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JPM JPMorgan Chase & Co.

Filed: 4 Nov 19, 4:24pm
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended Commission file 
September 30, 2019
 number1-5805 
JPMorgan Chase & Co.
(Exact name of registrant as specified in its charter)
Delaware 13-2624428
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. employer
identification no.)
    
383 Madison Avenue,  
New York,New York 10179
(Address of principal executive offices) 
(Zip Code)

Registrant’s telephone number, including area code: (212) 270-6000
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stockJPMThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 5.45% Non-Cumulative Preferred Stock, Series PJPM PR AThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.125% Non-Cumulative Preferred Stock, Series YJPM PR FThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.10% Non-Cumulative Preferred Stock, Series AAJPM PR GThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.15% Non-Cumulative Preferred Stock, Series BBJPM PR HThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 5.75% Non-Cumulative Preferred Stock, Series DDJPM PR DThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.00% Non-Cumulative Preferred Stock, Series EEJPM PR CThe New York Stock Exchange
Alerian MLP Index ETNs due May 24, 2024AMJNYSE Arca, Inc.
Guarantee of Callable Step-Up Fixed Rate Notes due April 26, 2028 of JPMorgan Chase Financial Company LLCJPM/28The New York Stock Exchange
Guarantee of Cushing 30 MLP Index ETNs due June 15, 2037 of JPMorgan Chase Financial Company LLCPPLNNYSE Arca, Inc.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer

Accelerated filer
    
Non-accelerated filerSmaller reporting company
    
  Emerging growth company
    
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 
Number of shares of common stock outstanding as of September 30, 2019: 3,136,484,924
 



FORM 10-Q
TABLE OF CONTENTS
Page
Item 1. 
  
 80
 81
 82
 83
 84
 85
 165
 166
 168
Item 2. 
 3
 4
 5
 10
 15
 18
 19
 21
 44
 45
 50
 56
 60
 69
 70
 75
 76
 78
 79
Item 3.176
Item 4.176
 
Item 1.176
Item 1A.176
Item 2.176
Item 3.177
Item 4.177
Item 5.177
Item 6.177


2


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

      Nine months ended Sept. 30,
3Q19
2Q19
1Q19
4Q18
3Q18
 2019
2018
Selected income statement data        
Total net revenue$29,341
$28,832
$29,123
$26,109
$27,260
 $87,296
$82,920
Total noninterest expense16,422
16,341
16,395
15,720
15,623
 49,158
47,674
Pre-provision profit12,919
12,491
12,728
10,389
11,637
 38,138
35,246
Provision for credit losses1,514
1,149
1,495
1,548
948
 4,158
3,323
Income before income tax expense11,405
11,342
11,233
8,841
10,689
 33,980
31,923
Income tax expense2,325
1,690
2,054
1,775
2,309
 6,069
6,515
Net income$9,080
$9,652
$9,179
$7,066
$8,380
 $27,911
$25,408
Earnings per share data        
Net income:        Basic$2.69
$2.83
$2.65
$1.99
$2.35
 $8.17
$7.04
        Diluted2.68
2.82
2.65
1.98
2.34
 8.15
7.00
Average shares: Basic3,198.5
3,250.6
3,298.0
3,335.8
3,376.1
 3,248.7
3,416.5
        Diluted3,207.2
3,259.7
3,308.2
3,347.3
3,394.3
 3,258.0
3,436.2
Market and per common share data        
Market capitalization369,133
357,479
328,387
319,780
375,239
 369,133
375,239
Common shares at period-end3,136.5
3,197.5
3,244.0
3,275.8
3,325.4
 3,136.5
3,325.4
Book value per share75.24
73.88
71.78
70.35
69.52
 75.24
69.52
Tangible book value per share (“TBVPS”)(a)
60.48
59.52
57.62
56.33
55.68
 60.48
55.68
Cash dividends declared per share0.90
0.80
0.80
0.80
0.80
 2.50
1.92
Selected ratios and metrics        
Return on common equity (“ROE”)(b)
15%16%16%12%14% 15%14%
Return on tangible common equity (“ROTCE”)(a)(b)
18
20
19
14
17
 19
18
Return on assets(b)
1.30
1.41
1.39
1.06
1.28
 1.37
1.31
Overhead ratio56
57
56
60
57
 56
57
Loans-to-deposits ratio62
63
64
67
65
 62
65
Liquidity coverage ratio (“LCR”) (average)115
113
111
113
115
 115
115
Common equity Tier 1 (“CET1”) capital ratio(c)
12.3
12.2
12.1
12.0
12.0
 12.3
12.0
Tier 1 capital ratio(c)
14.1
14.0
13.8
13.7
13.6
 14.1
13.6
Total capital ratio(c)
15.9
15.8
15.7
15.5
15.4
 15.9
15.4
Tier 1 leverage ratio(c)
7.9
8.0
8.1
8.1
8.2
 7.9
8.2
Supplementary leverage ratio (“SLR”)6.3
6.4
6.4
6.4
6.5
 6.3
6.5
Selected balance sheet data (period-end)        
Trading assets$495,875
$523,373
$533,402
$413,714
$419,827
 $495,875
$419,827
Investment securities394,251
307,264
267,365
261,828
231,398
 394,251
231,398
Loans945,218
956,889
956,245
984,554
954,318
 945,218
954,318
Core loans899,572
908,971
905,943
931,856
899,006
 899,572
899,006
Average core loans900,567
905,786
916,567
907,271
894,279
 907,581
877,774
Total assets2,764,661
2,727,379
2,737,188
2,622,532
2,615,183
 2,764,661
2,615,183
Deposits1,525,261
1,524,361
1,493,441
1,470,666
1,458,762
 1,525,261
1,458,762
Long-term debt296,472
288,869
290,893
282,031
270,124
 296,472
270,124
Common stockholders’ equity235,985
236,222
232,844
230,447
231,192
 235,985
231,192
Total stockholders’ equity264,348
263,215
259,837
256,515
258,956
 264,348
258,956
Headcount257,444
254,983
255,998
256,105
255,313
 257,444
255,313
Credit quality metrics        
Allowance for credit losses$14,400
$14,295
$14,591
$14,500
$14,225
 $14,400
$14,225
Allowance for loan losses to total retained loans1.42%1.39%1.43%1.39%1.39% 1.42%1.39%
Allowance for loan losses to retained loans excluding purchased credit-impaired loans(d)
1.32
1.28
1.28
1.23
1.23
 1.32
1.23
Nonperforming assets$5,343
$5,260
$5,616
$5,190
$5,034
 $5,343
$5,034
Net charge-offs1,371
1,403
1,361
1,236
1,033
 4,135
3,620
Net charge-off rate0.58%0.60%0.58%0.52%0.43% 0.59%0.52%
(a)TBVPS and ROTCE are non-GAAP financial measures. Refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 19–20 for a further discussion of these measures.
(b)Quarterly ratios are based upon annualized amounts.
(c)The Basel III capital rules became fully phased-in effective January 1, 2019. During 2018, the required capital measures were subject to the transitional rules and as of December 31, 2018 and September 30, 2018, were the same on a fully phased-in and on a transitional basis. Refer to Key performance measures on page 59 and Capital Risk Management on pages 85-94 of JPMorgan Chase’s 2018 Form 10-K and pages 45–49 of this Form 10-Q for additional information on these measures.
(d)Excludes the impact of residential real estate purchased credit-impaired (“PCI”) loans, a non-GAAP financial measure. Refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 19–20, and the Allowance for credit losses on pages 67–68 for a further discussion of these measures.

3


INTRODUCTION
The following is Management’s discussion and analysis of the financial condition and results of operations (“MD&A”) of JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”) for the third quarter of 2019.
This Quarterly Report on Form 10-Q for the third quarter of 2019 (“Form 10-Q”) should be read together with JPMorgan Chase’s Annual Report on Form 10-K for the year ended December 31, 2018 (“2018 Form 10-K”). Refer to the Glossary of terms and acronyms and line of business metrics on pages 168–175 for definitions of terms and acronyms used throughout this Form 10-Q.
This document contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. Refer to Forward-looking Statements on page 79 of this Form 10-Q and Part I, Item 1A, Risk factors, on pages 7–28 of the 2018 Form 10-K for a further discussion of certain of those risks and uncertainties and the factors that could cause JPMorgan Chase’s actual results to differ materially because of those risks and uncertainties.
JPMorgan Chase & Co. (NYSE: JPM), a financial holding company incorporated under Delaware law in 1968, is a leading global financial services firm and one of the largest banking institutions in the United States of America (U.S.), with operations worldwide; JPMorgan Chase had $2.8 trillion in assets and $264.3 billion in stockholders’ equity as of September 30, 2019. The Firm is a leader in investment banking, financial services for consumers and
 
small businesses, commercial banking, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the U.S. and many of the world’s most prominent corporate, institutional and government clients.
JPMorgan Chase’s principal bank subsidiary is JPMorgan Chase Bank, National Association (“JPMorgan Chase Bank, N.A.”), a national banking association with U.S. branches in 32 states and Washington, D.C. as of September 30, 2019. JPMorgan Chase’s principal nonbank subsidiary is J.P. Morgan Securities LLC (“J.P. Morgan Securities”), a U.S. broker-dealer. The bank and non-bank subsidiaries of JPMorgan Chase operate nationally as well as through overseas branches and subsidiaries, representative offices and subsidiary foreign banks. The Firm’s principal operating subsidiary in the United Kingdom (U.K.) is J.P. Morgan Securities plc, a subsidiary of JPMorgan Chase Bank, N.A.

For management reporting purposes, the Firm’s activities are organized into four major reportable business segments, as well as a Corporate segment. The Firm’s consumer business segment is Consumer & Community Banking (CCB). The Firm’s wholesale business segments are Corporate & Investment Bank (CIB), Commercial Banking (CB), and Asset & Wealth Management (AWM). Refer to Note 31 of JPMorgan Chase’s 2018 Form 10-K for a description of the Firm’s business segments and the products and services they provide to their respective
client bases.




4


EXECUTIVE OVERVIEW
This executive overview of the MD&A highlights selected information and does not contain all of the information that is important to readers of this Form 10-Q. For a complete description of the trends and uncertainties, as well as the risks and critical accounting estimates affecting the Firm and its various lines of business, this Form 10-Q and the 2018 Form 10-K should be read together and in their entirety.
Financial performance of JPMorgan Chase        
(unaudited)
As of or for the period ended,
(in millions, except per share data and ratios)
Three months ended September 30, Nine months ended September 30,
2019
 2018
 Change
 2019
 2018
 Change
Selected income statement data           
Total net revenue$29,341
 $27,260
 8% $87,296
 $82,920
 5%
Total noninterest expense16,422
 15,623
 5
 49,158
 47,674
 3
Pre-provision profit12,919
 11,637
 11
 38,138
 35,246
 8
Provision for credit losses1,514
 948
 60
 4,158
 3,323
 25
Net income9,080
 8,380
 8
 27,911
 25,408
 10
Diluted earnings per share$2.68
 $2.34
 15
 $8.15
 $7.00
 16
Selected ratios and metrics           
Return on common equity15% 14%   15% 14%  
Return on tangible common equity18
 17
   19
 18
  
Book value per share$75.24
 $69.52
 8
 $75.24
 $69.52
 8
Tangible book value per share60.48
 55.68
 9
 60.48
 55.68
 9
Capital ratios(a)
           
CET112.3% 12.0%   12.3% 12.0%  
Tier 1 capital14.1
 13.6
   14.1
 13.6
  
Total capital15.9
 15.4
   15.9
 15.4
  
(a)The Basel III capital rules became fully phased-in effective January 1, 2019. During 2018, the required capital measures were subject to the transitional rules and as of September 30, 2018, was the same on a fully phased-in and on a transitional basis. Refer to Key performance measures on page 59 and Capital Risk Management on pages 85-94 of JPMorgan Chase’s 2018 Form 10-K and pages 45–49 of this Form 10-Q for additional information on these measures.







5


Comparisons noted in the sections below are for the third quarter of 2019 versus the third quarter of 2018, unless otherwise specified.
Firmwide overview
JPMorgan Chase reported strong results in the third quarter of 2019, with net income of $9.1 billion, or $2.68 per share, on record net revenue of $29.3 billion. The Firm reported ROE of 15% and ROTCE of 18%.
The Firm had net income of $9.1 billion, up 8%.
Total net revenue increased 8%. Net interest income was $14.2 billion, up 2%, driven by continued balance sheet growth and mix, largely offset by the impact of rates. Noninterest revenue was $15.1 billion, up 13%, and included approximately $350 million of gains related to certain loan sales in Home Lending. Excluding these gains, the increase in noninterest revenue was largely driven by results in Fixed Income Markets in the CIB, as well as Home Lending and Auto in CCB.
Noninterest expense was $16.4 billion, up 5%, driven by higher volume- and revenue-related expenses and investments, including compensation and auto lease depreciation, partially offset by lower FDIC charges.
The provision for credit losses was $1.5 billion, up $566 million, largely as a result of net reductions in the allowance for credit losses and net recoveries in the prior year.
The total allowance for credit losses was $14.4 billion at September 30, 2019, and the Firm had a loan loss coverage ratio of 1.42%, compared with 1.39% in the prior year; excluding the PCI portfolio, the equivalent ratio was 1.32%, compared with 1.23% in the prior year. The Firm’s nonperforming assets totaled $5.3 billion at September 30, 2019, an increase from $5.0 billion in the prior year, reflecting increases in the wholesale portfolio related to select client downgrades, largely offset by improved credit performance in the consumer portfolio.
Firmwide average total loans were flat at $947 billion, or up 3% excluding the impact of certain loan sales in Home Lending.
 
Selected capital-related metrics
The Firm’s CET1 capital was $188 billion, and the Standardized and Advanced CET1 ratios were 12.3% and 13.1%, respectively.
The Firm’s supplementary leverage ratio (“SLR”) was 6.3% at September 30, 2019.
The Firm continued to grow tangible book value per share (“TBVPS”), ending the third quarter of 2019 at $60.48, up 9%.
ROTCE and TBVPS are non-GAAP financial measures. Refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 19–20 for a further discussion of each of these measures.

6


Business segment highlights
Selected business metrics for each of the Firm’s four lines of business are presented below for the third quarter of 2019.
CCB
ROE 32%
 
Average loans down 4%; Home Lending loans down 12% impacted by loan sales; credit card loans up 8%
Client investment assets up 13%; average deposits up 3%
Credit card sales volume up 10% and merchant processing volume up 11%
CIB
ROE 13%
 
Maintained #1 ranking for Global Investment Banking fees with 9.3% wallet share YTD
Total Markets revenue of $5.1 billion, up 14%
CB
ROE 16%
 
Gross Investment Banking revenue of $700 million, up 20%
Average client deposits of $173 billion, up 3%
AWM
ROE 24%
 
Average loan balances up 7%
Assets under management (AUM) of $2.2 trillion, up 8%
Refer to the Business Segment Results on pages 21–43 for a detailed discussion of results by business segment.
 
Credit provided and capital raised
JPMorgan Chase continues to support consumers, businesses and communities around the globe. The Firm provided new and renewed credit and raised capital for wholesale and consumer clients during the first nine months of 2019, consisting of:
$1.7 trillion Total credit provided and capital raised
   
$188
billion
 Credit for consumers
   
$25
billion
 Credit for U.S. small businesses
   
$630 billion Credit for corporations
   
$785 billion Capital raised for corporate clients and non-U.S. government entities
   
$53 billion 
Credit and capital raised for nonprofit and U.S. government entities(a)
(a)Includes states, municipalities, hospitals and universities.

7


2019 outlook
These current expectations are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. Refer to Forward-Looking Statements on page 79 of this Form 10-Q and Risk Factors on pages 7–28 of JPMorgan Chase’s 2018 Form 10-K for a further discussion of certain of those risks and uncertainties and the other factors that could cause JPMorgan Chase’s actual results to differ materially because of those risks and uncertainties. There is no assurance that actual results in the full year of 2019 will be in line with the outlook set forth below, and the Firm does not undertake to update any forward-looking statements.
JPMorgan Chase’s current outlook for the remainder of 2019 should be viewed against the backdrop of the global and U.S. economies, financial markets activity, the geopolitical environment, the competitive environment, client and customer activity levels, and regulatory and legislative developments in the U.S. and other countries where the Firm does business. Each of these factors will affect the performance of the Firm and its lines of business. The Firm expects that it will continue to make appropriate adjustments to its businesses and operations in response to ongoing developments in the business, economic, regulatory and legal environments in which it operates.
Firmwide
Management expects full-year 2019 net interest income, on a managed basis, to be less than $57.5 billion, market dependent. This estimate is based on stable long-end rates and assumes no more federal funds rate cuts in 2019.
Management expects Firmwide adjusted expense for the full-year 2019 to be approximately $65.5 billion.
Management expects full-year 2019 net charge-offs to be approximately $5.5 billion.


8


Business Developments
Expected departure of the U.K. from the EU
The U.K.’s expected departure from the EU, which is commonly referred to as “Brexit,” is scheduled to occur not later than January 31, 2020.
The Firm continues to execute the relevant elements of its Firmwide Brexit Implementation program with the objective of delivering the Firm’s capabilities to its EU clients on “day one” of any departure by the U.K. from the EU, whether or not an agreement has been reached to allow an orderly withdrawal.
The principal operational risks associated with Brexit continue to be the potential for disruption caused by insufficient preparations by individual market participants or in the overall market ecosystem, and risks related to potential disruptions of connectivity among market participants. Although legislative and regulatory actions taken by the EU and the U.K. have mitigated some of the significant market-wide risks, there continues to be regulatory and legal uncertainty with respect to various matters including contract continuity and access by market participants to liquidity in certain products, such as products subject to potentially conflicting U.K. and EU regulatory requirements in relation to eligible trading venues, including certain cross-border derivative contracts and equities that are listed on both U.K. and EU exchanges.
As discussed in Business Developments on page 46 of the 2018 Form 10-K, the Firm is focused on the following key areas to ensure continuation of service to its EU clients: regulatory and legal entity readiness; client readiness; and business and operational readiness. Following are the significant updates from the matters discussed in the 2018 Form 10-K.
Regulatory and legal entity readiness
The Firm’s legal entities in Germany, Luxembourg and Ireland are now prepared and licensed to provide services to the Firm’s EU clients, including after any departure by the U.K. from the EU.
Client readiness
The agreements covering a significant proportion of the Firm’s EU client activity have been re-documented to other EU legal entities to help facilitate continuation of service. The Firm continues to actively engage with clients that have not completed re-documentation to ensure preparedness both in terms of documentation and any operational changes that may be required. The Firm may be negatively impacted by any operational disruption stemming from delays of or lapses in the readiness of other market participants or market infrastructures.
 
Business and operational readiness
The Firm relocated certain employees during the first quarter of 2019. During the second quarter of 2019, the Firm added specific employees to certain EU legal entities, where appropriate, to support the level of client activity that has been migrated. However, the Firm’s final staffing plan will depend upon the timing and terms of any withdrawal by the U.K. from the EU.
If Brexit is further delayed due to a transition deal or another mechanism, the Firm will continue to review the timing and extent of any further expansion of activities in its EU legal entities, as appropriate. The Firm continues to closely monitor legislative developments, and its implementation plan allows for flexibility given the continued uncertainties.
LIBOR transition
The Firm continues to develop and implement plans to appropriately mitigate the risks associated with the expected discontinuation of certain unsecured benchmark interest rates, including the London Interbank Offered Rate (“LIBOR”) and other Interbank Offered Rates (“IBORs”). In particular, the Firm:
has implemented or is in the process of implementing fallback language for LIBOR-linked syndicated loans, securitizations, floating rate notes and bi-lateral business loans based on the recommendations of the Alternative Reference Rates Committee, and has started to introduce the Secured Overnight Financing Rate as a replacement benchmark rate for certain of these products;
continues to monitor the transition relief being considered by the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board (“IASB”) concerning the accounting for contract modifications and hedge accounting; and
continues to engage with regulators and clients as the transition from IBORs progresses.
Refer to Business Developments on page 47 of the 2018 Form 10-K for a discussion of the Firm’s initiatives to address the expected discontinuation of LIBOR and other IBORs.

