign
currency exposures, and revenues of $37 million in the first quarter of 1996
related to Morgan's exit from custody and cash processing activities.
OPERATING EXPENSES
Operating expenses were $1.191 billion in the first quarter, up 10% from a year
ago. The increase reflects investments in areas targeted for growth, including
investment banking, equities, investment management, and private client
services, as well as higher levels of business activity.
At March 31, 1997, staff totaled 15,483 employees compared with 15,431 employees
at March 31, 1996.
Income tax expense in the first quarter totaled $218 million, based on an
effective tax rate of 34%, compared with 33% in the first quarter of 1996.
ASSETS
Total assets were $226 billion at March 31, 1997, compared with $222 billion at
December 31, 1996.
At March 31, 1997, the aggregate allowance for credit losses was $1.113 billion
versus $1.116 billion at December 31, 1996. Nonperforming assets decreased to
$110 million at March 31, 1997, from $120 million at December 31, 1996, as
assets newly classified as nonperforming were more than offset by assets
returned to performing status, repayments, and charge-offs. No provision for
credit losses was deemed necessary in the 1997 first quarter.
CAPITAL
At March 31, 1997, J.P. Morgan's estimated tier 1 and total risk-based capital
ratios were 8.9% and 12.6%, respectively, compared with tier 1 and total
risk-based capital ratios of 8.8% and 12.2%, respectively, at December 31, 1996.
The leverage ratio was 5.9% at both March 31, 1997, and December 31, 1996.
At March 31, 1997, stockholders' equity included approximately $402 million of
net unrealized appreciation on debt investment and marketable equity investment
securities, net the related deferred tax liability of $227 million. This
compares with $464 million of net unrealized appreciation at December 31, 1996,
net the
<PAGE> 4
4
related deferred tax liability of $268 million. The net unrealized appreciation
on debt investment securities was $243 million and $255 million at March 31,
1997 and December 31, 1996, respectively. The net unrealized appreciation on
marketable equity investment securities was $386 million at March 31, 1997, and
$477 million at December 31, 1996.
In January 1997, JPM Capital Trust II, a wholly owned subsidiary of J.P. Morgan,
issued $400 million qualifying as tier 1 capital under Federal Reserve Board
guidelines through an issue of 7.95% trust preferred securities due 2027.
The firm purchased $555 million of J.P. Morgan common stock in the open market
during the first quarter of 1997, following the Board of Directors' December
1996 authorization of the purchase of up to $750 million of shares. The firm
also continued its program of purchasing J.P. Morgan shares to lessen the
dilutive impact on earnings per share of the firm's employee benefit plans.
# # #
J.P. Morgan is a leading global financial firm that meets critical financial
needs for business enterprises, governments, financial institutions, and
individuals. The firm advises on corporate strategy and structure, raises
capital, makes markets in financial instruments, and manages investment assets.
Morgan also commits its own capital to promising enterprises and invests and
trades to capture markets opportunities.
Attached are the financial summary, interim consolidated financial statements,
which are unaudited, summary of sector results, trading and investment banking
revenue table, and 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>
Fourth
First Quarter Quarter
------------------------------- --------------
1997 1996 1996
--------------------------------------------------
<S> <C> <C> <C>
Net Income $424 $439 $419
PER COMMON SHARE
Net income (a) $ 2.04 $ 2.13 $ 2.04
Dividends declared 0.88 0.81 0.88
Book value (b) 54.05 51.57 54.43
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Weighted-average number of common and
common equivalent shares outstanding 203,137,598 202,133,593 201,537,658
- ------------------------------------------------------------------------------------------------------
Dividends declared on common stock $160 $152 $163
Dividends declared on preferred stock 9 8 9
SELECTED RATIOS
Annualized rate of return on average
common stockholders' equity (c) 15.7 % 17.2 % 15.3 %
As % of period-end total assets:
Common equity 4.6 % 5.0 % 4.8 %
Total equity 4.9 5.3 5.2
Regulatory capital ratios (d)
Tier 1 risk-based capital ratio 8.9 % 8.3 % 8.8 %
Total risk-based capital ratio 12.6 12.2 12.2
Leverage ratio 5.9 6.2 5.9
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AVERAGE BALANCES
Debt investment securities (e) $ 25,452 $ 24,298 $ 26,728
Loans 28,702 27,326 29,267
Total interest-earning assets 189,516 162,606 185,351
Total assets 236,079 204,836 233,985
Total interest-bearing liabilities 182,059 154,804 177,783
Total liabilities 224,684 194,160 222,607
Common stockholders' equity 10,701 10,065 10,684
Total stockholders' equity 11,395 10,676 11,378
Net interest earnings (fully taxable basis) 470 418 505
Net yield on interest-earning assets 1.01 % 1.03 % 1.08 %
- ------------------------------------------------------------------------------------------------------
Employees at period-end 15,483 15,431 15,527
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</TABLE>
(a) Earnings per share amounts represent both primary and fully diluted earnings
per share, except for the three months ended December 31, 1996. Fully diluted
earnings per share for the three months ended December 31, 1996, were $2.03.