9


CONSOLIDATED RESULTS OF OPERATIONS
This section provides a comparative discussion of JPMorgan Chase’s Consolidated Results of Operations on a reported basis for the three and nine months ended September 30, 2019 and 2018, unless otherwise specified. Factors that relate primarily to a single business segment are discussed in more detail within that business segment. Refer to pages 76–77 of this Form 10-Q and pages 141-143 of JPMorgan Chase’s 2018 Form 10-K for a discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Results of Operations.
Revenue           
 Three months ended September 30, Nine months ended September 30,
(in millions)2019
 2018
 Change
 2019
 2018
 Change
Investment banking fees$1,967
 $1,832
 7 % $5,658
 $5,736
 (1)%
Principal transactions3,449
 2,964
 16
 11,239
 10,698
 5
Lending- and deposit-related fees1,626
 1,542
 5
 4,643
 4,514
 3
Asset management, administration and commissions4,351
 4,310
 1
 12,818
 12,923
 (1)
Investment securities gains/(losses)78
 (46) NM
 135
 (371) NM
Mortgage fees and related income887
 262
 239
 1,562
 1,051
 49
Card income1,283
 1,328
 (3) 3,923
 3,623
 8
Other income(a)
1,472
 1,160
 27
 4,239
 4,041
 5
Noninterest revenue15,113
 13,352
 13
 44,217
 42,215
 5
Net interest income14,228
 13,908
 2
 43,079
 40,705
 6
Total net revenue$29,341
 $27,260
 8 % $87,296
 $82,920
 5 %
(a)Included operating lease income of $1.4 billion and $1.2 billion for the three months ended September 30, 2019 and 2018, respectively and $4.0 billion and $3.3 billion for the nine months ended September 30, 2019 and 2018, respectively.
Quarterly results
Investment banking fees increased reflecting:
higher debt underwriting fees, on wallet share gains despite a decline in industry-wide fees, driven by participation in large acquisition financing deals and increased activity in investment-grade bonds
higher equity underwriting fees driven by wallet share gains primarily in the IPO and convertible markets,
partially offset by
lower advisory fees driven by a decline in industry-wide fees compared with a strong prior year.
Refer to CIB segment results on pages 28–33 and Note 5 for additional information.
Principal transactions revenue increased reflecting:
higher revenue in CIB, primarily driven by
strong performance across products in Fixed Income Markets, primarily in Rates, agency mortgage trading within Securitized Products, and Commodities, compared with the prior year, which was impacted by less favorable market conditions,
partially offset by
lower revenue in Equity Markets, primarily in derivatives, driven by lower client activity and less favorable market conditions, compared with a strong prior year, and
in Corporate, net gains on certain legacy private equity investments compared with net losses in the prior year.
Principal transactions revenue in CIB may have offsets across other revenue lines, including net interest income. The Firm assesses its Markets business performance on a total revenue basis.
 
Refer to CIB, AWM and Corporate segment results on pages 28–33, pages 38–41 and pages 42–43, and Note 5 for additional information.
Lending- and deposit-related fees increased primarily due to higher deposit-related fees in CCB, reflecting growth in customer accounts and transactions.
Refer to CCB segment results on pages 22–27, CIB on pages 28–33 and CB on pages 34–37, respectively, and Note 5 for additional information.
Asset management, administration and commissions revenue increased driven by higher asset management fees in CCB from growth in client investment assets.
Refer to CCB and AWM segment results on pages 22–27 and pages 38–41 , respectively, and Note 5 for additional information.
Investment securities gains/(losses) primarily reflect the impact of repositioning the investment securities portfolio. Refer to Corporate segment results on pages 42–43 and Note 9 for additional information.
Mortgage fees and related income increased driven by:
higher net mortgage production revenue reflecting approximately $350 million of gains on the sale of certain loans, as well as higher production volumes and margins
net mortgage servicing revenue, which remained relatively flat, reflecting lower operating revenue driven by the impact of reclassifying certain loans to held-for-sale and faster prepayment speeds on lower rates, offset by favorable MSR risk management results.

10


Refer to CCB segment results on pages 22–27, Note 5 and 14 for further information.
Card income decreased reflecting higher rewards costs and partner payments, predominantly offset by higher interchange income and merchant processing fees on higher volumes.
Refer to CCB segment results on pages 22–27 and Note 5 for further information.
Other income increased reflecting:
higher operating lease income from growth in auto operating lease volume in CCB
losses in the prior year on certain investments in CIB and Corporate,
partially offset by
lower other income in CIB associated with increased amortization on a higher level of alternative energy investments. The increased amortization was more than offset by the lower income tax expense from the associated tax credits.
Refer to Note 5 for further information.
Net interest income increased driven by continued balance sheet growth and changes in mix, largely offset by the net impact of rates. The Firm’s average interest-earning assets were $2.4 trillion, up $162 billion, and the net interest yield on these assets, on a fully taxable-equivalent (“FTE”) basis, was 2.41%, a decrease of 12 basis points. The net interest yield excluding CIB Markets was 3.23%, a decrease of 7 basis points. Net interest yield excluding CIB markets is a non-GAAP financial measure. Refer to the Consolidated average balance sheets, interest and rates schedule on pages 166–167 for further details; and the Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 19–20 for a further discussion of Net interest yield excluding CIB markets.
Year-to-date results
Investment banking fees were relatively flat reflecting:
lower advisory and equity underwriting fees driven by a decline in industry-wide fees despite wallet share gains,
offset by
higher debt underwriting fees on wallet share gains despite a decline in industry-wide fees, driven by participation in large acquisition financing deals
Principal transactions revenue increased reflecting:
higher revenue in CIB, which included a gain on the IPO of Tradeweb. Excluding this gain, the increase in CIB’s revenue was driven by:
higher revenue in Fixed Income Markets, primarily in agency mortgage trading within Securitized Products, and Commodities, partially offset by Currencies & Emerging Markets
favorable changes in funding spreads on derivatives in Credit Adjustments & Other,
partially offset by
 
lower revenue in Equity Markets driven by lower client activity in derivatives
the net increase in CIB was partially offset by
lower revenue in AWM, related to hedges on certain investments, which was more than offset by higher valuation gains on the related investments reflected in other income,
Corporate was relatively flat, reflecting
losses on cash deployment transactions in Treasury and CIO, which were more than offset by the related net interest income earned on those transactions, and
lower net valuation losses on certain legacy private equity investments.
Principal transactions revenue in CIB may have offsets across other revenue lines, including net interest income. The Firm assesses its Markets business performance on a total revenue basis.
Lending- and deposit-related fees increased primarily due to higher deposit-related fees in CCB, reflecting growth in customer accounts and transactions.
Asset management, administration and commissions revenue was relatively flat reflecting:
lower asset management fees in AWM driven by a shift in the mix toward lower fee products,
largely offset by
higher asset management fees in CCB from growth in client investment assets.
Investment securities gains/(losses) primarily reflect the impact of repositioning the investment securities portfolio.
Mortgage fees and related income increased driven by:
higher net mortgage production revenue reflecting gains on sales of certain loans, as well as higher mortgage production margins and volumes,
partially offset by
lower net mortgage servicing revenue driven by
lower operating revenue reflecting faster prepayment speeds on lower rates and the impact of reclassifying certain loans to held-for-sale, as well as
lower MSR risk management results reflecting updates to model inputs.
Card income increased reflecting the absence of the prior-year adjustment of approximately $330 million to the credit card rewards liability.
Other income increased reflecting:
higher operating lease income from growth in auto operating lease volume in CCB, and
higher investment valuation gains in AWM, which were largely offset by the impact of the related hedges reflected in principal transactions revenue,
partially offset by

11


lower other income in CIB associated with increased amortization on a higher level of alternative energy investments. The increased amortization was more than offset by the lower income tax expense from the associated tax credits.
The prior year included:
$505 million of fair value gains related to the adoption of the recognition and measurement accounting guidance for certain equity investments previously held at cost in the first quarter of 2018, and
losses on certain investments in CIB and Corporate.
 
Net interest income increased driven by continued balance sheet growth and changes in mix. The Firm’s average interest-earning assets were $2.3 trillion, up $136 billion, and the net interest yield on these assets, on an FTE basis, was 2.49%, a decrease of 1 basis point. The net interest yield excluding CIB Markets was 3.34%, an increase of 13 basis points. Net interest yield excluding CIB markets is a non-GAAP financial measure.
Provision for credit losses          
 Three months ended September 30, Nine months ended September 30,
(in millions)

2019
 2018
 Change
 2019
 2018
 Change
Consumer, excluding credit card$(61) $(242) 75% $(265) $(152) (74)%
Credit card1,375
 1,223
 12
 4,017
 3,557
 13
Total consumer1,314
 981
 34
 3,752
 3,405
 10
Wholesale200
 (33) NM
 406
 (82) NM
Total provision for credit losses$1,514
 $948
 60% $4,158
 $3,323
 25 %
Quarterly results
The provision for credit losses increased driven by consumer and wholesale.
The total consumer provision reflects:
an increase in credit card due to
higher net charge-offs on loan growth, in line with expectations, and
a $200 million addition to the allowance for loan losses reflecting higher loss rates, as newer vintages season and become a larger part of the portfolio, compared to a $150 million addition in the prior year
an increase in consumer, excluding credit card in CCB due to
a $100 million reduction in the allowance for loan losses in the non credit-impaired residential real estate portfolio, compared to a $250 million reduction in the PCI residential real estate portfolio in the prior year, and
lower net recoveries in the residential real estate portfolio as the prior year benefited from a larger recovery on a loan sale
partially offset by
a $50 million reduction in the allowance for loan losses in the business banking portfolio.
The wholesale provision was largely driven by select Commercial & Industrial (“C&I”) client downgrades. The prior year was a net benefit which included net recoveries predominantly related to a loan sale in CIB.
Refer to CCB segment results on pages 22–27, CIB on pages 28–33, CB on pages 34–37, AWM on pages 38–41, the Allowance for Credit Losses on pages 67–68, and Note 12 for additional information on the credit portfolio and the allowance for credit losses.
 
Year-to-date results
The provision for credit losses increased driven by wholesale and consumer.
The wholesale provision was largely driven by select C&I client downgrades. The prior year was a net benefit primarily driven by loan sales and other activity related to a single name in the Oil & Gas portfolio, partially offset by other net portfolio activity.
The total consumer provision reflects:
an increase in credit card due to
a $400 million addition to the allowance for loan losses reflecting higher loss rates, as newer vintages season and become a larger part of the portfolio and loan growth, compared to a $150 million addition in the prior year, and
higher net charge-offs on loan growth, in line with expectations
partially offset by
a decrease in consumer, excluding credit card in CCB due to
a $400 million reduction in the allowance for loan losses in the PCI residential real estate portfolio, reflecting continued improvement in home prices and delinquencies, and a $100 million reduction in the allowance for loan losses in the non credit-impaired residential real estate portfolio, compared to a $250 million reduction in the PCI residential real estate portfolio in the prior year, and
a $50 million reduction in the allowance for loan losses in the business banking portfolio
largely offset by
lower net recoveries in the residential real estate portfolio as the prior year benefited from larger recoveries on loan sales.

12


Noninterest expense           
 Three months ended September 30, Nine months ended September 30,
(in millions)

2019
 2018
 Change
 2019
 2018
 Change
Compensation expense$8,583
 $8,108
 6 % $26,067
 $25,308
 3 %
Noncompensation expense:           
Occupancy1,110
 1,014
 9
 3,238
 2,883
 12
Technology, communications and equipment2,494
 2,219
 12
 7,236
 6,441
 12
Professional and outside services2,056
 2,086
 (1) 6,307
 6,333
 
Marketing945
 798
 18
 2,686
 2,396
 12
Other expense(a)(b)
1,234
 1,398
 (12) 3,624
 4,313
 (16)
Total noncompensation expense7,839
 7,515
 4
 23,091
 22,366
 3
Total noninterest expense$16,422
 $15,623
 5 % $49,158
 $47,674
 3 %
(a)Included Firmwide legal expense/(benefit) of $10 million and $20 million for the three months ended September 30, 2019 and 2018, respectively and $(2) million and $90 million for the nine months ended September 30, 2019 and 2018, respectively.
(b)Included FDIC-related expense of $114 million and $349 million for the three months ended September 30, 2019 and 2018, respectively and $378 million and $1.1 billion for the nine months ended September 30, 2019 and 2018, respectively.
Quarterly results
Compensation expense increased driven by higher revenue-related expense in CIB and investments across the businesses, including front office hires, as well as technology staff.
Noncompensation expense increased as a result of:
higher investments across the businesses, including technology, real estate and marketing, and
higher volume-related expense, including depreciation from growth in auto operating lease assets in CCB, and brokerage expense in certain businesses in CIB,
partially offset by
lower FDIC charges as a result of the elimination of the surcharge at the end of the third quarter of 2018, and
lower other regulatory-related charges in CIB.

 
Year-to-date results
Compensation expense increased driven by investments across the businesses, including front office hires, as well as technology staff, partially offset by lower revenue-related expense in CIB.
Noncompensation expense increased as a result of:
higher investments across the businesses, including, technology, real estate and marketing
higher volume-related expense, including depreciation from growth in auto operating lease assets in CCB, and brokerage expense in certain businesses in CIB
contributions to the Firm’s Foundation, whereas all prior-year contributions were made in the fourth quarter, and
higher pension costs due to changes to actuarial assumptions and estimates,
partially offset by
lower FDIC charges as a result of the elimination of the surcharge at the end of the third quarter of 2018
lower other regulatory-related charges in CIB
lower legal expense, and
lower distribution fees in AWM.
The prior year included a loss of $174 million on the liquidation of a legal entity in Corporate recorded in other expense.
Refer to Note 19 for additional information on the liquidation of a legal entity.

13


Income tax expense       
 Three months ended September 30, Nine months ended September 30,
(in millions)

2019
 2018
 Change
 2019
 2018
 Change
Income before income tax expense$11,405
 $10,689
 7% $33,980
 $31,923
 6 %
Income tax expense2,325
 2,309
 1
 6,069
 6,515
 (7)
Effective tax rate20.4% 21.6%   17.9% 20.4%  
Quarterly results
The effective tax rate decreased due to the recognition of tax benefits related to the resolution of certain tax audits and changes in the mix of income and expense subject to U.S. federal, and state and local taxes. In addition, the prior year included a $132 million net tax benefit resulting from changes in the estimates under the Tax Cuts and Jobs Act (“TCJA”) related to the remeasurement of certain deferred taxes and the deemed repatriation tax on non-U.S. earnings.

 
Year-to-date results
The effective tax rate decreased due to the recognition of $1.0 billion of tax benefits related to the resolution of certain tax audits and changes in the mix of income and expense subject to U.S. federal, and state and local taxes. The decrease was partially offset by lower tax benefits related to the vesting of employee stock-based awards. In addition, the prior year included a $305 million net tax benefit resulting from changes in the estimates under the TCJA related to the remeasurement of certain deferred taxes and the deemed repatriation tax on non-U.S. earnings. Refer to Note 1 for additional information on the 2019 tax benefits.



14


CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS
Consolidated balance sheets analysis
The following is a discussion of the significant changes between September 30, 2019, and December 31, 2018.
Selected Consolidated balance sheets data
(in millions)September 30,
2019

 December 31,
2018

Change
Assets    
Cash and due from banks$21,215
 $22,324
(5)%
Deposits with banks235,382
 256,469
(8)
Federal funds sold and securities purchased under resale agreements257,391
 321,588
(20)
Securities borrowed138,336
 111,995
24
Trading assets495,875
 413,714
20
Investment securities394,251
 261,828
51
Loans945,218
 984,554
(4)
Allowance for loan losses(13,235) (13,445)(2)
Loans, net of allowance for loan losses931,983
 971,109
(4)
Accrued interest and accounts receivable88,988
 73,200
22
Premises and equipment25,117
 14,934
68
Goodwill, MSRs and other intangible assets53,078
 54,349
(2)
Other assets123,045
 121,022
2
Total assets$2,764,661
 $2,622,532
5 %
Cash and due from banks and deposits with banks decreased primarily as a result of a shift in the deployment of cash in Treasury and CIO to investment securities. Deposits with banks reflect the Firm’s placements of its excess cash with various central banks, including the Federal Reserve Banks.
Federal funds sold and securities purchased under resale agreements decreased largely as a result of a shift in the deployment of cash in Treasury and CIO. Refer to Liquidity Risk Management on pages 50–54 and Note 10 for additional information.
Securities borrowed increased in CIB driven by higher demand for securities related to client-driven market-making activities in Fixed Income Markets, and to cover customer short positions in prime brokerage. Refer to Liquidity Risk Management on pages 50–54 and Note 10 for additional information.
Trading assets increased due to:
growth in client-driven market-making activities in CIB, primarily debt instruments in Fixed Income Markets, and equity instruments in Equity Markets, including prime brokerage, and when compared with lower levels at year-end, and
in CCB, an increase in U.S. GSE MBS acquired as part of the proceeds of warehouse loan sales, and growth related to originations of mortgage warehouse loans, resulting from the favorable rate environment,
partially offset by
a reduction in short-term instruments associated with cash deployment activities in Treasury and CIO.
Refer to Notes 2 and 4 for additional information.
 
Investment securities increased primarily reflecting net purchases of U.S. Treasuries and U.S. GSE and government agency MBS in Treasury and CIO driven by interest rate risk management and broader balance sheet management. Refer to Corporate segment results on pages 42–43, Investment Portfolio Risk Management on page 69, and Notes 2 and 9 for additional information on Investment securities.
Loans decreased reflecting loan sales in Home Lending, and lower loans in CIB, primarily driven by a loan syndication and net pay downs, partially offset by increases in CB and AWM.
The allowance for loan losses decreased driven by:
a $550 million reduction in the CCB allowance for loan losses, which includes $400 million in the PCI residential real estate portfolio, reflecting continued improvement in home prices and delinquencies; $100 million in the non credit-impaired residential real estate portfolio; and $50 million in the business banking portfolio; as well as
a $132 million reduction for write-offs of PCI loans,
largely offset by
a $400 million addition to the allowance for loan losses in the credit card portfolio reflecting higher loss rates, as newer vintages season and become a larger part of the portfolio and loan growth.
Refer to Credit and Investment Risk Management on pages 55–69, and Notes 2, 3, 11 and 12 for a more detailed discussion of loans and the allowance for loan losses.
Accrued interest and accounts receivable increased reflecting higher client receivables related to client-driven activities in CIB.

15


Premises and equipment increased due to the adoption of the new lease accounting guidance effective January 1, 2019. Refer to Note 16 for additional information.
 
Goodwill, MSRs and other intangibles decreased reflecting lower MSRs as a result of faster prepayment speeds on lower rates, partially offset by an increase in goodwill associated with the acquisition of InstaMed. Refer to Note 14 for additional information.
Selected Consolidated balance sheets data (continued) 
(in millions)September 30,
2019

 December 31,
2018

Change
Liabilities    
Deposits$1,525,261
 $1,470,666
4 %
Federal funds purchased and securities loaned or sold under repurchase agreements247,766
 182,320
36
Short-term borrowings48,893
 69,276
(29)
Trading liabilities138,343
 144,773
(4)
Accounts payable and other liabilities225,063
 196,710
14
Beneficial interests issued by consolidated variable interest entities (“VIEs”)18,515
 20,241
(9)
Long-term debt296,472
 282,031
5
Total liabilities2,500,313
 2,366,017
6
Stockholders’ equity264,348
 256,515
3
Total liabilities and stockholders’ equity$2,764,661
 $2,622,532
5 %
Deposits increased reflecting:
growth in operating deposits in CIB driven by client activity in Treasury Services and Securities Services, and an increase in net issuances of structured notes in Markets, and
in CCB, predominantly due to continued growth in new accounts, and in CB, growth from existing clients.
Refer to Liquidity Risk Management on pages 50–54 and Notes 2 and 15 for additional information.
Federal funds purchased and securities loaned or sold under repurchase agreements increased driven by CIB and includes the Firm’s participation in the Federal Reserve’s open market operations, as well as higher secured financing of trading assets-debt instruments and client-driven activities. Refer to Liquidity Risk Management on pages 50–54 and Note 10 for additional information.
Short-term borrowings decreased reflecting lower commercial paper and short-term advances from Federal Home Loan Banks (“FHLB”) in Treasury and CIO, primarily driven by liquidity management. Refer to Liquidity Risk Management on pages 50–54 for additional information.
Trading liabilities decreased as a result of client-driven market-making activities in CIB, which resulted in lower levels of short positions primarily in equity instruments in Equity Markets. Refer to Notes 2 and 4 for additional information.
 
Accounts payable and other liabilities increased reflecting:
higher client payables related to client-driven activities in CIB, and
the impact of the adoption of the new lease accounting guidance effective January 1, 2019.
Refer to Note 16 for additional information on Leases.
Beneficial interests issued by consolidated VIEs decreased due to:
maturities of credit card securitizations,
predominantly offset by
higher levels of Firm-administered multi-seller conduit commercial paper issued to third parties.
Refer to Off-Balance Sheet Arrangements on page 18 and Notes 13 and 22 for further information on Firm-sponsored VIEs and loan securitization trusts.
Long-term debt increased as a result of client-driven net issuances of structured notes in CIB’s Markets business.
Refer to Liquidity Risk Management on pages 50–54 for additional information on the Firm’s long-term debt activities.
Refer to page 83 for information on changes in stockholders’ equity and Capital actions on pages 47–48.


16


Consolidated cash flows analysis
The following is a discussion of cash flow activities during the nine months ended September 30, 2019 and 2018.
(in millions) Nine months ended September 30,
 2019
 2018
Net cash provided by/(used in)    
Operating activities $(77,039) $13,765
Investing activities (38,181) (39,782)
Financing activities 96,006
 16,319
Effect of exchange rate changes on cash (2,982) (2,509)
Net decrease in cash and due from banks and deposits with banks $(22,196) $(12,207)
Operating activities
In 2019, cash used primarily resulted from higher trading assets, securities borrowed, other assets and accrued interest and accounts receivable, partially offset by higher accounts payable and other liabilities, trading liabilities, and net proceeds from loans originated for sale.
In 2018, cash provided primarily resulted from net income, higher accounts payable and other liabilities, and trading liabilities, partially offset by higher trading assets and securities borrowed.
 
Investing activities
In 2019, cash used primarily resulted from net purchases of investment securities and net loan originations, predominantly offset by lower securities purchased under resale agreements, and proceeds from the sale of loans held-for-investment.
In 2018, cash used resulted from higher net loan originations and an increase in securities purchased under resale agreements, partially offset by net proceeds from investment securities and sales of loans held-for- investment.
Financing activities
In 2019, cash provided resulted from higher deposits, and securities loaned or sold under repurchase agreements, partially offset by lower short-term and long-term borrowings.
In 2018, cash provided resulted from higher securities loaned or sold under repurchase agreements, deposits and short-term borrowings, partially offset by a decrease in long-term borrowings.
For both periods, cash was used for repurchases of common stock and cash dividends on common and preferred stock.
* * *
Refer to Consolidated Balance Sheets Analysis on pages 15-16, Capital Risk Management on pages 45–49, and Liquidity Risk Management on pages 50–54 of this Form 10-Q, and pages 95–100 of JPMorgan Chase’s 2018 Form 10-K for a further discussion of the activities affecting the Firm’s cash flows.


17


OFF-BALANCE SHEET ARRANGEMENTS
In the normal course of business, the Firm enters into various off-balance sheet arrangements and contractual obligations that may require future cash payments. Certain obligations are recognized on-balance sheet, while others are disclosed off-balance sheet under accounting principles generally accepted in the U.S. (“U.S. GAAP”).
Special-purpose entities
The Firm has several types of off–balance sheet arrangements, including through nonconsolidated special-purpose entities (“SPEs”), which are a type of VIE, and through lending-related financial instruments (e.g., commitments and guarantees).
The Firm holds capital, as appropriate, against all SPE-related transactions and related exposures, such as derivative contracts and lending-related commitments and guarantees.
The Firm has no commitments to issue its own stock to support any SPE transaction, and its policies require that transactions with SPEs be conducted at arm’s length and reflect market pricing. Consistent with this policy, no JPMorgan Chase employee is permitted to invest in SPEs with which the Firm is involved where such investment would violate the Firm’s Code of Conduct.
The table below provides an index of where in this Form 10-Q a discussion of the Firm’s various off-balance sheet arrangements can be found. In addition, refer to Note 1 for information about the Firm’s consolidation policies.
Type of off-balance sheet arrangementLocation of disclosurePage references
Special-purpose entities: variable interests and other obligations, including contingent obligations, arising from variable interests in nonconsolidated VIEsRefer to Note 13139-144
Off-balance sheet lending-related financial instruments, guarantees, and other commitmentsRefer to Note 22156-159



18


EXPLANATION AND RECONCILIATION OF THE FIRM’S USE OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES
The Firm prepares its Consolidated Financial Statements in accordance with U.S. GAAP and this presentation is referred to as “reported” basis; these financial statements appear on pages 80–84.
In addition to analyzing the Firm’s results on a reported basis, the Firm also reviews and uses certain non-GAAP financial measures at the Firmwide and segment level. These non-GAAP measures include:
Firmwide “managed” basis results, including the overhead ratio, which include certain reclassifications to present total net revenue from investments that receive tax credits and tax-exempt securities on a basis comparable to taxable investments and securities (“FTE” basis)
 
Net interest income and net yield excluding CIB’s Markets businesses
Certain credit metrics and ratios, which exclude PCI loans
Tangible common equity (“TCE”), ROTCE, and TBVPS.
In addition, core loans is a key performance measure utilized by the Firm and its investors and analysts in assessing actual growth in the loan portfolio.
Refer to Explanation and Reconciliation of the Firm’s Use Of Non-GAAP Financial Measures and Key Performance Measures on pages 57-59 of JPMorgan Chase’s 2018 Form 10-K for a further discussion of management’s use of non-GAAP financial measures and key performance measures.
The following summary table provides a reconciliation from the Firm’s reported U.S. GAAP results to managed basis.
 Three months ended September 30,
 2019 2018
(in millions, except ratios)Reported
results
 
Fully taxable-equivalent adjustments(a)
 Managed
basis
 Reported
results
 
Fully taxable-equivalent adjustments(a)
 Managed
basis
Other income$1,472
 $596
  $2,068
 $1,160
 $408
  $1,568
Total noninterest revenue15,113
 596
  15,709
 13,352
 408
  13,760
Net interest income14,228
 127
  14,355
 13,908
 154
  14,062
Total net revenue29,341
 723
  30,064
 27,260
 562
  27,822
Pre-provision profit12,919
 723
  13,642
 11,637
 562
  12,199
Income before income tax expense11,405
 723
  12,128
 10,689
 562
  11,251
Income tax expense$2,325
 $723
  $3,048
 $2,309
 $562
  $2,871
Overhead ratio56% NM
  55% 57% NM
  56%
              
 Nine months ended September 30,
 2019 2018
(in millions, except ratios)Reported
results
 
Fully taxable-equivalent adjustments(a)
 Managed
basis
 Reported
results
 
Fully taxable-equivalent adjustments(a)
 Managed
basis
Other income$4,239
 $1,777
  $6,016
 $4,041
 $1,337
  $5,378
Total noninterest revenue44,217
 1,777
  45,994
 42,215
 1,337
  43,552
Net interest income43,079
 408
  43,487
 40,705
 473
  41,178
Total net revenue87,296
 2,185
  89,481
 82,920
 1,810
  84,730
Pre-provision profit38,138
 2,185
  40,323
 35,246
 1,810
  37,056
Income before income tax expense33,980
 2,185
  36,165
 31,923
 1,810
  33,733
Income tax expense$6,069
 $2,185
  $8,254
 $6,515
 $1,810
  $8,325
Overhead ratio56% NM
  55% 57% NM
  56%
(a)Predominantly recognized in CIB, CB and Corporate.












19


The following table provides information on net interest income and net yield excluding CIB’s Markets businesses.

(in millions, except rates)
Three months ended September 30, Nine months ended September 30,
2019
2018
 Change
 20192018 Change
Net interest income – reported$14,228
$13,908
 2 % $43,079
$40,705
 6 %
Fully taxable-equivalent adjustments127
154
 (18) 408
473
 (14)
Net interest income – managed basis(a)
$14,355
$14,062
 2
 $43,487
$41,178
 6
Less: CIB Markets net interest income(b)
723
704
 3
 1,971
2,488
 (21)
Net interest income excluding CIB Markets(a)
$13,632
$13,358
 2
 $41,516
$38,690
 7
          
Average interest-earning assets(c)
$2,365,154
$2,203,305
 7
 $2,334,623
$2,198,909
 6
Less: Average CIB Markets interest-earning assets(b)(c)
690,593
596,784
 16
 671,236
589,185
 14
Average interest-earning assets excluding CIB Markets$1,674,561
$1,606,521
 4 % $1,663,387
$1,609,724
 3 %
Net interest yield on average interest-earning assets – managed basis(c)
2.41%2.53%   2.49%2.50%  
Net interest yield on average CIB Markets interest-earning assets(b)(c)
0.42
0.47
   0.39
0.56
  
Net interest yield on average interest-earning assets excluding CIB Markets3.23%3.30%   3.34%3.21%  
(a)Interest includes the effect of related hedges. Taxable-equivalent amounts are used where applicable.
(b)Refer to page 32 for further information on CIB’s Markets businesses.
(c)In the second quarter of 2019, the Firm reclassified balances related to certain instruments from interest-earning to noninterest-earning assets, as the associated returns are recorded in principal transactions revenue and not in net interest income. These changes were applied retrospectively and, accordingly, prior period amounts were revised to conform with the current presentation.
The following summary table provides a reconciliation from the Firm’s common stockholders’ equity to TCE.
 Period-end Average
(in millions, except per share and ratio data)Sep 30,
2019

Dec 31,
2018

 Three months ended September 30,Nine months ended September 30,
 2019
2018
2019
2018
Common stockholders’ equity$235,985
$230,447
 $235,613
$230,439
$232,917
$228,995
Less: Goodwill47,818
47,471
 47,707
47,490
47,552
47,496
Less: Other intangible assets841
748
 842
795
776
820
Add: Certain Deferred tax liabilities(a)
2,371
2,280
 2,344
2,233
2,311
2,221
Tangible common equity$189,697
$184,508
 $189,408
$184,387
$186,900
$182,900
        
Return on tangible common equityNA
NA
 18%17%19%18%
Tangible book value per share$60.48
$56.33
 NA
NA
NA
NA
(a)Represents deferred tax liabilities related to tax-deductible goodwill and to identifiable intangibles created in nontaxable transactions, which are netted against goodwill and other intangibles when calculating TCE.


20


BUSINESS SEGMENT RESULTS
The Firm is managed on a line of business basis. There are four major reportable business segments – Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking and Asset & Wealth Management. In addition, there is a Corporate segment.
The business segments are determined based on the products and services provided, or the type of customer served, and they reflect the manner in which financial information is currently evaluated by the Firm’s Operating Committee. Segment results are presented on a managed basis. Refer to Explanation and Reconciliation of the Firm’s use of Non-GAAP Financial Measures and Key Performance Measures on pages 19–20 for a definition of managed basis.
Description of business segment reporting methodology
Results of the business segments are intended to present each segment as if it were essentially a stand-alone business. The management reporting process that derives business segment results includes the allocation of certain
 
income and expense items. Refer to Line of business equity on page 47 for further information about line of business capital. The Firm periodically assesses the assumptions, methodologies and reporting classifications used for segment reporting, and further refinements may be implemented in future periods.
Business segment capital allocation
The amount of capital assigned to each business is referred to as equity. On at least an annual basis, the assumptions and methodologies used in capital allocation are assessed and as a result, the capital allocated to lines of business may change. Refer to Line of business equity on page 91 of JPMorgan Chase’s 2018 Form 10-K for additional information on business segment capital allocation.
Refer to Business Segment Results – Description of business segment reporting methodology on pages 60–61 of JPMorgan Chase’s 2018 Form 10-K for a further discussion of those methodologies.
Segment results – managed basis
The following tables summarize the Firm’s results by segment for the periods indicated.
Three months ended September 30,Consumer & Community Banking Corporate & Investment Bank Commercial Banking
(in millions, except ratios)2019
2018
Change 2019
2018
Change 2019
2018
Change
Total net revenue$14,259
$13,290
7 $9,338
$8,805
6 $2,207
$2,271
(3)%
Total noninterest expense7,290
6,982
4 5,348
5,175
3 881
853
3
Pre-provision profit/(loss)6,969
6,308
10 3,990
3,630
10 1,326
1,418
(6)
Provision for credit losses1,311
980
34 92
(42)NM 67
(15)NM
Net income/(loss)4,273
4,086
5 2,809
2,626
7 937
1,089
(14)
Return on equity (“ROE”)32%31%  13%14%  16%21% 
Three months ended September 30,Asset & Wealth Management Corporate Total
(in millions, except ratios)2019
2018
Change
 2019
2018
Change 2019
2018
Change
Total net revenue$3,568
$3,559

 $692
$(103)NM $30,064
$27,822
8
Total noninterest expense2,622
2,585
1
 281
28
NM 16,422
15,623
5
Pre-provision profit/(loss)946
974
(3) 411
(131)NM 13,642
12,199
12
Provision for credit losses44
23
91
 
2
NM 1,514
948
60
Net income/(loss)668
724
(8) 393
(145)NM 9,080
8,380
8
ROE24%31%  NM
NM
  15%14% 
Nine months ended September 30,Consumer & Community Banking Corporate & Investment Bank Commercial Banking
(in millions, except ratios)2019
2018
Change 2019
2018
Change
 2019
2018
Change
Total net revenue$41,843
$38,384
9 $28,827
$29,211
(1)% $6,756
$6,753

Total noninterest expense21,663
20,770
4 16,288
16,237

 2,618
2,541
3
Pre-provision profit/(loss)20,180
17,614
15 12,539
12,974
(3) 4,138
4,212
(2)
Provision for credit losses3,745
3,405
10 179
(142)NM
 186
23
NM
Net income/(loss)12,410
10,824
15 8,995
9,798
(8) 2,986
3,201
(7)
ROE31%27%  14%18%  17%20% 
Nine months ended September 30,Asset & Wealth Management Corporate Total
(in millions, except ratios)2019
2018
Change
 2019
2018
Change 2019
2018
Change
Total net revenue$10,616
$10,637

 $1,439
$(255)NM $89,481
$84,730
6%
Total noninterest expense7,865
7,732
2
 724
394
84 49,158
47,674
3
Pre-provision profit/(loss)2,751
2,905
(5) 715
(649)NM 40,323
37,056
9
Provision for credit losses48
40
20
 
(3)NM 4,158
3,323
25
Net income/(loss)2,048
2,249
(9) 1,472
(664)NM 27,911
25,408
10
ROE25%32%  NM
NM
  15%14% 
The following sections provide a comparative discussion of the Firm’s results by segment as of or for the three and nine months ended September 30, 2019 versus the corresponding periods in the prior year, unless otherwise specified.

21



CONSUMER & COMMUNITY BANKING
Refer to pages 62–65 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on page 173 for a discussion of the business profile of CCB.
Selected income statement data          
 Three months ended September 30, Nine months ended September 30,
(in millions, except ratios)2019
 2018
 Change
 2019
 2018
 Change
Revenue           
Lending- and deposit-related fees$1,026
 $936
 10 % $2,827
 $2,668
 6 %
Asset management, administration and commissions608
 626
 (3) 1,890
 1,792
 5
Mortgage fees and related income886
 260
 241
 1,561
 1,049
 49
Card income1,176
 1,219
 (4) 3,601
 3,299
 9
All other income1,399
 1,135
 23
 3,989
 3,255
 23
Noninterest revenue5,095
 4,176
 22
 13,868
 12,063
 15
Net interest income9,164
 9,114
 1
 27,975
 26,321
 6
Total net revenue14,259
 13,290
 7
 41,843
 38,384
 9
            
Provision for credit losses1,311
 980
 34
 3,745
 3,405
 10
            
Noninterest expense           
Compensation expense2,683
 2,635
 2
 8,063
 7,916
 2
Noncompensation expense(a)
4,607
 4,347
 6
 13,600
 12,854
 6
Total noninterest expense7,290
 6,982
 4
 21,663
 20,770
 4
Income before income tax expense5,658
 5,328
 6
 16,435
 14,209
 16
Income tax expense1,385
 1,242
 12
 4,025
 3,385
 19
Net income$4,273
 $4,086
 5
 $12,410
 $10,824
 15
            
Revenue by line of business           
Consumer & Business Banking$6,688
 $6,385
 5
 $20,053
 $18,238
 10
Home Lending1,465
 1,306
 12
 3,929
 4,162
 (6)
Card, Merchant Services & Auto6,106
 5,599
 9
 17,861
 15,984
 12
            
Mortgage fees and related income details:           
Net production revenue738
 108
 NM
 1,291
 296
 336
Net mortgage servicing revenue(b)
148
 152
 (3) 270
 753
 (64)
Mortgage fees and related income$886
 $260
 241 % $1,561
 $1,049
 49 %
            
Financial ratios           
Return on equity32% 31%   31% 27%  
Overhead ratio51
 53
   52
 54
  
Note: In the discussion and the tables which follow, CCB presents certain financial measures which exclude the impact of PCI loans; these are non-GAAP financial measures.
(a)Included operating lease depreciation expense of $1.0 billion and $862 million for the three months ended September 30, 2019 and 2018, respectively, and $3.0 billion and $2.5 billion for nine months ended September 30, 2019 and 2018, respectively.
(b)Included MSR risk management results of $53 million and $(88) million for the three months ended September 30, 2019 and 2018, respectively and $(200) million and $(94) million for nine months ended September 30, 2019 and 2018, respectively.

22



Quarterly results
Net income was $4.3 billion, an increase of 5%.
Net revenue was $14.3 billion, an increase of 7%. Net production revenue included approximately $350 million of gains on the sale of certain mortgage loans that were predominantly offset by a charge in net interest income for the unwind of the related internal funding from Treasury and Chief Investment Office (“CIO”) associated with these loans. The charge reflects the net present value of that funding and is recognized as interest income in Treasury and CIO. Refer to Corporate on pages 42–43 of this Form 10-Q and Funds Transfer Pricing (“FTP”) on page 60 of the Firm’s 2018 Form 10-K for further information.
Net interest income was $9.2 billion, up 1% and includes the charge from the loan sales mentioned above. Excluding this charge, net interest income increased, driven by:
higher loan balances and margin expansion in Card, as well as growth in deposit balances and higher deposit margins in CBB,
partially offset by
lower loan balances due to loan sales, as well as loan spread compression in Home Lending.
Noninterest revenue was $5.1 billion, up 22% and includes the gain from the loan sales mentioned above. Excluding this gain, noninterest revenue increased, driven by:
higher net mortgage production revenue reflecting higher production volumes and margins, and
higher auto lease volume
net mortgage servicing revenue, which remained relatively flat, reflecting lower operating revenue driven by the impact of reclassifying certain loans to held-for-sale and faster prepayment speeds on lower rates, offset by favorable MSR risk management results.
Refer to Note 14 for further information regarding changes in value of the MSR asset and related hedges, and mortgage fees and related income.
Noninterest expense was $7.3 billion, up 4%, predominantly driven by:
technology, marketing and other investments in the business, as well as higher auto lease depreciation,
partially offset by
expense efficiencies and lower FDIC charges.
 
The provision for credit losses was $1.3 billion, an increase of 34%, reflecting:
an increase in credit card due to
higher net charge-offs on loan growth, in line with expectations, and
a $200 million addition to the allowance for loan losses reflecting higher loss rates, as newer vintages season and become a larger part of the portfolio, compared to a $150 million addition in the prior year
an increase in consumer, excluding credit card due to
a $100 million reduction in the allowance for loan losses in the non credit-impaired residential real estate portfolio, compared to a $250 million reduction in the PCI residential real estate portfolio in the prior year, and
lower net recoveries in the residential real estate portfolio as the prior year benefited from a larger recovery on a loan sale
partially offset by
a $50 million reduction in the allowance for loan losses in the business banking portfolio.


23



Year-to-date results
Net income was $12.4 billion, an increase of 15%.
Net revenue was $41.8 billion, an increase of 9%. Net production revenue included gains on sales of certain mortgage loans that were predominantly offset by charges in net interest income for the unwind of the related internal funding from Treasury and CIO associated with these loans.
Net interest income was $28.0 billion, up 6%, and includes charges from the loan sales mentioned above. Excluding these charges, net interest income increased, driven by:
higher deposit margins and growth in deposit balances in CBB, as well as higher loan balances and margin expansion in Card,
partially offset by
lower loan balances due to loan sales, as well as loan spread compression in Home Lending.
Noninterest revenue was $13.9 billion, up 15%, and includes gains from the loan sales mentioned above. Excluding these gains, noninterest revenue increased, driven by:
higher auto lease volume,
higher net mortgage production revenue reflecting higher production margins and volumes, and
the impact of the prior-year adjustment of approximately $330 million to the credit card rewards liability,
partially offset by
lower net mortgage servicing revenue driven by
lower operating revenue reflecting faster prepayment speeds on lower rates and the impact of reclassifying certain loans to held-for-sale, as well as
lower MSR risk management results reflecting updates to model inputs.
Noninterest expense was $21.7 billion, up 4%, driven by:
technology, marketing and other investments in the business, as well as higher auto lease depreciation,
partially offset by
expense efficiencies and lower FDIC charges.
 