(b) Excluding the impact of SFAS No. 115, the book value per common share would
have been $51.98, $49.18, and $52.08 at March 31, 1997, March 31, 1996, and
December 31, 1996, respectively.
(c) Excluding the impact of SFAS No. 115, the annualized rate of return on
average common stockholders' equity would have been 16.5%, 18.1%, and 15.9% for
the three months ended March 31, 1997, March 31, 1996, and December 31, 1996,
respectively.
(d) In accordance with the 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
March 31, 1997 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
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In millions, except per share data
<TABLE>
<CAPTION>
Three months ended
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March 31 March 31 Increase/ December 31 Increase/
1997 1996 (Decrease) 1996 (Decrease)
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<S> <C> <C> <C> <C> <C>
NET INTEREST REVENUE
Interest revenue $2,892 $2,554 $338 $2,925 ($33)
Interest expense 2,442 2,158 284 2,441 1
- ------------------------------------------------------------------------------------------------------------
Net interest revenue 450 396 54 484 (34)
NONINTEREST REVENUE
Trading revenue 697 758 (61) 512 185
Investment banking revenue 226 201 25 277 (51)
Investment management revenue 184 157 27 182 2
Fees and commissions 148 151 (3) 152 (4)
Investment securities revenue 61 78 (17) 84 (23)
Other revenue 67 (1) 68 114 (47)
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Total noninterest revenue 1,383 1,344 39 1,321 62
Total revenue 1,833 1,740 93 1,805 28
OPERATING EXPENSES
Employee compensation and benefits 766 730 36 732 34
Net occupancy 73 73 - 73 -
Technology and communications 203 158 45 221 (18)
Other expenses 149 124 25 171 (22)
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Total operating expenses 1,191 1,085 106 1,197 (6)
Income before income taxes 642 655 (13) 608 34
Income taxes 218 216 2 189 29
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Net income 424 439 (15) 419 5
PER COMMON SHARE
Net income (a) $2.04 $2.13 ($0.09) $2.04 -
Dividends declared 0.88 0.81 0.07 0.88 -
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(a) See Financial Summary for per common share data assuming full dilution.
<PAGE> 7
7
CONSOLIDATED BALANCE SHEET
J.P. Morgan & Co. Incorporated
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<TABLE>
<CAPTION>
Dollars in millions March 31 December 31
1997 1996
-----------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,174 $ 906
Interest-earning deposits with banks 1,955 1,908
Debt investment securities available-for-sale carried at fair value (cost: $23,416 at
March 1997 and $24,610 at December 1996) 23,659 24,865
Trading account assets, net of allowance for credit losses of $350 89,417 90,980
Securities purchased under agreements to resell ($35,034 at March 1997
and $32,455 at December 1996) and federal funds sold 35,108 32,505
Securities borrowed 31,981 27,931
Loans, net of allowance for credit losses of $563 at March 1997 and $566 at December 1996 28,890 27,554
Customers' acceptance liability 257 212
Accrued interest and accounts receivable 5,569 3,789
Premises and equipment 3,160 3,137
Less: accumulated depreciation 1,313 1,272
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Premises and equipment, net 1,847 1,865
Other assets 6,525 9,511
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Total assets 226,382 222,026
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LIABILITIES
Noninterest-bearing deposits:
In offices in the U.S. 1,219 1,501
In offices outside the U.S. 806 708
Interest-bearing deposits:
In offices in the U.S. 10,293 7,103
In offices outside the U.S. 41,253 43,412
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Total deposits 53,571 52,724
Trading account liabilities 55,338 50,919
Securities sold under agreements to repurchase ($55,448 at March 1997 and $56,117 at December 1996)
and federal funds purchased 60,155 61,429
Commercial paper 4,023 4,132
Other liabilities for borrowed money 19,948 19,948
Accounts payable and accrued expenses 4,825 5,935
Liability on acceptances 257 212
Long-term debt not qualifying as risk-based capital 10,855 9,411
Other liabilities, including allowance for credit losses of $200 986 1,442
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209,958 206,152
Long-term debt qualifying as risk-based capital 4,118 3,692
Company-obligated mandatorily redeemable preferred securities of subsidiaries 1,150 750
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Total liabilities 215,226 210,594
STOCKHOLDERS' EQUITY
Preferred stock (authorized shares: 10,400,000)
Adjustable rate cumulative preferred stock, $100 par value (issued and outstanding: 2,444,300) 244 244
Variable cumulative preferred stock, $1,000 par value (issued and outstanding: 250,000) 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: 200,689,373 at March
1997 and 200,688,123 at December 1996) 502 502
Capital surplus 1,413 1,446
Retained earnings 8,883 8,635
Net unrealized gains on investment securities, net of taxes 402 464
Other 864 826
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12,758 12,567
Less: treasury stock (19,562,782 shares at March 1997 and 15,765,455 shares at December 1996) at cost 1,602 1,135
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Total stockholders' equity 11,156 11,432