The provision for credit losses was $3.7 billion, an increase of 10%, reflecting:
an increase in credit card due to
a $400 million addition to the allowance for loan losses reflecting higher loss rates, as newer vintages season and become a larger part of the portfolio and loan growth, compared to a $150 million addition in the prior year, and
higher net charge-offs on loan growth, in line with expectations
partially offset by
a decrease in consumer, excluding credit card due to
a $400 million reduction in the allowance for loan losses in the PCI residential real estate portfolio, reflecting continued improvement in home prices and delinquencies, and a $100 million reduction in the allowance for loan losses in the non credit-impaired residential real estate portfolio, compared to a $250 million reduction in the PCI residential real estate portfolio in the prior year, and
a $50 million reduction in the allowance for loan losses in the business banking portfolio
largely offset by
lower net recoveries in the residential real estate portfolio as the prior year benefited from larger recoveries on loan sales.



24



Selected metrics           
 As of or for the three months
ended September 30,
 As of or for the nine months
ended September 30,
(in millions, except headcount)2019
 2018
 Change
 2019 2018 Change
Selected balance sheet data (period-end)           
Total assets$532,487
 $560,432
 (5)% $532,487
 $560,432
 (5)%
Loans:           
Consumer & Business Banking26,699
 26,451
 1
 26,699
 26,451
 1
Home equity31,552
 37,461
 (16) 31,552
 37,461
 (16)
Residential mortgage171,787
 205,389
 (16) 171,787
 205,389
 (16)
Home Lending203,339
 242,850
 (16) 203,339
 242,850
 (16)
Card159,571
 147,881
 8
 159,571
 147,881
 8
Auto61,410
 63,619
 (3) 61,410
 63,619
 (3)
Total loans451,019
 480,801
 (6) 451,019
 480,801
 (6)
Core loans405,662
 425,917
 (5) 405,662
 425,917
 (5)
Deposits701,170
 677,260
 4
 701,170
 677,260
 4
Equity52,000
 51,000
 2
 52,000
 51,000
 2
Selected balance sheet data (average)           
Total assets$538,500
 $551,080
 (2) $544,833
 $544,931
 
Loans:           
Consumer & Business Banking26,550
 26,351
 1
 26,537
 26,104
 2
Home equity32,215
 38,211
 (16) 33,694
 39,951
 (16)
Residential mortgage181,157
 204,689
 (11) 191,881
 201,665
 (5)
Home Lending213,372
 242,900
 (12) 225,575
 241,616
 (7)
Card158,168
 146,272
 8
 154,375
 143,986
 7
Auto61,371
 64,060
 (4) 62,118
 65,096
 (5)
Total loans459,461
 479,583
 (4) 468,605
 476,802
 (2)
Core loans413,036
 422,582
 (2) 419,851
 415,662
 1
Deposits693,980
 674,211
 3
 688,676
 669,244
 3
Equity52,000
 51,000
 2
 52,000
 51,000
 2
            
Headcount127,687
 129,891
 (2)% 127,687
 129,891
 (2)%


25



Selected metrics          
 As of or for the three months
ended September 30,
 As of or for the nine months
ended September 30,
(in millions, except ratio data)2019

2018
 Change
 2019 2018 Change
Credit data and quality statistics           
Nonaccrual loans(a)(b)
$3,099

$3,520

(12)%
$3,099

$3,520

(12)%
            
Net charge-offs/(recoveries)(c)
           
Consumer & Business Banking79
 68
 16
 204
 171
 19
Home equity(25) (12) (108) (41) (3) NM
Residential mortgage(17) (105) 84
 (34) (252) 87
Home Lending(42) (117) 64
 (75) (255) 71
Card1,175
 1,073
 10
 3,617
 3,407
 6
Auto49
 56
 (13) 149
 182
 (18)
Total net charge-offs/(recoveries)$1,261
 $1,080
 17
 $3,895
 $3,505
 11
            
Net charge-off/(recovery) rate(c)
           
Consumer & Business Banking1.18 % 1.02%   1.03 % 0.88%  
Home equity(d)
(0.41) (0.17)   (0.22) (0.01)  
Residential mortgage(d)
(0.04) (0.22)   (0.03) (0.18)  
Home Lending(d)
(0.09) (0.21)   (0.05) (0.16)  
Card2.95
 2.91
   3.13
 3.16
  
Auto0.32
 0.35
   0.32
 0.37
  
Total net charge-off/(recovery) rate(d)
1.16
 0.95
   1.17
 1.05
  
            
30+ day delinquency rate           
Home Lending(e)(f)
0.78 % 0.81%   0.78 % 0.81%  
Card1.84
 1.75
   1.84
 1.75
  
Auto0.88
 0.82
   0.88
 0.82
  
            
90+ day delinquency rate — Card0.90
 0.85
   0.90
 0.85
  
            
Allowance for loan losses           
Consumer & Business Banking$746
 $796
 (6) $746
 $796
 (6)
Home Lending, excluding PCI loans903
 1,003
 (10) 903
 1,003
 (10)
Home Lending — PCI loans(c)
1,256
 1,824
 (31) 1,256
 1,824
 (31)
Card5,583
 5,034
 11
 5,583
 5,034
 11
Auto465
 464
 
 465
 464
 
Total allowance for loan losses(c)
$8,953
 $9,121
 (2)% $8,953
 $9,121
 (2)%
(a)Excludes PCI loans. The Firm is recognizing interest income on each pool of PCI loans as each of the pools is performing.
(b)At September 30, 2019 and 2018, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $1.6 billion and $2.9 billion, respectively. These amounts have been excluded based upon the government guarantee.
(c)Net charge-offs/(recoveries) and the net charge-off/(recovery) rates for the three months ended September 30, 2019 and 2018, excluded $43 million and $58 million, respectively, and for nine months ended September 30, 2019 and 2018, excluded $132 million and $151 million, respectively, of write-offs in the PCI portfolio. These write-offs decreased the allowance for loan losses for PCI loans. Refer to Summary of changes in the allowance for credit losses on page 68 for further information on PCI write-offs.
(d)Excludes the impact of PCI loans. For the three months ended September 30, 2019 and 2018, the net charge-off/(recovery) rates including the impact of PCI loans were as follows: (1) home equity of (0.31)% and (0.12)%, respectively; (2) residential mortgage of (0.04)% and (0.20)%, respectively; (3) Home Lending of (0.08)% and (0.19)%, respectively; and (4) total CCB of 1.10% and 0.89%, respectively. For nine months ended September 30, 2019 and 2018, the net charge-off/(recovery) rates included impact of PCI loans were as follows: (1) home equity of (0.16)% and (0.01)%, respectively; (2) residential mortgage of (0.02)% and (0.17)%, respectively; (3) Home Lending of (0.04)% and (0.14)%, respectively; and (4) total CCB of 1.12% and 0.98%, respectively.
(e)At September 30, 2019 and 2018, excluded mortgage loans insured by U.S. government agencies of $2.7 billion and $4.5 billion, respectively, that are 30 or more days past due. These amounts have been excluded based upon the government guarantee.
(f)Excludes PCI loans. The 30+ day delinquency rate for PCI loans was 8.56% and 9.39% at September 30, 2019 and 2018, respectively.

26



Selected metrics          
 As of or for the three months
ended September 30,
 As of or for the nine months
ended September 30,
(in billions, except ratios and where otherwise noted)2019
 2018
 Change
 2019
 2018
 Change
Business Metrics           
Number of branches4,949
 5,066
 (2)% 4,949
 5,066
 (2)%
Active digital customers
(in thousands)(a)
51,843
 48,664
 7
 51,843
 48,664
 7
Active mobile customers
(in thousands)(b)
36,510
 32,538
 12
 36,510
 32,538
 12
Debit and credit card sales volume$282.2

$259.0

9
 $818.8

$746.4
 10
            
Consumer & Business Banking           
Average deposits$678.3
 $659.5
 3
 $674.5
 $655.3
 3
Deposit margin2.47% 2.43%   2.56% 2.33%  
Business banking origination volume$1.6
 $1.6
 (5) $4.8
 $5.2
 (8)
Client investment assets337.9
 298.4
 13
 337.9
 298.4
 13
            
Home Lending           
Mortgage origination volume by channel           
Retail$14.2
 $10.6
 34
 $34.6
 $29.3
 18
Correspondent18.2
 11.9
 53
 37.3
 32.9
 13
Total mortgage origination volume(c)
$32.4
 $22.5
 44
 $71.9
 $62.2
 16
            
Total loans serviced (period-end)$774.8
 $798.6
 (3) $774.8
 $798.6
 (3)
Third-party mortgage loans serviced (period-end)535.8
 526.5
 2
 535.8
 526.5
 2
MSR carrying value (period-end)4.4
 6.4
 (31) 4.4
 6.4
 (31)
Ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end)0.82% 1.22%   0.82% 1.22%  
            
MSR revenue multiple(d)
2.41x 3.49x   2.34x 3.49x  
            
Card, excluding Commercial Card           
Credit card sales volume$193.6
 $176.0
 10
 $558.6
 $507.1
 10
            
Card Services           
Net revenue rate11.40% 11.50%   11.50% 11.17%  
            
Merchant Services           
Merchant processing volume$380.5
 $343.8
 11
 $1,108.6
 $990.9
 12
            
Auto           
Loan and lease origination volume$9.1
 $8.1
 12
 $25.5
 $24.8
 3
Average auto operating lease assets21.8
 19.2
 14 % 21.3
 18.4
 16 %
(a)Users of all web and/or mobile platforms who have logged in within the past 90 days.
(b)Users of all mobile platforms who have logged in within the past 90 days.
(c)Firmwide mortgage origination volume was $35.8 billion and $24.5 billion for the three months ended September 30, 2019 and 2018, respectively, and $78.5 billion and $68.2 billion for nine months ended September 30, 2019 and 2018, respectively.
(d)Represents the ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end) divided by the ratio of annualized loan servicing-related revenue to third-party mortgage loans serviced (average).


27


CORPORATE & INVESTMENT BANK
Refer to pages 66–70 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on page 173 for a discussion of the business profile of CIB.
Selected income statement data        
 Three months ended September 30, Nine months ended September 30,
(in millions, except ratios)2019 2018 Change 2019 2018 Change
Revenue           
Investment banking fees$1,981
 $1,823
 9 % $5,671
 $5,658
 
Principal transactions3,418
 3,091
 11
 11,466
 10,786
 6
Lending- and deposit-related fees360
 373
 (3) 1,095
 1,136
 (4)
Asset management, administration and commissions1,197
 1,130
 6
 3,447
 3,416
 1
All other income226
 88
 157
 649
 958
 (32)
Noninterest revenue7,182
 6,505
 10
 22,328
 21,954
 2
Net interest income2,156
 2,300
 (6) 6,499
 7,257
 (10)
Total net revenue(a)
9,338
 8,805
 6
 28,827
 29,211
 (1)
            
Provision for credit losses92
 (42) NM
 179
 (142) NM
            
Noninterest expense           
Compensation expense2,734
 2,402
 14
 8,381
 8,158
 3
Noncompensation expense2,614
 2,773
 (6) 7,907
 8,079
 (2)
Total noninterest expense5,348
 5,175
 3
 16,288
 16,237
 
Income before income tax expense3,898
 3,672
 6
 12,360
 13,116
 (6)
Income tax expense1,089
 1,046
 4
 3,365
 3,318
 1
Net income$2,809
 $2,626
 7 % $8,995
 $9,798
 (8)%
Financial ratios           
Return on equity13% 14%   14% 18%  
Overhead ratio57
 59
   57
 56
  
Compensation expense as percentage of total net revenue29
 27
   29
 28
  
(a)Includes tax-equivalent adjustments, predominantly due to income tax credits related to alternative energy investments; income tax credits and amortization of the cost of investments in affordable housing projects; and tax-exempt income from municipal bonds of $527 million and $354 million for the three months ended September 30, 2019 and 2018, respectively, and $1.6 billion and $1.2 billion for the nine months ended September 30, 2019 and 2018, respectively.
Selected income statement data        
 Three months ended September 30, Nine months ended September 30,
(in millions)2019 2018 Change 2019 2018 Change
Revenue by business           
Investment Banking$1,871
 $1,731
 8 % $5,392
 $5,267
 2 %
Treasury Services1,101
 1,183
 (7) 3,383
 3,480
 (3)
Lending329
 331
 (1) 1,006
 954
 5
Total Banking3,301
 3,245
 2
 9,781
 9,701
 1
Fixed Income Markets3,557
 2,844
 25
 10,972
 10,850
 1
Equity Markets1,517
 1,595
 (5) 4,986
 5,571
 (11)
Securities Services1,034
 1,057
 (2) 3,093
 3,219
 (4)
Credit Adjustments & Other(a)
(71) 64
 NM
 (5) (130) 96
Total Markets & Securities Services6,037
 5,560
 9
 19,046
 19,510
 (2)
Total net revenue$9,338
 $8,805
 6 % $28,827
 $29,211
 (1)%
(a)Consists primarily of credit valuation adjustments (“CVA”) managed centrally within CIB and funding valuation adjustments (“FVA”) on derivatives. Results are primarily reported in principal transactions revenue. Results are presented net of associated hedging activities and net of CVA and FVA amounts
allocated to Fixed Income Markets and Equity Markets.


28


Quarterly results
Net income was $2.8 billion, up 7%.
Net revenue was $9.3 billion, up 6%.
Banking revenue was $3.3 billion, up 2%.
Investment Banking revenue was $1.9 billion, up 8%, driven by higher debt and equity underwriting fees, partially offset by lower advisory fees. The Firm maintained its #1 ranking for Global Investment Banking fees with overall share gains, according to Dealogic.
Debt underwriting fees were $961 million, up 17%, reflecting wallet share gains despite a decline in industry-wide fees, driven by participation in large acquisition financing deals and increased activity in investment-grade bonds.
Equity underwriting fees were $514 million, up 22%, driven by wallet share gains primarily in the IPO and convertible markets.
Advisory fees were $506 million, down 13%, driven by a decline in industry-wide fees compared to a strong prior year.
Treasury Services revenue was $1.1 billion, down 7%, driven by deposit margin compression partially offset by fee growth and higher balances.
Lending revenue was $329 million, down 1%.
Markets & Securities Services revenue was $6.0 billion, up 9%. Markets revenue was $5.1 billion, up 14%.
Fixed Income Markets revenue was $3.6 billion, up 25% compared to the prior year which reflected less favorable market conditions. The current quarter results were driven by strong client activity across products primarily in Rates, agency mortgage trading within Securitized Products and Commodities.
Equity Markets revenue was $1.5 billion, down 5% compared to a strong prior year. The current quarter results were driven by lower revenue in derivatives reflecting lower client activity and less favorable market conditions which were partially offset by higher revenue in Cash Equities.
Securities Services revenue was $1.0 billion, down 2%, with deposit margin compression largely offset by organic growth.
The provision for credit losses was $92 million, largely driven by a net addition to the allowance for credit losses related to select emerging market client downgrades. The prior year was a benefit of $42 million reflecting a net recovery related to a loan sale.
Noninterest expense was $5.3 billion, up 3%, driven by higher volume- and revenue-related expenses and investments, including compensation expense, largely offset
 
by lower legal expenses and FDIC charges.
Year-to-date results
Net income was $9.0 billion, down 8%.
Net revenue was $28.8 billion, down 1%.
Banking revenue was $9.8 billion, up 1% compared to the prior year.
Investment Banking revenue was $5.4 billion, up 2%, with higher debt underwriting, predominantly offset by lower advisory and equity underwriting fees. The Firm maintained its #1 ranking for Global Investment Banking fees with overall share gains, according to Dealogic.
Debt underwriting fees were $2.7 billion, up 7%, reflecting wallet share gains despite a decline in industry-wide fees, driven by participation in large acquisition financing deals.
Advisory fees were $1.7 billion, down 6%, and Equity underwriting fees were $1.3 billion, down 4%, driven by a decline in industry-wide fees despite wallet share gains.
Treasury Services revenue was $3.4 billion, down 3%, with deposit margin compression predominantly offset by fee growth and higher balances.
Lending revenue was $1.0 billion, up 5%, predominantly driven by higher net interest income reflecting growth in loan balances.
Markets & Securities Services revenue was $19.0 billion, down 2%. Markets revenue was $16.0 billion, down 3% which included a gain from the IPO of Tradeweb. In addition, prior year results included approximately $500 million of fair value gains related to the adoption of the recognition and measurement accounting guidance for certain equity investments previously held at cost.
Fixed Income Markets revenue was $11.0 billion, up 1% reflecting higher revenue in agency mortgage trading within Securitized Products and Commodities partially offset by lower revenue in Currencies & Emerging Markets.
Equity Markets revenue was $5.0 billion, down 11% compared to a strong prior year, predominantly driven by lower client activity in derivatives.
Securities Services revenue was $3.1 billion, down 4%, driven by deposit margin compression and the impact of a business exit partially offset by organic growth.
Credit Adjustments & Other was a loss of $5 million, compared with a loss of $130 million in the prior year.
The provision for credit losses was $179 million reflecting select C&I client downgrades including those in an emerging market. The prior year was a benefit of $142 million, primarily driven by loan sales and other activity related to a single name in the Oil & Gas portfolio, partially offset by other net portfolio activity.
Noninterest expense was $16.3 billion, flat compared to the prior year reflecting higher volume-related expenses and investments, including front office hires, as well as technology staff, predominantly offset by lower FDIC charges and revenue-related compensation expense.

29


Selected metrics          
 As of or for the three months
ended September 30,
 As of or for the nine months
ended September 30,
(in millions, except headcount)2019 2018 Change 2019 2018 Change
Selected balance sheet data (period-end)           
Assets$1,023,132
 $928,148
 10 % $1,023,132
 $928,148
 10 %
Loans:           
Loans retained(a)
118,290
 117,084
 1
 118,290
 117,084
 1
Loans held-for-sale and loans at fair value8,324
 6,133
 36
 8,324
 6,133
 36
Total loans126,614
 123,217
 3
 126,614
 123,217
 3
Core loans126,445
 122,953
 3
 126,445
 122,953
 3
Equity80,000
 70,000
 14
 80,000
 70,000
 14
Selected balance sheet data (average)           
Assets$1,003,395
 $924,909
 8
 $985,503
 $924,145
 7
Trading assets-debt and equity instruments415,450
 349,390
 19
 406,304
 354,270
 15
Trading assets-derivative receivables48,266
 62,025
 (22) 49,221
 60,943
 (19)
Loans:           
Loans retained(a)
$119,007
 $115,390
 3
 $123,368
 $112,921
 9
Loans held-for-sale and loans at fair value8,344
 7,328
 14
 8,239
 6,263
 32
Total loans$127,351
 $122,718
 4
 $131,607
 $119,184
 10
Core loans127,187
 122,442
 4
 131,436
 118,877
 11
Equity80,000
 70,000
 14
 80,000
 70,000
 14
Headcount55,873
 54,052
 3 % 55,873
 54,052
 3 %
(a)Loans retained includes credit portfolio loans, loans held by consolidated Firm-administered multi-seller conduits, trade finance loans, other held-for-investment loans and overdrafts.

Selected metrics           
 As of or for the three months
ended September 30,
 As of or for the nine months
ended September 30,
(in millions, except ratios)2019 2018 Change 2019 2018 Change
Credit data and quality statistics           
Net charge-offs/(recoveries)$38
 $(40) NM
 $140
 $94
 49 %
Nonperforming assets:           
Nonaccrual loans:           
Nonaccrual loans retained(a)
$712
 $318
 124 % $712
 $318
 124
Nonaccrual loans held-for-sale and loans at fair value
262
 9
 NM
 262
 9
 NM
Total nonaccrual loans974
 327
 198
 974
 327
 198
Derivative receivables26
 90
 (71) 26
 90
 (71)
Assets acquired in loan satisfactions75
 61
 23
 75
 61
 23
Total nonperforming assets$1,075
 $478
 125
 $1,075
 $478
 125
Allowance for credit losses:           
Allowance for loan losses$1,171
 $1,068
 10
 $1,171
 $1,068
 10
Allowance for lending-related commitments824
 802
 3
 824
 802
 3
Total allowance for credit losses$1,995
 $1,870
 7 % $1,995
 $1,870
 7 %
Net charge-off/(recovery) rate(b)
0.13% (0.14)%   0.15% 0.11%  
Allowance for loan losses to period-end loans retained0.99
 0.91
   0.99
 0.91
  
Allowance for loan losses to period-end loans retained, excluding trade finance and conduits(c)
1.33
 1.27
   1.33
 1.27
  
Allowance for loan losses to nonaccrual loans retained(a)
164
 336
   164
 336
  
Nonaccrual loans to total period-end loans0.77% 0.27 %   0.77% 0.27%  
(a)Allowance for loan losses of $207 million and $145 million were held against these nonaccrual loans at September 30, 2019 and 2018, respectively.
(b)Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate.
(c)Management uses allowance for loan losses to period-end loans retained, excluding trade finance and conduits, a non-GAAP financial measure, to provide a more meaningful assessment of CIB’s allowance coverage ratio.

30


Investment banking fees          
 Three months ended September 30, Nine months ended September 30,
(in millions)2019 2018 Change 2019 2018 Change
Advisory$506
 $581
 (13)% $1,675
 $1,782
 (6)%
Equity underwriting514
 420
 22
 1,284
 1,336
 (4)
Debt underwriting(a)
961
 822
 17
 2,712
 2,540
 7
Total investment banking fees$1,981
 $1,823
 9 % $5,671
 $5,658
 
(a)Represents long-term debt and loan syndications.
League table results – wallet share                
 Three months ended September 30, Nine months ended September 30, Full-year 2018
 2019 2018 2019 2018 
 Rank Share Rank Share Rank Share Rank Share Rank Share
Based on fees(a)
                   
M&A(b)
                   
Global#2
 8.6 #2
 8.4 #2
 9.3 #2
 8.8 #2
 8.7%
U.S.4
 8.7 3
 7.0 2
 9.4 2
 9.3 2
 8.9
Equity and equity-related(c)
                   
Global1
 11.9 1
 9.7 1
 10.3 3
 9.1 1
 9.0
U.S.1
 17.3 1
 13.2 1
 13.8 1
 12.5 1
 12.3
Long-term debt(d)
                   
Global1
 8.8 1
 7.8 1
 8.0 1
 7.4 1
 7.2
U.S.1
 13.7 1
 12.9 1
 12.2 1
 11.4 1
 11.2
Loan syndications                   
Global1
 10.1 1
 10.8 1
 10.6 1
 9.9 1
 9.7
U.S.1
 13.0 1
 14.4 1
 13.2 1
 12.6 1
 12.3
Global investment banking fees(e)
#1
 9.6 #1
 9.0 #1
 9.3 #1
 8.7 #1
 8.6%
(a)Source: Dealogic as of October 1, 2019. Reflects the ranking of revenue wallet and market share.
(b)Global M&A excludes any withdrawn transactions. U.S. M&A revenue wallet represents wallet from client parents based in the U.S.
(c)Global equity and equity-related ranking includes rights offerings and Chinese A-Shares.
(d)Long-term debt rankings include investment-grade, high-yield, supranationals, sovereigns, agencies, covered bonds, asset-backed securities (“ABS”) and mortgage-backed securities (“MBS”); and exclude money market, short-term debt, and U.S. municipal securities.
(e)Global investment banking fees exclude money market, short-term debt and shelf deals.

31


Markets revenue
The following table summarizes select income statement data for the Markets businesses. Markets includes both Fixed Income Markets and Equity Markets. Markets revenue comprises principal transactions, fees, commissions and other income, as well as net interest income. The Firm assesses its Markets business performance on a total revenue basis, as offsets may occur across revenue line items. For example, securities that generate net interest income may be risk-managed by derivatives that are
 
recorded in principal transactions revenue. Refer to Notes 5 and 6 for a description of the composition of these income statement line items. Refer to Markets revenue on page 69 of JPMorgan Chase’s 2018 Form 10-K for further information.
For the periods presented below, the predominant source of principal transactions revenue was the amount recognized
upon executing new transactions.
 Three months ended September 30, Three months ended September 30,
 2019 2018

(in millions)
Fixed Income MarketsEquity MarketsTotal Markets Fixed Income MarketsEquity MarketsTotal Markets
Principal transactions$2,292
$1,263
$3,555
 $1,849
$1,252
$3,101
Lending- and deposit-related fees51
1
52
 51
1
52
Asset management, administration and commissions110
472
582
 96
446
542
All other income108
54
162
 33
7
40
Noninterest revenue2,561
1,790
4,351
 2,029
1,706
3,735
Net interest income996
(273)723
 815
(111)704
Total net revenue$3,557
$1,517
$5,074
 $2,844
$1,595
$4,439
 Nine months ended September 30, Nine months ended September 30,
 2019 2018

(in millions)
Fixed Income MarketsEquity MarketsTotal Markets Fixed Income MarketsEquity MarketsTotal Markets
Principal transactions$7,205
$4,428
$11,633
 $6,795
$4,528
$11,323
Lending- and deposit-related fees149
5
154
 147
4
151
Asset management, administration and commissions310
1,359
1,669
 313
1,364
1,677
All other income500
31
531
 764
18
782
Noninterest revenue8,164
5,823
13,987
 8,019
5,914
13,933
Net interest income(a)
2,808
(837)1,971
 2,831
(343)2,488
Total net revenue$10,972
$4,986
$15,958
 $10,850
$5,571
$16,421
(a)Declines in Markets net interest income were driven by higher funding costs.


32


Selected metrics           
 As of or for the three months
ended September 30,
 As of or for the nine months
ended September 30,
(in millions, except where otherwise noted)2019 2018 Change 2019 2018 Change
Assets under custody (“AUC”) by asset class (period-end)
(in billions):
           
Fixed Income$13,349
 $12,339
 8% $13,349
 $12,339
 8%
Equity9,301
 9,174
 1
 9,301
 9,174
 1
Other(a)
3,045
 2,890
 5
 3,045
 2,890
 5
Total AUC$25,695

$24,403
 5
 $25,695
 $24,403
 5
Client deposits and other third-party liabilities (average)(b)
$471,291

$434,847
 8% $457,961
 $430,640
 6%
(a)Consists of mutual funds, unit investment trusts, currencies, annuities, insurance contracts, options and other contracts.
(b)Client deposits and other third-party liabilities pertain to the Treasury Services and Securities Services businesses.
International metrics           
 As of or for the three months
ended September 30,
 As of or for the nine months
ended September 30,
(in millions, except where
 otherwise noted)
2019 
2018(c)
 Change 2019 
2018(c)
 Change
Total net revenue(a)
           
Europe/Middle East/Africa$2,892
 $2,773
 4 % $8,955
 $9,936
 (10)%
Asia/Pacific1,428
 1,234
 16
 4,143
 3,997
 4
Latin America/Caribbean404
 318
 27
 1,205
 1,123
 7
Total international net revenue4,724
 4,325
 9
 14,303
 15,056
 (5)
North America4,614
 4,480
 3
 14,524
 14,155
 3
Total net revenue$9,338
 $8,805
 6
 $28,827
 $29,211
 (1)
            
Loans retained (period-end)(a)
          
Europe/Middle East/Africa$23,807
 $25,341
 (6) $23,807
 $25,341
 (6)
Asia/Pacific14,402
 16,907
 (15) 14,402
 16,907
 (15)
Latin America/Caribbean5,782
 6,097
 (5) 5,782
 6,097
 (5)
Total international loans43,991
 48,345
 (9) 43,991
 48,345
 (9)
North America74,299
 68,739
 8
 74,299
 68,739
 8
Total loans retained$118,290
 $117,084
 1
 $118,290
 $117,084
 1
            
Client deposits and other third-party liabilities (average)(b)
           
Europe/Middle East/Africa$175,354
 $162,060
 8
 $171,601
 $162,102
 6
Asia/Pacific91,556
 81,771
 12
 87,866
 82,272
 7
Latin America/Caribbean30,165
 26,196
 15
 28,849
 26,477
 9
Total international$297,075
 $270,027
 10
 $288,316
 $270,851
 6
North America174,216
 164,820
 6
 169,645
 159,789
 6
Total client deposits and other third-party liabilities$471,291
 $434,847
 8
 $457,961
 $430,640
 6
            
AUC (period-end)(b)
(in billions)
           
North America$16,146
 $15,148
 7
 $16,146
 $15,148
 7
All other regions9,549
 9,255
 3
 9,549
 9,255
 3
Total AUC$25,695
 $24,403
 5 % $25,695
 $24,403
 5 %
(a)Total net revenue and loans retained (excluding loans held-for-sale and loans at fair value) are based on the location of the trading desk, booking location, or domicile of the client, as applicable.
(b)Client deposits and other third-party liabilities pertaining to the Treasury Services and Securities Services businesses, and AUC, are based on the domicile of the client.
(c)The prior period amounts have been revised to conform with the current period presentation.

33


COMMERCIAL BANKING
Refer to pages 71-73 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on page 174 for a discussion of the business profile of CB.
Selected income statement data      
 Three months ended September 30, Nine months ended September 30,
(in millions)2019
 2018
 Change
 2019
 2018
 Change
Revenue           
Lending- and deposit-related fees$221
 $216
 2 % $664
 $666
  %
All other income(a)
378
 360
 5
 1,142
 1,092
 5
Noninterest revenue599
 576
 4
 1,806
 1,758
 3
Net interest income1,608
 1,695
 (5) 4,950
 4,995
 (1)
Total net revenue(b)
2,207
 2,271
 (3) 6,756
 6,753
 
            
Provision for credit losses67
 (15) NM
 186
 23
 NM
            
Noninterest expense           
Compensation expense454
 432
 5
 1,341
 1,268
 6
Noncompensation expense427
 421
 1
 1,277
 1,273
 
Total noninterest expense881
 853
 3
 2,618
 2,541
 3
            
Income before income tax expense1,259
 1,433
 (12) 3,952
 4,189
 (6)
Income tax expense322
 344
 (6) 966
 988
 (2)
Net income$937
 $1,089
 (14)% $2,986
 $3,201
 (7)%
(a)Effective in the first quarter of 2019, includes revenue from investment banking products, commercial card transactions and asset management fees. The prior period amounts have been revised to conform with the current period presentation.
(b)Total net revenue included tax-equivalent adjustments from income tax credits related to equity investments in designated community
development entities that provide loans to qualified businesses in low-income communities, as well as tax-exempt income related to municipal financing activities of $114 million and $107 million for the three months ended September 30, 2019 and 2018, respectively and $308 million and $316 million for the nine months ended September 30, 2019 and 2018, respectively.
Quarterly results
Net income was $937 million, a decrease of 14%.
Net revenue was $2.2 billion, down 3%. Net interest income was $1.6 billion, down 5%, driven by lower deposit margins, partially offset by higher deposit balances. Noninterest revenue was $599 million, an increase of 4%, predominantly driven by strong investment banking performance due to increased equity underwriting and M&A activity.
Noninterest expense was $881 million, up 3%, predominantly driven by investments in the business, largely offset by lower FDIC charges.
The provision for credit losses was $67 million, compared with a benefit of $15 million in the prior year.
 
Year-to-date results
Net income was $3.0 billion, a decrease of 7%.
Net revenue of $6.8 billion was flat. Net interest income was $5.0 billion, a decrease of 1%, driven by lower loan spreads and lower deposit balances, largely offset by higher deposit margins. Noninterest revenue was $1.8 billion, up 3% driven by higher investment banking revenue, predominantly due to increased equity underwriting and M&A activity.
Noninterest expense was $2.6 billion, an increase of 3%, predominantly driven by continued investments in the business, largely offset by lower FDIC charges.
The provision for credit losses was $186 million, largely driven by a net addition to the allowance for credit losses related to select C&I client downgrades.

34


Selected income statement data (continued)      
 Three months ended September 30, Nine months ended September 30,
(in millions, except ratios)2019
 2018
 Change
 2019
 2018
 Change
Revenue by product           
Lending$1,006
 $1,027
 (2)% $3,030
 $3,052
 (1)%
Treasury services950
 1,021
 (7) 2,968
 3,019
 (2)
Investment banking(a)
226
 206
 10
 708
 644
 10
Other25
 17
 47
 50
 38
 32
Total Commercial Banking net revenue$2,207
 $2,271
 (3) $6,756
 $6,753
 
            
Investment banking revenue, gross(b)
$700
 $581
 20
 $2,110
 $1,889
 12
            
Revenue by client segments           
Middle Market Banking$903
 $935
 (3) $2,793
 $2,749
 2
Corporate Client Banking739
 749
 (1) 2,264
 2,243
 1
Commercial Real Estate Banking(c)
547
 562
 (3) 1,632
 1,681
 (3)
Other(c)
18
 25
 (28) 67
 80
 (16)
Total Commercial Banking net revenue$2,207
 $2,271
 (3)% $6,756
 $6,753
  %
            
Financial ratios           
Return on equity16% 21%   17% 20%  
Overhead ratio40
 38
   39
 38
  
(a)Includes CB’s share of revenue from investment banking products sold to CB clients through the CIB.
(b)Refer to page 60 of the 2018 Form 10-K for discussion of revenue sharing.
(c)Effective in the first quarter of 2019, client segment data includes Commercial Real Estate Banking which comprises the former Commercial Term Lending and Real Estate Banking client segments, and Community Development Banking (previously part of Other). The prior period amounts have been revised to conform with the current period presentation.


35


Selected metrics      
 As of or for the three months
ended September 30,
 As of or for the nine months
ended September 30,
(in millions, except headcount)2019
2018
Change
 20192018Change
Selected balance sheet data (period-end)       
Total assets$222,483
$217,194
2 % $222,483
$217,194
2 %
Loans:       
Loans retained209,448
205,177
2
 209,448
205,177
2
Loans held-for-sale and loans at fair value3,187
405
NM
 3,187
405
NM
Total loans$212,635
$205,582
3
 $212,635
$205,582
3
Core loans212,514
205,418
3
 212,514
205,418
3
Equity22,000
20,000
10
 22,000
20,000
10
        
Period-end loans by client segment       
Middle Market Banking$54,298
$57,324
(5) $54,298
$57,324
(5)
Corporate Client Banking55,976
46,890
19
 55,976
46,890
19
Commercial Real Estate Banking(a)
101,326
100,072
1
 101,326
100,072
1
Other(a)
1,035
1,296
(20) 1,035
1,296
(20)
Total Commercial Banking loans$212,635
$205,582
3
 $212,635
$205,582
3
        
Selected balance sheet data (average)       
Total assets$218,620
$219,232

 $218,560
$218,270

Loans:       
Loans retained207,286
205,603
1
 206,183
203,950
1
Loans held-for-sale and loans at fair value963
1,617
(40) 1,097
1,139
(4)
Total loans$208,249
$207,220

 $207,280
$205,089
1
Core loans208,125
207,052
1
 207,145
204,902
1
        
Average loans by client segment       
Middle Market Banking$54,806
$57,258
(4) $56,221
$57,121
(2)
Corporate Client Banking51,389
49,004
5
 49,407
47,650
4
Commercial Real Estate Banking(a)
101,044
99,627
1
 100,663
98,880
2
Other(a)
1,010
1,331
(24) 989
1,438
(31)
Total Commercial Banking loans$208,249
$207,220

 $207,280
$205,089
1
        
Client deposits and other third-party liabilities$172,714
$168,169
3
 $169,427
$171,483
(1)
Equity22,000
20,000
10
 22,000
20,000
10
        
Headcount11,501
10,937
5 % 11,501
10,937
5 %
(a)Effective in the first quarter of 2019, client segment data includes Commercial Real Estate Banking which comprises the former Commercial Term Lending and Real Estate Banking client segments, and Community Development Banking (previously part of Other). The prior period amounts have been revised to conform with the current period presentation.

36


Selected metrics (continued)        
 As of or for the three months
ended September 30,
 As of or for the nine months
ended September 30,
(in millions, except ratios)2019
2018
Change
 2019
 2018
 Change
Credit data and quality statistics         
Net charge-offs/(recoveries)$45
$(18)NM
 $71
 $16
 344%
Nonperforming assets         
Nonaccrual loans:         
Nonaccrual loans retained(a)
$659
$452
46% $659
 $452
 46%
Nonaccrual loans held-for-sale and loans at fair value
5
NM
 
 5
 NM
Total nonaccrual loans$659
$457
44
 $659
 $457
 44
Assets acquired in loan satisfactions19
2
NM
 19
 2
 NM
Total nonperforming assets$678
$459
48
 $678
 $459
 48
Allowance for credit losses:         
Allowance for loan losses$2,759
$2,619
5
 $2,759
 $2,619
 5
Allowance for lending-related commitments293
249
18
 293
 249
 18
Total allowance for credit losses$3,052
$2,868
6% $3,052
 $2,868
 6%
Net charge-off/(recovery) rate(b)
0.09%(0.03)%  0.05% 0.01%  
Allowance for loan losses to period-end loans retained
1.32
1.28
  1.32
 1.28
  
Allowance for loan losses to nonaccrual loans retained(a)
419
579
  419
 579
  
Nonaccrual loans to period-end total loans0.31
0.22
  0.31
 0.22
  
(a)Allowance for loan losses of $119 million and $105 million was held against nonaccrual loans retained at September 30, 2019 and 2018, respectively.
(b)Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate.


37


ASSET & WEALTH MANAGEMENT
Refer to pages 74–76 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on pages 174–175 for a discussion of the business profile of AWM.
Selected income statement data    
(in millions, except ratios)Three months ended September 30, Nine months ended September 30,
2019
2018
Change
 2019
2018
Change
Revenue       
Asset management, administration and commissions$2,574
$2,563
 % $7,558
$7,623
(1)%
All other income139
117
19
 431
374
15
Noninterest revenue2,713
2,680
1
 7,989
7,997

Net interest income855
879
(3) 2,627
2,640

Total net revenue3,568
3,559

 10,616
10,637

        
Provision for credit losses44
23
91
 48
40
20
        
Noninterest expense       
Compensation expense1,391
1,391

 4,259
4,112
4
Noncompensation expense1,231
1,194
3
 3,606
3,620

Total noninterest expense2,622
2,585
1
 7,865
7,732
2
        
Income before income tax expense902
951
(5) 2,703
2,865
(6)
Income tax expense234
227
3
 655
616
6
Net income$668
$724
(8) $2,048
$2,249
(9)
        
Revenue by line of business       
Asset Management$1,816
$1,827
(1) $5,362
$5,440
(1)
Wealth Management1,752
1,732
1
 5,254
5,197
1
Total net revenue$3,568
$3,559
 % $10,616
$10,637
 %
        
Financial ratios       
Return on equity24%31%  25%32% 
Overhead ratio73
73
  74
73
 
Pre-tax margin ratio:       
Asset Management25
27
  25
27
 
Wealth Management25
26
  26
27
 
Asset & Wealth Management25
27
  25
27
 
Quarterly results
Net income was $668 million, a decrease of 8%.
Net revenue of $3.6 billion was flat. Net interest income was $855 million, down 3%, driven by deposit margin compression, largely offset by deposit and loan growth. Noninterest revenue was $2.7 billion, up 1%, driven by higher average market levels.
The provision for credit losses was $44 million, driven by net charge-offs, as well as net additions to the allowance for loan losses predominantly due to loan growth.
Noninterest expense was $2.6 billion, an increase of 1%, predominantly driven by continued investments in technology and advisors, partially offset by lower distribution and legal fees.
 
Year-to-date results
Net income was $2.0 billion, a decrease of 9%.
Net revenue of $10.6 billion was flat. Net interest income of $2.6 billion was flat, reflecting loan growth, offset by deposit margin compression. Noninterest revenue of $8.0 billion was flat, reflecting a shift in the mix toward lower fee products and lower brokerage activity, offset by higher net investment valuation gains.
The provision for credit losses was $48 million, driven by net charge-offs, as well as net additions to the allowance for loan losses predominantly due to loan growth.
Noninterest expense was $7.9 billion, an increase of 2%, predominantly driven by continued investments in technology and advisors, partially offset by lower distribution fees.