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Total liabilities and stockholders' equity 226,382 222,026
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</TABLE>
<PAGE> 8
8
CONSOLIDATED STATEMENT OF CONDITION
Morgan Guaranty Trust Company of New York
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<TABLE>
<CAPTION>
Dollars in millions March 31 December 31
1997 1996
----------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,113 $ 920
Interest-earning deposits with banks 1,958 1,910
Debt investment securities available-for-sale carried at fair value 22,416 23,510
Trading account assets, net of allowance for credit losses of $350 72,600 72,549
Securities purchased under agreements to resell and federal funds sold 34,613 27,762
Loans, net of allowance for credit losses of $561 at March 1997 and $565
at December 1996 28,711 27,378
Customers' acceptance liability 257 212
Accrued interest and accounts receivable 6,385 3,470
Premises and equipment 2,830 2,812
Less: accumulated depreciation 1,152 1,116
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Premises and equipment, net 1,678 1,696
Other assets 3,207 5,406
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Total assets 172,938 164,813
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LIABILITIES
Noninterest-bearing deposits:
In offices in the U.S. 1,253 1,495
In offices outside the U.S. 845 749
Interest-bearing deposits:
In offices in the U.S. 10,304 7,114
In offices outside the U.S. 41,288 43,716
- -----------------------------------------------------------------------------------------------------------------------
Total deposits 53,690 53,074
Trading account liabilities 46,825 44,039
Securities sold under agreements to repurchase and federal funds purchased 31,361 30,787
Other liabilities for borrowed money 12,941 13,215
Accounts payable and accrued expenses 2,833 4,203
Liability on acceptances 257 212
Long-term debt not qualifying as risk-based capital 7,800 5,436
Other liabilities, including allowance for credit losses of $200 4,254 977
- -----------------------------------------------------------------------------------------------------------------------
159,961 151,943
Long-term debt qualifying as risk-based capital 2,891 2,979
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities 162,852 154,922
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) 265 265
Surplus 3,155 3,155
Undivided profits 6,521 6,334
Net unrealized gains on investment securities, net of taxes 161 149
Foreign currency translation (16) (12)
- -----------------------------------------------------------------------------------------------------------------------
Total stockholder's equity 10,086 9,891
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Total liabilities and stockholder's equity 172,938 164,813
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</TABLE>
Member of the Federal Reserve System and the Federal Deposit Insurance
Corporation.
<PAGE> 9
9
SUMMARY OF SECTOR RESULTS
J.P. Morgan & Co. Incorporated
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<TABLE>
<CAPTION>
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Asset TOTAL
Finance Manage- CLIENT- Equity Proprietary TOTAL
and Market ment and FOCUSED Invest- Investing PROPRIETARY Corporate CONSOL-
In millions Advisory Making Servicing ACTIVITIES ments and Trading ACTIVITIES Items IDATED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FIRST QUARTER 1997
Total revenues $451 $733 $375 $1,559 $49 $276 $ 325 ($ 51) $ 1,833
Total expenses 302 474 300 1,076 7 46 53 62 1,191
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Pretax income 149 259 75 483 42 230 272 (113) 642
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FIRST QUARTER 1996
Total revenues 416 771 345 1,532 66 215 281 (73) 1,740
Total expenses 259 410 271 940 8 36 44 101 1,085
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Pretax income 157 361 74 592 58 179 237 (174) 655
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</TABLE>
BUSINESS SECTORS:
We describe the activities of J.P. Morgan using five business sectors. Three of
these sectors - Finance and Advisory, Market Making, and Asset Management and
Servicing - focus on services we provide for clients. Two sectors comprise
proprietary activities that we conduct exclusively for our own account: Equity
Investments and Proprietary Investing and Trading. The Finance and Advisory
sector includes results of our Advisory, Debt and Equity Underwriting, and
Credit activities. The Market Making sector includes results of our Fixed
Income, Equities, Foreign Exchange, and Commodities activities, including
positions taken to facilitate client transactions. The Asset Management and
Servicing sector includes results of our Investment Management, Private Client
Services, Futures and Options Brokerage, and Euroclear System activities. The
Equity Investments sector includes results from our proprietary equity
investment portfolio management activities and the Proprietary Investing and
Trading sector includes results from our market risk positioning and capital and
liquidity management activities. Corporate Items includes revenues and expenses
that have not been allocated to the five business sectors, intercompany
eliminations, the taxable-equivalent adjustment and the results of sold or
discontinued businesses. For a complete description of our business sectors,
please refer to the J.P. Morgan & Co. Incorporated 1996 Annual Report.