38


Selected metrics       
 As of or for the three months
ended September 30,
 As of or for the nine months
ended September 30,
(in millions, except ranking data, headcount and ratios)2019
2018
Change
 2019
2018
Change
% of JPM mutual fund assets rated as 4- or 5-star(a)
65%64%  65%64% 
% of JPM mutual fund assets ranked in 1st or 2nd quartile:(b)
       
1 year74
65
  74
65
 
3 years80
64
  80
64
 
5 years86
83
  86
83
 
        
Selected balance sheet data (period-end)       
Total assets$174,226
$166,716
5 % $174,226
$166,716
5 %
Loans153,245
143,162
7
 153,245
143,162
7
Core loans153,245
143,162
7
 153,245
143,162
7
Deposits138,439
130,497
6
 138,439
130,497
6
Equity10,500
9,000
17
 10,500
9,000
17
        
Selected balance sheet data (average)       
Total assets$171,121
$161,982
6
 $168,688
$158,218
7
Loans150,486
140,558
7
 147,481
136,663
8
Core loans150,486
140,558
7
 147,481
136,663
8
Deposits138,822
133,021
4
 139,127
138,885

Equity10,500
9,000
17
 10,500
9,000
17
        
Headcount24,228
23,747
2
 24,228
23,747
2
        
Number of Wealth Management client advisors2,872
2,808
2
 2,872
2,808
2
        
Credit data and quality statistics       
Net charge-offs$26
$11
136
 $27
$7
286
Nonaccrual loans176
285
(38) 176
285
(38)
Allowance for credit losses:       
Allowance for loan losses$350
$317
10
 $350
$317
10
Allowance for lending-related commitments16
15
7
 16
15
7
Total allowance for credit losses$366
$332
10 % $366
$332
10 %
Net charge-off rate0.07%0.03%  0.02%0.01% 
Allowance for loan losses to period-end loans0.23
0.22
  0.23
0.22
 
Allowance for loan losses to nonaccrual loans199
111
  199
111
 
Nonaccrual loans to period-end loans0.11
0.20
  0.11
0.20
 
(a)Represents the “overall star rating” derived from Morningstar for the U.S., the U.K., Luxembourg, Hong Kong and Taiwan domiciled funds; and Nomura “star rating” for Japan domiciled funds. Includes only Asset Management retail open-ended mutual funds that have a rating. Excludes money market funds, Undiscovered Managers Fund, and Brazil and India domiciled funds.
(b)Quartile ranking sourced from: Lipper for the U.S. and Taiwan domiciled funds; Morningstar for the U.K., Luxembourg and Hong Kong domiciled funds; Nomura for Japan domiciled funds and Fund Doctor for South Korea domiciled funds. Includes only Asset Management retail open-ended mutual funds that are ranked by the aforementioned sources. Excludes money market funds, Undiscovered Managers Fund, and Brazil and India domiciled funds.

39


Client assets
Client assets of $3.1 trillion and assets under management of $2.2 trillion were up 7% and 8% respectively, predominantly driven by net inflows into long-term and liquidity products as well as higher market levels globally.
Client assets   
 September 30,
(in billions)2019
2018
Change
Assets by asset class   
Liquidity$505
$463
9 %
Fixed income590
457
29
Equity437
452
(3)
Multi-asset and alternatives714
705
1
Total assets under management2,246
2,077
8
Custody/brokerage/administration/deposits815
790
3
Total client assets$3,061
$2,867
7
    
Memo:   
Alternatives client assets (a)
$183
$172
6
    
Assets by client segment   
Private Banking$636
$576
10
Institutional1,029
945
9
Retail581
556
4
Total assets under management$2,246
$2,077
8
    
Private Banking$1,424
$1,339
6
Institutional1,051
967
9
Retail586
561
4
Total client assets$3,061
$2,867
7 %
(a)Represents assets under management, as well as client balances in brokerage accounts
Client assets (continued)     


Three months ended
September 30,
Nine months ended
September 30,
(in billions)2019
2018
 2019
2018
Assets under management rollforward     
Beginning balance$2,178
$2,028
 $1,987
$2,034
Net asset flows:     
Liquidity24
14
 23
10
Fixed income41
3
 97
(9)
Equity(2)1
 (9)8
Multi-asset and alternatives1
4
 (2)29
Market/performance/other impacts4
27
 150
5
Ending balance, September 30$2,246
$2,077
 $2,246
$2,077
      
Client assets rollforward     
Beginning balance$2,998
$2,799
 $2,733
$2,789
Net asset flows59
33
 120
58
Market/performance/other impacts4
35
 208
20
Ending balance, September 30$3,061
$2,867
 $3,061
$2,867






40


International metrics       
 As of or for the three months
ended September 30,
 As of or for the nine months
ended September 30,
(in millions)2019
2018
Change
 2019
2018
Change
Total net revenue (a)
       
Europe/Middle East/Africa$672
$677
(1)% $2,014
$2,095
(4)%
Asia/Pacific376
377

 1,104
1,161
(5)
Latin America/Caribbean218
228
(4) 658
689
(4)
Total international net revenue1,266
1,282
(1) 3,776
3,945
(4)
North America2,302
2,277
1
 6,840
6,692
2
Total net revenue(a)
$3,568
$3,559

 $10,616
$10,637
 %
(a)Regional revenue is based on the domicile of the client.
 As of or for the three months
ended September 30,
 As of or for the nine months
ended September 30,
(in billions)2019
2018
Change
 2019
2018
Change
Assets under management       
Europe/Middle East/Africa$387
$375
3% $387
$375
3%
Asia/Pacific183
164
12
 183
164
12
Latin America/Caribbean70
65
8
 70
65
8
Total international assets under management640
604
6
 640
604
6
North America1,606
1,473
9
 1,606
1,473
9
Total assets under management$2,246
$2,077
8
 $2,246
$2,077
8
        
Client assets       
Europe/Middle East/Africa$455
$435
5
 $455
$435
5
Asia/Pacific253
228
11
 253
228
11
Latin America/Caribbean172
162
6
 172
162
6
Total international client assets880
825
7
 880
825
7
North America2,181
2,042
7
 2,181
2,042
7
Total client assets$3,061
$2,867
7% $3,061
$2,867
7%

41


CORPORATE
Refer to pages 77–78 of JPMorgan Chase’s 2018 Form 10-K for a discussion of Corporate.
Selected income statement and balance sheet data      
 As of or for the three months
ended September 30,
 As of or for the nine months
ended September 30,
(in millions, except headcount)2019
2018
 Change
 2019
 2018
 Change
Revenue          
Principal transactions$10
$(161) NM
 $(227) $(222) (2)%
Investment securities gains/(losses)78
(46) NM
 135
 (371) NM
All other income32
30
 7% 95
 373
 (75)
Noninterest revenue120
(177) NM
 3
 (220) NM
Net interest income572
74
 NM
 1,436
 (35) NM
Total net revenue(a)
692
(103) NM
 1,439
 (255) NM
           
Provision for credit losses
2
 NM
 
 (3) NM
           
Noninterest expense(b)
281
28
 NM
 724
 394
 84
Income/(loss) before income tax expense/(benefit)411
(133) NM
 715
 (646) NM
Income tax expense/(benefit)18
12
 50
 (757) 18
 NM
Net income/(loss)$393
$(145) NM
 $1,472
 $(664) NM
Total net revenue          
Treasury and CIO$801
$186
 331
 $1,930
 $235
 NM
Other Corporate(109)(289) 62
 (491) (490) 
Total net revenue$692
$(103) NM
 $1,439
 $(255) NM
Net income/(loss)          
Treasury and CIO$576
$96
 500
 $1,372
 $(244) NM
Other Corporate(183)(241) 24
 100
 (420) NM
Total net income/(loss)$393
$(145) NM
 $1,472
 $(664) NM
Total assets (period-end)$812,333
$742,693
 9
 $812,333
 $742,693
 9
Loans (period-end)1,705
1,556
 10
 1,705
 1,556
 10
Core loans(c)
1,706
1,556
 10
 1,706
 1,556
 10
Headcount38,155
36,686
 4% 38,155
 36,686
 4 %
(a)Included tax-equivalent adjustments, driven by tax-exempt income from municipal bonds, of $74 million and $94 million for the three months ended September 30, 2019 and 2018, respectively, and $241 million and $287 million for the nine months ended September 30, 2019 and 2018, respectively.
(b)Included a net legal benefit of $(32) million and $(175) million for the three months ended September 30, 2019 and 2018, respectively, and $(189) million and $(225) million for the nine months ended September 30, 2019 and 2018, respectively.
(c)Average core loans were $1.7 billion and $1.6 billion for the three months ended September 30, 2019 and 2018, respectively, and $1.7 billion for both the nine months ended September 30, 2019 and 2018.
Quarterly results
Net income was $393 million, compared with a net loss of $145 million in the prior year.
Net revenue was $692 million, compared with a net loss of $103 million in the prior year, driven by higher net interest income and noninterest revenue. Net interest income was driven by balance sheet growth and changes in mix, partially offset by lower rates. Net interest income also includes income related to the unwind of the internal funding provided to CCB upon the sale of certain mortgage loans. The income reflects the net present value of that funding and is recognized as a charge to net interest income in CCB. Refer to CCB on pages 23–24 of this Form 10-Q and Funds Transfer Pricing (“FTP”) on page 60 of the Firm’s 2018 Form 10-K for further information.
Noninterest revenue increased reflecting small net gains on certain legacy private equity investments compared to net losses in the prior year.
 
Noninterest expense of $281 million was up $253 million due to higher investments in technology and a lower net legal benefit compared with the prior year.
The current period included tax benefits related to the resolution of certain tax audits as well as other tax adjustments, which were partially offset by changes to certain tax reserves. The prior year reflected a net benefit of $132 million resulting from changes in estimates under the TCJA related to the remeasurement of certain deferred taxes and the deemed repatriation tax on non-U.S. earnings, which was more than offset by changes to certain tax reserves and other tax adjustments.
Year-to-date results
Net income was $1.5 billion, compared with a net loss of $664 million in the prior year.
Net revenue was $1.4 billion, compared with a net loss of $255 million in the prior year driven by higher net interest income and noninterest revenue. Net interest income was

42


driven by balance sheet growth and changes in mix and includes the income related to the unwind of the internal funding, as mentioned above.
Noninterest revenue increased reflecting:
investment securities gains compared with losses in the prior year due to the repositioning of the investment securities portfolio
lower net valuation losses on certain legacy private equity investments,
partially offset by
losses on cash deployment transactions which were more than offset by the related net interest income earned on those transactions.
 
Noninterest expense of $724 million, was up $330 million reflecting:
higher investments in technology and real estate,
contributions to the Firm’s Foundation, whereas all prior-year contributions were made in the fourth quarter, and
higher pension costs due to changes to actuarial assumptions and estimates.
The prior year included a $174 million loss on the liquidation of a legal entity.
The current period included tax benefits of $957 million related to the resolution of certain tax audits, as well as other tax adjustments partially offset by changes in certain tax reserves. The prior year expense reflected changes to certain tax reserves, largely offset by a net benefit of $305 million resulting from changes in estimates under the TCJA related to the remeasurement of certain deferred taxes and the deemed repatriation tax on non-U.S. earnings as well as other tax adjustments.
Treasury and CIO overview
At September 30, 2019, the average credit rating of the Treasury and CIO investment securities comprising the portfolio in the table below was AA+ (based upon external ratings where available and, where not available, based primarily upon internal ratings that correspond to ratings as defined by S&P and Moody’s). Refer to Note 9 for further information on the Firm’s investment securities portfolio.
Refer to Liquidity Risk Management on pages 50–54 for further information on liquidity and funding risk. Refer to Market Risk Management on pages 70–74 for information on interest rate, foreign exchange and other risks.
Selected income statement and balance sheet data      
 As of or for the three months
ended September 30,
 As of or for the nine months
ended September 30,
(in millions)2019
 2018
 Change 2019
 2018
 Change
Investment securities gains/(losses)$78
 $(46) NM $135
 $(371) NM
Available-for-sale (“AFS”) investment securities (average)$305,894
 $197,230
 55 $260,661
 $200,569
 30
Held-to-maturity (“HTM”) investment securities (average)35,494
 31,232
 14 32,518
 31,842
 2
Investment securities portfolio (average)$341,388
 $228,462
 49 $293,179
 $232,411
 26
AFS investment securities (period-end)$351,599
 $198,523
 77 $351,599
 $198,523
 77
HTM investment securities (period-end)40,830
 31,368
 30 40,830
 31,368
 30
Investment securities portfolio (period-end)$392,429
 $229,891
 71 $392,429
 $229,891
 71


43


ENTERPRISE-WIDE RISK MANAGEMENT
Risk is an inherent part of JPMorgan Chase’s business activities. When the Firm extends a consumer or wholesale loan, advises customers on their investment decisions, makes markets in securities, or offers other products or services, the Firm takes on some degree of risk. The Firm’s overall objective is to manage its businesses and the associated risks in a manner that balances serving the interests of its clients, customers and investors and protects the safety and soundness of the Firm.
The Firm believes that effective risk management requires:
Acceptance of responsibility, including identification and escalation of risk issues, by all individuals within the Firm;
Ownership of risk identification, assessment, data and management within each of the lines of business and Corporate; and
Firmwide structures for risk governance.
The Firm strives for continual improvement through efforts to enhance controls, ongoing employee training and development, talent retention, and other measures. The Firm follows a disciplined and balanced compensation framework with strong internal governance and independent Board oversight. The impact of risk and control issues are carefully considered in the Firm’s performance evaluation and incentive compensation processes.
Firmwide Risk Management is overseen and managed on an enterprise-wide basis. The Firm’s risk management governance and oversight framework involves understanding drivers of risks, types of risks, and impacts of risks.
jpmcgovernancea03.jpg
Refer to pages 79-83 of JPMorgan Chase’s 2018 Form 10-K for a further discussion of Enterprise-wide risk management governance and oversight.
 
Effective July 2019, the Board of Directors’ Risk Policy Committee (“DRPC”) was renamed the Risk Committee. The committee’s responsibilities were not changed. Refer to page 81 of JPMorgan Chase’s 2018 Form 10-K for a further discussion of the committee.

Governance and Oversight Functions
The following sections of this Form 10-Q and the 2018 Form 10-K discuss the risk governance and oversight functions in place to manage the risks inherent in the Firm’s business activities.
Risk governance and oversight functionsForm 10-Q page referenceForm 10-K page reference
Strategic risk 84
Capital risk45–4985–94
Liquidity risk50–5495–100
Reputation risk 101
Consumer credit risk56–59106-111
Wholesale credit risk60–66112-119
Investment portfolio risk69123
Market risk70–74124-131
Country risk75132–133
Operational risk 134-136
Compliance risk 137
Conduct risk 138
Legal risk 139
Estimations and Model risk 140

44


CAPITAL RISK MANAGEMENT
Capital risk is the risk the Firm has an insufficient level and composition of capital to support the Firm’s business activities and associated risks during normal economic environments and under stressed conditions.
Refer to pages 85-94 of JPMorgan Chase’s 2018 Form
10-K, Note 21 of this Form 10-Q and the Firm’s Pillar 3 Regulatory Capital Disclosures reports, which are available on the Firm’s website for a further discussion of the Firm’s Capital Risk Management, including capital planning and stress testing.
The capital rules under Basel III establish minimum capital ratios and overall capital adequacy standards for large and internationally active U.S. bank holding companies (“BHC”) and banks, including the Firm and its insured depository institution (“IDI”) subsidiaries, including JPMorgan Chase Bank, N.A. Two comprehensive approaches are prescribed for calculating RWA: a standardized approach (“Basel III
 
Standardized”), and an advanced approach (“Basel III Advanced”). Effective January 1, 2019, the capital adequacy of the Firm is evaluated against the fully phased-in measures under Basel III and represents the lower of the Standardized or Advanced approaches. During 2018, the required capital measures were subject to the transitional rules and as of December 31, 2018 the calculations were the same on a fully phased-in and on a transitional basis. The Firm’s Basel III Standardized risk-based ratios are currently more binding than the Basel III Advanced risk-based ratios, and the Firm expects that this will remain the case for the foreseeable future.
Basel III also includes a requirement for Advanced Approach banking organizations, including the Firm, to calculate the SLR. Refer to page 91 of JPMorgan Chase’s 2018 Form 10-K for additional information on SLR.

The following tables present the Firm’s risk-based and leverage-based capital measures under both the Basel III Standardized and Advanced Approaches. The Firm’s Basel III ratios exceeded regulatory minimums as of September 30, 2019 and December 31, 2018. Refer to Capital Risk Management on pages 85-94 of JPMorgan Chase’s 2018 Form 10-K for a further discussion of these capital metrics.
 September 30, 2019 December 31, 2018
(in millions)Standardized Advanced Minimum capital ratios 
Standardized(b)
 
Advanced(b)
 Minimum capital ratios
Risk-based capital metrics:           
CET1 capital$188,151
 $188,151
   $183,474
 $183,474
  
Tier 1 capital214,831
 214,831
   209,093
 209,093
  
Total capital243,500
 233,203
   237,511
 227,435
  
Risk-weighted assets1,527,762
 1,435,693
   1,528,916
 1,421,205
  
CET1 capital ratio12.3% 13.1% 10.5% 12.0% 12.9% 9.0%
Tier 1 capital ratio14.1
 15.0
 12.0
 13.7
 14.7
 10.5
Total capital ratio15.9
 16.2
 14.0
 15.5
 16.0
 12.5
Leverage-based capital metrics:           
Adjusted average assets(a)
$2,717,852
 $2,717,852
   $2,589,887
 $2,589,887
  
Tier 1 leverage ratio7.9% 7.9% 4.0% 8.1% 8.1% 4.0%
Total leverage exposureNA
 $3,404,535
   NA
 $3,269,988
  
SLRNA
 6.3% 5.0% NA
 6.4% 5.0%
(a)
Adjusted average assets, for purposes of calculating the Tier 1 leverage ratio, includes total quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill and other intangible assets.
(b)The Firm’s capital ratios as of December 31, 2018 were equivalent whether calculated on a transitional or fully phased-in basis.

45


Capital components
The following table presents reconciliations of total stockholders’ equity to Basel III CET1 capital, Tier 1 capital and Total capital as of September 30, 2019 and December 31, 2018.
(in millions)September 30, 2019
December 31, 2018
Total stockholders’ equity$264,348
$256,515
Less: Preferred stock(a)
28,363
26,068
Common stockholders’ equity235,985
230,447
Less:  
Goodwill47,818
47,471
Other intangible assets841
748
Other CET1 capital adjustments1,546
1,034
Add:  
Deferred tax liabilities(b)
2,371
2,280
Standardized/Advanced CET1 capital188,151
183,474
Preferred stock(a)
28,363
26,068
Less: Other Tier 1 adjustments(a)
1,683
449
Standardized/Advanced Tier 1 capital$214,831
$209,093
Long-term debt and other instruments qualifying as Tier 2 capital$14,145
$13,772
Qualifying allowance for credit losses14,400
14,500
Other124
146
Standardized Tier 2 capital$28,669
$28,418
Standardized Total capital$243,500
$237,511
Adjustment in qualifying allowance for credit losses for Advanced Tier 2 capital(10,297)(10,076)
Advanced Tier 2 capital$18,372
$18,342
Advanced Total capital$233,203
$227,435
(a)
As of September 30, 2019, preferred stock reflects the issuance of $2.25 billion of Series FF preferred stock and redemption of $880 million of Series W preferred stock. Other Tier 1 adjustments includes $1.37 billion of Series I preferred stock called for partial redemption on September 26, 2019 and subsequently redeemed on October 30, 2019. Tier 1 capital as of September 30, 2019 reflects the issuance and redemptions.
(b)Represents certain deferred tax liabilities related to tax-deductible goodwill and identifiable intangibles created in nontaxable transactions, which are netted against goodwill and other intangibles when calculating CET1 capital.
 
Capital rollforward
The following table presents the changes in Basel III CET1 capital, Tier 1 capital and Tier 2 capital for the nine months ended September 30, 2019.
Nine months ended September 30,
(in millions)
2019
Standardized/Advanced CET1 capital at December 31, 2018$183,474
Net income applicable to common equity26,710
Dividends declared on common stock(8,086)
Net purchase of treasury stock(15,805)
Changes in additional paid-in capital(650)
Changes related to AOCI2,877
Adjustment related to DVA(a)
287
Changes related to other CET1 capital adjustments(656)
Change in Standardized/Advanced CET1 capital4,677
Standardized/Advanced CET1 capital at September 30, 2019$188,151
  
Standardized/Advanced Tier 1 capital at December 31, 2018$209,093
Change in CET1 capital4,677
Net issuance of noncumulative perpetual preferred stock(b)
925
Other136
Change in Standardized/Advanced Tier 1 capital5,738
Standardized/Advanced Tier 1 capital at September 30, 2019$214,831
  
Standardized Tier 2 capital at December 31, 2018$28,418
Change in long-term debt and other instruments qualifying as Tier 2373
Change in qualifying allowance for credit losses(101)
Other(21)
Change in Standardized Tier 2 capital251
Standardized Tier 2 capital at September 30, 2019$28,669
Standardized Total capital at September 30, 2019$243,500
  
Advanced Tier 2 capital at December 31, 2018$18,342
Change in long-term debt and other instruments qualifying as Tier 2373
Change in qualifying allowance for credit losses(322)
Other(21)
Change in Advanced Tier 2 capital30
Advanced Tier 2 capital at September 30, 2019$18,372
Advanced Total capital at September 30, 2019$233,203
(a)Includes DVA related to structured notes recorded in AOCI.
(b)Includes the net effect of $2.25 billion and $1.85 billion of non-cumulative preferred stock issued on July 31, 2019 and January 24, 2019, respectively, and redemptions of non-cumulative preferred stock of $925 million and $880 million on March 1, 2019 and September 1, 2019, respectively, as well as $1.37 billion of non-cumulative preferred stock that was called for partial redemption on September 26, 2019 and subsequently redeemed on October 30, 2019.


46


RWA rollforward
The following table presents changes in the components of RWA under Basel III Standardized and Advanced for the nine months ended September 30, 2019. The amounts in the rollforward categories are estimates, based on the predominant driver of the change.
 Standardized Advanced 
Nine months ended September 30, 2019
(in millions)
Credit risk RWAMarket risk RWATotal RWA Credit risk RWAMarket risk RWA
Operational risk
RWA
Total RWA
December 31, 2018$1,423,053
$105,863
$1,528,916
 $926,647
$105,976
$388,582
$1,421,205
Model & data changes(a)
(3,406)(17,076)(20,482) (4,542)(17,076)
(21,618)
Portfolio runoff(b)
(4,400)
(4,400) (4,300)

(4,300)
Movement in portfolio levels(c)
24,711
(983)23,728
 44,408
(1,136)(2,866)40,406
Changes in RWA16,905
(18,059)(1,154) 35,566
(18,212)(2,866)14,488
September 30, 2019$1,439,958
$87,804
$1,527,762
 $962,213
$87,764
$385,716
$1,435,693
(a)
Model & data changes refer to movements in levels of RWA as a result of revised methodologies and/or treatment per regulatory guidance (exclusive of rule changes).
(b)Portfolio runoff for credit risk RWA primarily reflects reduced risk from position rolloffs in legacy portfolios in Home Lending.
(c)Movement in portfolio levels (inclusive of rule changes) refers to: changes in book size, composition, credit quality, and market movements for credit risk RWA; changes in position and market movements for market risk RWA; and updates to cumulative losses for operational risk RWA.

Supplementary leverage ratio
Refer to Capital Risk Management on page 88 of JPMorgan Chase’s 2018 Form 10-K for additional information.
The following table presents the components of the Firm’s SLR as of September 30, 2019 and December 31, 2018.
(in millions, except ratio)September 30,
2019

December 31,
2018

Tier 1 capital$214,831
$209,093
Total average assets2,765,052
2,636,505
Less: Adjustments for deductions from Tier 1 capital47,200
46,618
Total adjusted average assets(a)
2,717,852
2,589,887
Off-balance sheet exposures(b)
686,683
680,101
Total leverage exposure$3,404,535
$3,269,988
SLR6.3%6.4%
(a)
Adjusted average assets, for purposes of calculating the SLR, includes total quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill and other intangible assets.
(b)Off-balance sheet exposures are calculated as the average of the three month-end spot balances during the quarter.
Refer to Note 21 for JPMorgan Chase Bank, N.A.’s SLR ratios.
Line of business equity
Each business segment is allocated capital by taking into consideration a variety of factors including capital levels of similarly rated peers and applicable regulatory capital requirements. Effective January 1, 2019, line of business capital allocations have increased due to a combination of changes in the relative weights, with greater emphasis on Standardized RWA and stress, a higher capitalization rate, updated stress simulations, and general business growth. Refer to page 91 of JPMorgan Chase’s 2018 Form 10-K for additional information.
 

The following table represents the capital allocated to each business segment:

(in billions)
September 30,
2019

 December 31,
2018

Consumer & Community Banking$52.0
 $51.0
Corporate & Investment Bank80.0
 70.0
Commercial Banking22.0
 20.0
Asset & Wealth Management10.5
 9.0
Corporate71.5
 80.4
Total common stockholders’ equity$236.0
 $230.4
Planning and stress testing
Comprehensive Capital Analysis and Review (“CCAR”)
On June 27, 2019, the Federal Reserve informed the Firm that it did not object to the Firm’s 2019 capital plan.
Capital actions
Preferred stock
Preferred stock dividends declared were $423 million and $1.2 billion for the three and nine months ended September 30, 2019.
On October 31, 2019, the Firm announced and priced an offering of depositary shares representing $900 million of 4.75% non-cumulative preferred stock, Series GG. This issuance is expected to close on November 7, 2019. On November 1, 2019, the Firm announced that it will redeem all $900 million of its 5.45% non-cumulative preferred stock, Series P on December 1, 2019.
On October 30, 2019, the Firm redeemed $1.37 billion of its Series I fixed-to-floating rate non-cumulative perpetual preferred stock.
On September 1, 2019, the Firm redeemed all $880 million of its 6.30% non-cumulative preferred stock, Series W.
On July 31, 2019, the Firm issued $2.25 billion of fixed-to-floating rate non-cumulative preferred stock, Series FF.

47


Refer to Note 17 of this Form 10-Q and Note 20 of JPMorgan Chase’s 2018 Form 10-K for additional information on the Firm’s preferred stock.
Common stock dividends
On September 17, 2019, the Firm announced that its Board of Directors had declared a quarterly common stock dividend, which increased to $0.90 per share, from $0.80 per share effective with the dividend paid on October 31, 2019. The Firm’s dividends are subject to the Board of Directors’ approval on a quarterly basis.
Common equity
The Firm’s Board of Directors has authorized the repurchase of up to $29.4 billion of gross common equity between July 1, 2019 and June 30, 2020 as part of the Firm’s annual capital plan.
The following table sets forth the Firm’s repurchases of common equity, on a settlement-date basis, for the three and nine months ended September 30, 2019 and 2018.

Three months ended
September 30,

Nine months ended
September 30,
(in millions)2019
2018

2019
2018
Total shares of common stock repurchased62.0
39.3

159.0
126.0
Aggregate common stock repurchases$6,949
$4,416

$17,250
$14,055
Refer to Part II, Item 2: Unregistered Sales of Equity Securities and Use of Proceeds and Part II, Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities on pages 176-177 of this Form 10-Q and page 30 of JPMorgan Chase’s 2018 Form 10-K, respectively, for additional information regarding repurchases of the Firm’s equity securities.

 
Other capital requirements
TLAC
The Federal Reserve’s TLAC rule requires the top-tier U.S. GSIB holding companies, including the Firm, to maintain minimum levels of external TLAC and eligible LTD effective January 1, 2019.
Refer to page 93 of JPMorgan Chase’s 2018 Form 10-K for additional information.
The following table presents the eligible external TLAC and LTD amounts, as well as a representation of the amounts as a percentage of the Firm’s total RWA and total leverage exposure.
September 30, 2019 
(in billions, except ratio)
Eligible external TLAC(a)
Eligible LTD
Total eligible TLAC & LTD$387.8
$159.9
% of RWA25.4%10.5%
Minimum requirement23.0
9.5
Surplus/(shortfall)$36.4
$14.8
   
% of total leverage exposure11.4%4.7%
Minimum requirement9.5
4.5
Surplus/(shortfall)$64.3
$6.7
(a)As of September 30, 2019, total eligible external TLAC reflects the issuance of $2.25 billion of Series FF non-cumulative preferred stock, redemption of $880 million of Series W non-cumulative preferred stock, and redemption of $1.37 billion of Series I non-cumulative preferred stock called for partial redemption on September 26, 2019 and subsequently redeemed on October 30, 2019. 
Refer to Part I, Item 1A: Risk Factors on pages 7-28 of JPMorgan Chase’s 2018 Form 10-K for information on the financial consequences to holders of the Firm’s debt and equity securities in a resolution scenario.

48


Broker-dealer regulatory capital
J.P. Morgan Securities
JPMorgan Chase’s principal U.S. broker-dealer subsidiary is J.P. Morgan Securities. J.P. Morgan Securities is subject to Rule 15c3-1 under the Securities Exchange Act of 1934 (the “Net Capital Rule”). J.P. Morgan Securities is also registered as a futures commission merchant and subject to Rule 1.17 of the Commodity Futures Trading Commission (“CFTC”).
Refer to Capital risk management on pages 85-94 of JPMorgan Chase’s 2018 Form 10-K for a discussion on J.P. Morgan Securities’ capital requirements.
The following table presents J.P. Morgan Securities’ net capital:
September 30, 2019 
(in millions)Actual
Minimum
Net Capital$22,068
$3,746

 

J.P. Morgan Securities plc
J.P. Morgan Securities plc is a wholly-owned subsidiary of JPMorgan Chase Bank, N.A. and has authority to engage in banking, investment banking and broker-dealer activities. J.P. Morgan Securities plc is jointly regulated by the U.K. Prudential Regulation Authority (“PRA”) and the Financial Conduct Authority (“FCA”).
Refer to Capital risk management on pages 85-94 of JPMorgan Chase’s 2018 Form 10-K for a further discussion on J.P. Morgan Securities plc.
Effective January 1, 2019, the Bank of England requires, on a transitional basis, that U.K. banks, including U.K. regulated subsidiaries of overseas groups, maintain a minimum requirement for own funds and eligible liabilities (“MREL”). As of September 30, 2019, J.P. Morgan Securities plc was compliant with the requirements of the MREL rule. Refer to Supervision and Regulation on pages 1-6 of JPMorgan Chase’s 2018 Form 10-K for additional information on MREL.
The following table presents J.P. Morgan Securities plc’s capital metrics:
September 30, 2019  
(in millions, except ratios)Estimated
Minimum ratios
Total capital$55,614
 
CET1 ratio16.9%4.5%
Total capital ratio21.5%8.0%




49


LIQUIDITY RISK MANAGEMENT
Liquidity risk is the risk that the Firm will be unable to meet its contractual and contingent financial obligations as they arise or that it does not have the appropriate amount, composition and tenor of funding and liquidity to support its assets and liabilities. Refer to pages 95–100 of JPMorgan Chase’s 2018 Form 10-K and the Firm’s US LCR Disclosure reports, which are available on the Firm’s website for a further discussion of the Firm’s Liquidity Risk Management.
LCR and HQLA
The LCR rule requires the Firm to maintain an amount of unencumbered HQLA that is sufficient to meet its estimated total net cash outflows over a prospective 30 calendar-day period of significant stress. HQLA is the amount of liquid assets that qualify for inclusion in the LCR. HQLA primarily consist of unencumbered cash and certain high-quality liquid securities as defined in the LCR rule. The LCR is required to be a minimum of 100%.
Under the LCR rule, the amount of HQLA held by JPMorgan Chase Bank N.A. that is in excess of its standalone 100% minimum LCR requirement, and that is not transferable to non-bank affiliates, must be excluded from the Firm’s reported HQLA.
The following table summarizes the Firm’s average LCR for the three months ended September 30, 2019, June 30, 2019 and September 30, 2018 based on the Firm’s interpretation of the finalized LCR framework.
 Three months ended
Average amount
(in millions)
September 30,
2019
June 30, 2019September 30,
2018
HQLA   
Eligible cash(a)
$199,757
$219,838
$344,660
Eligible securities(b)(c)
337,704
317,439
190,349
Total HQLA(d)
$537,461
$537,277
$535,009
Net cash outflows$468,452
$477,442
$466,803
LCR115%113%115%
Net excess HQLA(d)
$69,009
$59,835
$68,206
(a)
Represents cash on deposit at central banks, primarily the Federal Reserve Banks.
(b)Predominantly U.S. Treasuries, U.S. GSE and U.S. government agency MBS, and sovereign bonds net of applicable haircuts under the LCR rules.
(c)HQLA eligible securities may be reported in securities borrowed or purchased under resale agreements, trading assets, or investment securities on the Firm’s Consolidated balance sheets.
(d)Excludes average excess HQLA at JPMorgan Chase Bank, N.A. that are not transferable to non-bank affiliates.
 
The Firm’s average LCR increased during the three months ended September 30, 2019, compared with the three-month period ended June 30, 2019, primarily due to a decline in the net cash outflows from CIB activities.
The Firm’s average LCR fluctuates from period to period, due to changes in its HQLA and estimated net cash outflows as a result of ongoing business activity.
Other liquidity sources
As of September 30, 2019, in addition to assets reported in the Firm’s HQLA, the Firm had approximately $312 billion of unencumbered marketable securities, such as equity securities and fixed income debt securities, available to raise liquidity. This includes HQLA-eligible securities included as part of the excess liquidity at JPMorgan Chase Bank, N.A. that are not transferable to non-bank affiliates.
As of September 30, 2019, the Firm also had approximately $313 billion of available borrowing capacity at FHLBs, the discount window at the Federal Reserve Bank, and other central banks as a result of collateral pledged by the Firm to such banks. This borrowing capacity excludes the benefit of securities reported in the Firm’s HQLA or other unencumbered securities that are currently pledged at the Federal Reserve Bank discount window. Although available, the Firm does not view this borrowing capacity at the Federal Reserve Bank discount window and the other central banks as a primary source of liquidity.

50


Funding
Sources of funds
Management believes that the Firm’s unsecured and secured funding capacity is sufficient to meet its on- and off-balance sheet obligations.
The Firm funds its global balance sheet through diverse sources of funding including stable deposits as well as secured and unsecured funding in the capital markets. The Firm’s loan portfolio is funded with a portion of the Firm’s deposits, through securitizations and, with respect to a portion of the Firm’s real estate-related loans, with secured borrowings from the FHLBs. Deposits in excess of the amount utilized to fund loans are primarily invested by Treasury and CIO in the Firm’s investment securities portfolio or deployed in cash or other short-term liquid investments based on their interest rate and liquidity risk
 
characteristics. Securities borrowed or purchased under resale agreements and trading assets-debt and equity instruments are primarily funded by the Firm’s securities loaned or sold under agreements to repurchase, trading liabilities-debt and equity instruments, and a portion of the Firm’s long-term debt and stockholders’ equity. In addition to funding securities borrowed or purchased under resale agreements and trading assets-debt and equity instruments, proceeds from the Firm’s debt and equity issuances are used to fund certain loans and other financial and non-financial assets, or may be invested in the Firm’s investment securities portfolio. Refer to the discussion below for additional information relating to Deposits, Short-term funding, and Long-term funding and issuance.
Deposits
The table below summarizes, by line of business, the deposit balances as of September 30, 2019, and December 31, 2018, and the average deposit balances for the three and nine months ended September 30, 2019 and 2018, respectively.
 September 30, 2019
December 31, 2018
 Three months ended September 30, Nine months ended September 30,
Deposits Average Average
(in millions) 2019
2018
 2019
2018
Consumer & Community Banking$701,170
$678,854
 $693,980
$674,211
 $688,676
$669,244
Corporate & Investment Bank510,403
482,084
 524,521
476,995
 509,775
472,879
Commercial Banking174,903
170,859
 172,653
168,102
 169,361
171,403
Asset & Wealth Management138,439
138,546
 138,822
133,021
 139,127
138,885
Corporate346
323
 904
533
 887
736
Total Firm$1,525,261
$1,470,666
 $1,530,880
$1,452,862
 $1,507,826
$1,453,147
Deposits provide a stable source of funding and reduce the Firm’s reliance on the wholesale funding markets. A significant portion of the Firm’s deposits are consumer and wholesale operating deposits, which are both considered to be stable sources of liquidity. Wholesale operating deposits are considered to be stable sources of liquidity because they are generated from customers that maintain operating service relationships with the Firm.
The table below shows the loan and deposit balances, the loans-to-deposits ratios, and deposits as a percentage of total liabilities, as of September 30, 2019 and December 31, 2018.
(in billions except ratios)September 30, 2019
 December 31, 2018
Deposits$1,525.3
 $1,470.7
Deposits as a % of total liabilities61% 62%
Loans$945.2
 $984.6
Loans-to-deposits ratio62% 67%
The Firm believes that average deposit balances are generally more representative of deposit trends than period-end deposit balances.
Average deposits increased for the three months ended September 30, 2019.
The increase in CIB reflects an increase in operating deposits predominantly in Treasury Services driven by
 
growth in client activity, and an increase in the net issuances of structured notes in Markets. The increase in CCB was driven by growth in new accounts. The increase in AWM was driven by growth in interest-bearing deposits on new client activity. The increase in CB was primarily driven by growth from existing clients.
Average deposits increased for the nine months ended September 30, 2019 in CIB and CCB, partially offset by a decline in CB. Balances in AWM were relatively flat.
The increase in CIB reflects an increase in operating deposits predominantly in Treasury Services driven by growth in client activity, and an increase in the net issuances of structured notes in Markets. The increase in CCB was driven by growth in new accounts.
The decrease in CB was primarily driven by lower non operating deposits.
AWM balances were relatively flat with growth in interest-bearing deposits offset by migration predominantly into the Firm’s investment-related products.
Refer to the discussion of the Firm’s Business Segment Results and the Consolidated Balance Sheets Analysis on pages 21–43 and pages 15-16, respectively, for further information on deposit and liability balance trends.

51


The following table summarizes short-term and long-term funding, excluding deposits, as of September 30, 2019, and December 31, 2018, and average balances for the three and nine months ended September 30, 2019 and 2018, respectively. Refer to the Consolidated Balance Sheets Analysis on pages 15–17 and Note 10 for additional information.
 September 30, 2019December 31, 2018 Three months ended September 30, Nine months ended September 30,
Sources of funds (excluding deposits)Average Average
(in millions)2019
2018
 2019
2018
Commercial paper$19,620
$30,059
 $19,607
$28,702
 $24,756
$27,289
Other borrowed funds8,826
8,789
 10,537
11,172
 10,869
11,716
Total short-term unsecured funding$28,446
$38,848
 $30,144
$39,874
 $35,625
$39,005
Securities sold under agreements to repurchase(a)
$235,968
$171,975
 $229,581
$174,436
 $215,148
$178,929
Securities loaned(a)
9,739
9,481
 8,505
9,131
 9,117
10,900
Other borrowed funds(b)
20,447
30,428
 21,758
21,169
 28,343
21,336
Obligations of Firm-administered multi-seller conduits(c)
$10,514
$4,843
 $12,167
$3,102
 $10,987
$3,070
Total short-term secured funding$276,668
$216,727
 $272,011
$207,838
 $263,595
$214,235
         
Senior notes$173,550
$162,733
 $172,059
$154,820
 $167,495
$152,046
Trust preferred securities

 
517
 
629
Subordinated debt18,043
16,743
 17,797
16,079
 17,196
16,106
Structured notes(d)
70,687
53,090
 69,144
50,905
 62,984
48,874
Total long-term unsecured funding$262,280
$232,566
 $259,000
$222,321
 $247,675
$217,655
         
Credit card securitization(c)
$6,457
$13,404
 $7,394
$15,052
 $10,802
$16,620
FHLB advances29,642
44,455
 29,646
48,645
 35,998
54,378
Other long-term secured funding(e)
4,550
5,010
 4,558
5,013
 4,708
4,832
Total long-term secured funding$40,649
$62,869
 $41,598
$68,710
 $51,508
$75,830
         
Preferred stock(f)
$28,363
$26,068
 $28,241
$26,252
 $27,457
$26,130
Common stockholders’ equity(f)
$235,985
$230,447
 $235,613
$230,439
 $232,917
$228,995
(a)Primarily consists of short-term securities loaned or sold under agreements to repurchase.
(b)Includes FHLB advances with original maturities of less than one year of $2.6 billion and $11.4 billion as of September 30, 2019 and December 31, 2018, respectively.
(c)Included in beneficial interests issued by consolidated variable interest entities on the Firm’s Consolidated balance sheets.
(d)Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company.
(e)Includes long-term structured notes which are secured.
(f)Refer to Capital Risk Management on pages 45–49, Consolidated statements of changes in stockholders’ equity on page 83 of this Form 10-Q and Note 20 and Note 21 of JPMorgan Chase’s 2018 Form 10-K for additional information on preferred stock and common stockholders’ equity.
Short-term funding
The Firm’s sources of short-term secured funding primarily consist of securities loaned or sold under agreements to repurchase. These instruments are secured predominantly by high-quality securities collateral, including government-issued debt, U.S. GSE and government agency MBS, and constitute a significant portion of the federal funds purchased and securities loaned or sold under repurchase agreements on the Consolidated balance sheets. The increase at September 30, 2019, from December 31, 2018, was driven by CIB and includes the Firm’s participation in the Federal Reserve’s open market operations, as well as higher secured financing of trading assets-debt instruments
 
and client-driven activities.
The balances associated with securities loaned or sold under agreements to repurchase fluctuate over time due to customers’ investment and financing activities, the Firm’s demand for financing, the ongoing management of the mix of the Firm’s liabilities, including its secured and unsecured financing (for both the investment securities and market-making portfolios), and other market and portfolio factors.
The Firm’s sources of short-term unsecured funding primarily consist of issuance of wholesale commercial paper. The decrease in commercial paper at September 30, 2019, from December 31, 2018, was due to lower net issuance primarily for short-term liquidity management.