METHODOLOGY:
The firm's management reporting system and policies were used to determine the
revenues and expenses directly attributable to each business sector. Earnings on
stockholders' equity were allocated based on management's assessment of the
inherent risk of the components of each sector. In addition, certain overhead
expenses not allocated for management reporting purposes were allocated to each
business sector. Overhead expenses were allocated based primarily on staff
levels and represent costs associated with various support functions that exist
for the benefit of the firm as a whole. Certain prior year amounts have been
reclassified to conform with the 1997 presentation.
<PAGE> 10
10
TRADING REVENUE
J.P. Morgan & Co. Incorporated
- --------------------------------------------------------------------------------
Dollars in millions
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
FIXED FOREIGN PROPRIETARY
INCOME EQUITIES EXCHANGE COMMODITIES TRADING TOTAL
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Quarter 1997 $346 $111 $120 $13 $107 $697
First Quarter 1996 533 94 68 34 29 758
Fourth Quarter 1996 273 69 84 10 76 512
- ------------------------------------------------------------------------------------------------
</TABLE>
INVESTMENT BANKING REVENUE
J.P. Morgan & Co. Incorporated
- --------------------------------------------------------------------------------
Dollars in millions
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
ADVISORY AND UNDERWRITING TOTAL INVESTMENT
SYNDICATION FEES REVENUE BANKING REVENUE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
First Quarter 1997 $129 $97 $226
First Quarter 1996 136 65 201
Fourth Quarter 1996 183 94 277
- ------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 11
11
ASSET QUALITY
J.P. Morgan & Co. Incorporated
- --------------------------------------------------------------------------------
NONPERFORMING ASSETS
<TABLE>
<CAPTION>
March 31 December 31 March 31
Dollars in millions 1997 1996 1996
---------- --------------- -----------
<S> <C> <C> <C>
Impaired loans:
Commercial and industrial $ 55 $ 89 $110
Other 34 29 42
- -------------------------------------------------------------------------------------------------
89 118 152
Restructuring countries 2 2 4
- -------------------------------------------------------------------------------------------------
Total impaired loans 91 120 156
Other nonperforming assets 19 - -
- -------------------------------------------------------------------------------------------------
Total nonperforming assets 110 120 156
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</TABLE>
AGGREGATE ALLOWANCE FOR CREDIT LOSSES
<TABLE>
<CAPTION>
March 31 December 31 March 31
Dollars in millions 1997 1996 1996
----------- ---------------- -----------
<S> <C> <C> <C>
Aggregate allowance for credit losses (a) $1,113 $1,116 $1,117
- -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
First Quarter
------------------------------
1997 1996
------------------------------
<S> <C> <C>
Charge-offs:
Commercial and industrial ($13) ($15)
Other - (3)
Recoveries 10 5
- ----------------------------------------------------------------------------------
</TABLE>
(a) Prior to December 31, 1996, the aggregate allowance for credit losses was
displayed in the consolidated balance sheet as a reduction of the carrying value
of loans. For financial statement reporting purposes, beginning December 31,
1996, in accordance with the American Institute of Certified Public Accountants
Banks and Savings Institutions Audit Guide, while we consider it in the
aggregate, the total allowance has been apportioned and displayed in the
consolidated balance sheet (see page 7) as a reduction of loans, a reduction of
trading account assets relating to derivatives, and as other liabilities related
to undertakings to extend credit that are not currently reflected in the balance
sheet, such as standby letters of credit, guarantees, and commitments. Given the
global and diversified nature of our business, expected shifts in the relative
level of credit risk among financial instruments, and the numerous estimates and
assumptions necessary to derive such allocated amounts, portions of the
aggregate allowance may be reclassified from time to time.