52


Long-term funding and issuance
Long-term funding provides additional sources of stable funding and liquidity for the Firm. The Firm’s long-term funding plan is driven primarily by expected client activity, liquidity considerations, and regulatory requirements, including TLAC. Long-term funding objectives include maintaining diversification, maximizing market access and optimizing funding costs. The Firm evaluates various funding markets, tenors and currencies in creating its optimal long-term funding plan.
The significant majority of the Firm’s long-term unsecured funding is issued by the Parent Company to provide maximum flexibility in support of both bank and nonbank subsidiary funding needs. The Parent Company advances substantially all net funding proceeds to its subsidiary, the Intermediate Holding Company (“IHC”). The IHC does not issue debt to external counterparties. The following table summarizes long-term unsecured issuance and maturities or redemptions for the three and nine months ended September 30, 2019 and 2018. Refer to Liquidity Risk Management on pages 95-100 and Note 19 of JPMorgan Chase’s 2018 Form 10-K for additional information on the IHC and long-term debt.
Long-term unsecured funding          
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
 2019
2018
 2019
2018
 2019
2018
 2019
2018
(Notional in millions)Parent Company Subsidiaries
Issuance           
Senior notes issued in the U.S. market$5,000
$6,000
 $13,250
$17,000
 $
$1,250
 $1,750
$8,761
Senior notes issued in non-U.S. markets1,672

 3,920
1,175
 

 

Total senior notes6,672
6,000
 17,170
18,175
 
1,250
 1,750
8,761
Structured notes(a)
780
387
 2,596
2,047
 8,511
5,934
 23,643
20,159
Total long-term unsecured funding – issuance$7,452
$6,387
 $19,766
$20,222
 $8,511
$7,184
 $25,393
$28,920
            
Maturities/redemptions           
Senior notes$2,700
$646
 $10,607
$18,633
 $2,751
$1,503
 $4,567
$4,466
Subordinated debt37
15
 183
15
 

 

Structured notes477
582
 1,436
2,465
 4,540
3,474
 12,700
12,104
Total long-term unsecured funding – maturities/redemptions$3,214
$1,243
 $12,226
$21,113
 $7,291
$4,977
 $17,267
$16,570
(a)Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company.

The Firm raises secured long-term funding through securitization of consumer credit card loans and advances from the FHLBs. The following table summarizes the securitization issuance and FHLB advances and their respective maturities or redemptions for the three and nine months ended September 30, 2019 and 2018, respectively.
Long-term secured funding         
 Three months ended September 30, Nine months ended September 30,
 Issuance Maturities/Redemptions Issuance Maturities/Redemptions
(in millions)20192018 20192018 2019
2018
 2019
2018
Credit card securitization$
$
 $2,850
$2,375
 $
$1,396
 $6,975
$8,500
FHLB advances

 5
10,704
 
4,000
 14,810
23,157
Other long-term secured funding(a)
62
117
 180
139
 115
312
 633
161
Total long-term secured funding$62
$117
 $3,035
$13,218
 $115
$5,708
 $22,418
$31,818
(a)Includes long-term structured notes which are secured.
The Firm’s wholesale businesses also securitize loans for client-driven transactions; those client-driven loan securitizations are not considered to be a source of funding for the Firm and are not included in the table above. Refer to Note 14 of JPMorgan Chase’s 2018 Form 10-K for further description of the client-driven loan securitizations.

53


Credit ratings
The cost and availability of financing are influenced by credit ratings. Reductions in these ratings could have an adverse effect on the Firm’s access to liquidity sources, increase the cost of funds, trigger additional collateral or funding requirements and decrease the number of investors and counterparties willing to lend to the Firm. The nature and magnitude of the impact of ratings downgrades depends on numerous contractual and behavioral factors, which the Firm believes are incorporated in its liquidity risk and stress testing metrics. The Firm believes that it maintains sufficient liquidity to withstand a potential decrease in funding capacity due to ratings downgrades.
 
Additionally, the Firm’s funding requirements for VIEs and other third-party commitments may be adversely affected by a decline in credit ratings. Refer to SPEs on page 18, and liquidity risk and credit-related contingent features in Note 4 for additional information on the impact of a credit ratings downgrade on the funding requirements for VIEs, and on derivatives and collateral agreements.

The credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries as of September 30, 2019, were as follows.
 JPMorgan Chase & Co. 
JPMorgan Chase Bank, N.A.(a)
 
J.P. Morgan Securities LLC
J.P. Morgan Securities plc
September 30, 2019Long-term issuerShort-term issuerOutlook Long-term issuerShort-term issuerOutlook Long-term issuerShort-term issuerOutlook
Moody’s Investors ServiceA2P-1Stable Aa2P-1Stable Aa3P-1Stable
Standard & Poor’sA-A-2Stable A+A-1Stable A+A-1Stable
Fitch RatingsAA-F1+Stable AAF1+Stable AAF1+Stable
(a)On May 18, 2019, the Firm merged Chase Bank USA, N.A. with and into JPMorgan Chase Bank, N.A., with JPMorgan Chase Bank, N.A. as the surviving bank. The credit rating for JPMorgan Chase Bank, N.A. reflects the credit rating of the merged entity.
Refer to page 100 of JPMorgan Chase’s 2018 Form 10-K for a discussion of the factors that could affect credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries.


54


CREDIT AND INVESTMENT RISK MANAGEMENT
Credit and investment risk is the risk associated with the default or change in credit profile of a client, counterparty or customer; or loss of principal or a reduction in expected returns on investments, including consumer credit risk,
wholesale credit risk, and investment portfolio risk. Refer to pages 55-68 for a further discussion of Credit Risk.
Refer to page 69 for a further discussion of Investment Portfolio Risk. Refer to Credit and Investment Risk Management on pages 102-123 of JPMorgan Chase’s 2018 Form 10-K for a further discussion of the Firm’s Credit and Investment Risk Management framework and organization, and the identification, monitoring and management.

CREDIT PORTFOLIO
Credit risk is the risk associated with the default or change in credit profile of a client, counterparty or customer.
In the following tables, reported loans include loans retained (i.e., held-for-investment); loans held-for-sale; and certain loans accounted for at fair value. The following tables do not include loans which the Firm accounts for at fair value and classifies as trading assets; refer to Notes 2 and 3 for further information regarding these loans. Refer to Notes 11, 22, and 4 for additional information on the Firm’s loans, lending-related commitments and derivative receivables, including the Firm’s accounting policies.
Refer to Wholesale credit exposure – industry exposures on pages 62–64 for further information regarding the credit risk inherent in the Firm’s cash placed with banks; refer to Note 9 of this Form 10-Q and Note 10 of JPMorgan Chase’s 2018 Form 10-K for information regarding the credit risk inherent in the Firm’s investment securities portfolio; and refer to Note 10 of this Form 10-Q and Note 11 of JPMorgan Chase’s 2018 Form 10-K for information regarding the credit risk inherent in the securities financing portfolio.
Refer to Consumer Credit Portfolio on pages 106–111 of JPMorgan Chase’s 2018 Form 10-K and Note 11 of this Form 10-Q for a further discussion of the consumer credit environment and consumer loans. Refer to Wholesale Credit Portfolio on pages 112–119 of JPMorgan Chase’s 2018 Form 10-K and Note 11 of this Form 10-Q for a further discussion of the wholesale credit environment and wholesale loans.
Total credit portfolio    
 Credit exposure 
Nonperforming(d)(e)
(in millions)Sep 30,
2019

Dec 31,
2018

 Sep 30,
2019

Dec 31,
2018

Loans retained$928,887
$969,415
 $4,687
$4,611
Loans held-for-sale10,571
11,988
 88

Loans at fair value5,760
3,151
 176
220
Total loans–reported945,218
984,554
 4,951
4,831
Derivative receivables55,577
54,213
 26
60
Receivables from customers and other(a)
32,236
30,217
 

Total credit-related assets1,033,031
1,068,984
 4,977
4,891
Assets acquired in loan satisfactions     
Real estate ownedNA
NA
 340
269
OtherNA
NA
 26
30
Total assets acquired in loan satisfactions
NA
NA
 366
299
Lending-related commitments1,095,090
1,039,258
 446
469
Total credit portfolio$2,128,121
$2,108,242
 $5,789
$5,659
Credit derivatives used
in credit portfolio management activities(b)
$(15,031)$(12,682) $
$
Liquid securities and other cash collateral held against derivatives(c)
(15,482)(15,322) NA
NA
 
(in millions,
except ratios)
Three months ended
September 30,
 Nine months ended
September 30,
2019
2018
 2019
2018
Net charge-offs$1,371
$1,033
 $4,135
$3,620
Average retained loans     
Loans932,493
942,583
 944,666
931,766
Loans – reported, excluding
residential real estate PCI loans
910,753
916,205
 921,978
903,377
Net charge-off rates     
Loans0.58%0.43% 0.59%0.52%
Loans – excluding PCI0.60
0.45
 0.60
0.54
(a)Receivables from customers and other primarily represents prime brokerage-related held-for-investment customer receivables.
(b)Represents the net notional amount of protection purchased and sold through credit derivatives used to manage both performing and nonperforming wholesale credit exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP. Refer to Credit derivatives on page 66 and Note 4 for additional information.
(c)Includes collateral related to derivative instruments where an appropriate legal opinion has not been either sought or obtained.
(d)Excludes PCI loans. The Firm is recognizing interest income on each pool of PCI loans as each of the pools is performing.
(e)At September 30, 2019, and December 31, 2018, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $1.6 billion and $2.6 billion, respectively, and real estate owned (“REO”) insured by U.S. government agencies of $50 million and $75 million, respectively. These amounts have been excluded based upon the government guarantee. In addition, the Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance issued by the Federal Financial Institutions Examination Council (“FFIEC”).

55


CONSUMER CREDIT PORTFOLIO
The Firm’s retained consumer portfolio consists primarily of residential real estate loans, credit card loans, auto loans, and business banking loans, as well as associated lending-related commitments. The Firm’s focus is on serving primarily the prime segment of the consumer credit market. Refer to Note 11 of this Form 10-Q and Consumer Credit Portfolio on pages 106–111 and Note 12 of JPMorgan Chase’s 2018 Form 10-K for further information on consumer loans. Refer to Note 22 of this Form 10-Q and Note 27 of JPMorgan Chase’s 2018 Form 10-K for further information on lending-related commitments.
The following table presents consumer credit-related information with respect to the credit portfolio held by CCB, scored prime mortgage and scored home equity loans held by AWM, and prime mortgage loans held by Corporate. Refer to Note 12 of JPMorgan Chase’s 2018 Form 10-K for further information about the Firm’s nonaccrual and charge-off accounting policies.
Consumer credit portfolio                
      Three months ended September 30, Nine months ended September 30,

(in millions, except ratios)
Credit exposure 
Nonaccrual loans(f)(g)
 
Net charge-offs/(recoveries)(h)
 
Net charge-off/(recovery) rate(h)(i)
 
Net charge-offs/(recoveries)(h)
 
Net charge-off/(recovery) rate(h)(i)
Sep 30,
2019

Dec 31,
2018

 Sep 30,
2019

Dec 31,
2018

 2019
2018
 2019
2018
 2019
2018
 2019
2018
Consumer, excluding credit card                 
Loans, excluding PCI loans and loans held-for-sale                 
Residential mortgage$197,456
$231,078
 $1,629
$1,765
 $(15)$(105) (0.03)%(0.18)% $(31)$(256) (0.02)%(0.15)%
Home equity24,954
28,340
 1,208
1,323
 (25)(12) (0.39)(0.16) (40)(2) (0.20)(0.01)
Auto(a)(b)
61,410
63,573
 112
128
 49
56
 0.32
0.35
 149
182
 0.32
0.37
Consumer & Business Banking(b)(c)
26,699
26,612
 268
245
 79
68
 1.18
1.02
 204
171
 1.03
0.88
Total loans, excluding PCI loans and loans held-for-sale310,519
349,603
 3,217
3,461
 88
7
 0.11
0.01
 282
95
 0.11
0.04
Loans – PCI                 
Home equity7,753
8,963
 NA
NA
 NA
NA
 NA
NA
 NA
NA
 NA
NA
Prime mortgage4,164
4,690
 NA
NA
 NA
NA
 NA
NA
 NA
NA
 NA
NA
Subprime mortgage1,797
1,945
 NA
NA
 NA
NA
 NA
NA
 NA
NA
 NA
NA
Option ARMs7,576
8,436
 NA
NA
 NA
NA
 NA
NA
 NA
NA
 NA
NA
Total loans – PCI21,290
24,034
 NA
NA
 NA
NA
 NA
NA
 NA
NA
 NA
NA
Total loans – retained331,809
373,637
 3,217
3,461
 88
7
 0.10
0.01
 282
95
 0.11
0.03
Loans held-for-sale4,821
95
 2

 NA
NA
 NA
NA
 NA
NA
 NA
NA
Total consumer, excluding credit card loans336,630
373,732
 3,219
3,461
 88
7
 0.10
0.01
 282
95
 0.11
0.03
Lending-related commitments(d)
53,591
46,066
               
Receivables from customers18
154
               
Total consumer exposure, excluding credit card390,239
419,952
               
Credit card                 
Loans retained(e)
159,571
156,616
 

 1,175
1,073
 2.95
2.91
 3,617
3,407
 3.13
3.16
Loans held-for-sale
16
 

 NA
NA
 NA
NA
 NA
NA
 NA
NA
Total credit card loans159,571
156,632
 

 1,175
1,073
 2.95
2.91
 3,617
3,407
 3.13
3.16
Lending-related commitments(d)
645,880
605,379
               
Total credit card exposure805,451
762,011
               
Total consumer credit portfolio$1,195,690
$1,181,963
 $3,219
$3,461
 $1,263
$1,080
 1.00 %0.82 % $3,899
$3,502
 1.02 %0.90 %
Memo: Total consumer credit portfolio, excluding PCI$1,174,400
$1,157,929
 $3,219
$3,461
 $1,263
$1,080
 1.05 %0.86 % $3,899
$3,502
 1.07 %0.96 %
(a)At September 30, 2019, and December 31, 2018, excluded operating lease assets of $22.1 billion and $20.5 billion, respectively. These operating lease assets are included in other assets on the Firm’s Consolidated balance sheets. Refer to Note 16 for further information.
(b)Includes certain business banking and auto dealer risk-rated loans that apply the wholesale methodology for determining the allowance for loan losses; these loans are managed by CCB, and therefore, for consistency in presentation, are included within the consumer portfolio.
(c)Predominantly includes Business Banking loans.
(d)Credit card and home equity lending-related commitments represent the total available lines of credit for these products. The Firm has not experienced, and does not anticipate, that all available lines of credit would be used at the same time. For credit card commitments, and if certain conditions are met, home equity commitments, the Firm can reduce or cancel these lines of credit by providing the borrower notice or, in some cases as permitted by law, without notice. Refer to Note 22 for further information.
(e)Includes billed interest and fees net of an allowance for uncollectible interest and fees.
(f)At September 30, 2019 and December 31, 2018, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $1.6 billion and $2.6 billion, respectively. These amounts have been excluded from nonaccrual loans based upon the government guarantee. In addition, the Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status, as permitted by regulatory guidance issued by the FFIEC.
(g)Excludes PCI loans. The Firm is recognizing interest income on each pool of PCI loans as each of the pools is performing.
(h)Net charge-offs/(recoveries) and the net charge-off/(recovery) rates excluded write-offs in the PCI portfolio of $43 million and $58 million for the three months ended September 30, 2019 and 2018, respectively, and $132 million and $151 million for the nine months ended September 30, 2019 and 2018, respectively. These write-offs decreased the allowance for loan losses for PCI loans. Refer to Allowance for Credit Losses on pages 67–68 for further information.
(i)Average consumer loans held-for-sale were $5.5 billion and $196 million for the three months ended September 30, 2019 and 2018, respectively, and $2.6 billion and $240 million for the nine months ended September 30, 2019 and 2018, respectively. These amounts were excluded when calculating net charge-off/(recovery) rates.

56


Consumer, excluding credit card
Portfolio analysis
Loan balances decreased from December 31, 2018 due to lower residential real estate loans, predominantly driven by loan sales. The credit performance of the portfolio continues to benefit from a strong labor market and improvement in home prices.
The following discussions provide information concerning individual loan products, excluding PCI loans which are addressed separately. Refer to Note 11 of this Form 10-Q for further information about this portfolio, including information about delinquencies, loan modifications and other credit quality indicators.
Residential mortgage: The residential mortgage portfolio, including loans held-for-sale, predominantly consists of prime mortgage loans. The portfolio decreased from December 31, 2018 driven by loan sales in Home Lending as well as paydowns, largely offset by originations of prime mortgage loans that have been retained on the balance sheet. Net recoveries for the three and nine months ended September 30, 2019 were lower when compared with the same periods in the prior year as the prior year benefited from larger recoveries on loan sales.
At September 30, 2019, and December 31, 2018, the Firm’s residential mortgage portfolio included $21.8 billion and $21.6 billion, respectively, of interest-only loans. These loans have an interest-only payment period generally followed by an adjustable-rate or fixed-rate fully amortizing payment period to maturity and are typically originated as higher-balance loans to higher-income borrowers, predominantly in AWM. Performance of this portfolio for the three and nine months ended September 30, 2019 was in line with the performance of the broader residential mortgage portfolio for the same period.
The following table provides a summary of the Firm’s residential mortgage portfolio insured and/or guaranteed by U.S. government agencies, including loans held-for-sale. The Firm monitors its exposure to certain potential unrecoverable claim payments related to government-insured loans and considers this exposure in estimating the allowance for loan losses.
(in millions)September 30,
2019

December 31,
2018

Current$2,100
$2,884
30-89 days past due1,054
1,528
90 or more days past due1,602
2,600
Total government guaranteed loans$4,756
$7,012
 
Home equity: The home equity portfolio declined from December 31, 2018 primarily reflecting loan paydowns.
At September 30, 2019, approximately 90% of the Firm’s home equity portfolio consisted of home equity lines of credit (“HELOCs”) and the remainder consisted of home equity loans (“HELOANs”). The carrying value of HELOCs outstanding was $23 billion at September 30, 2019. This amount included $10 billion of HELOCs that have recast from interest-only to fully amortizing payments or have been modified and $4 billion of interest-only balloon HELOCs, which primarily mature after 2030. The Firm manages the risk of HELOCs during their revolving period by closing or reducing the undrawn line to the extent permitted by law when borrowers are exhibiting a material deterioration in their credit risk profile.
Refer to Note 11 of this Form 10-Q and Consumer Credit Portfolio on pages 106–111 of JPMorgan Chase’s 2018 Form 10-K for further information on the Firm’s home equity portfolio.
Auto: The auto loan portfolio predominantly consists of prime-quality loans. The portfolio declined when compared with December 31, 2018, as paydowns and charge-offs or liquidation of delinquent loans were predominantly offset by new originations.
Consumer & Business Banking: Consumer & Business Banking loans were flat when compared with December 31, 2018 as loan originations were offset by paydowns and charge-offs of delinquent loans. Net charge-offs for the three and nine months ended September 30, 2019 increased when compared with the same period in the prior year due primarily to higher deposit overdraft losses.
Purchased credit-impaired loans: PCI loans represent certain loans that were acquired and deemed to be credit-impaired on the acquisition date. PCI loans decreased from December 31, 2018 due to portfolio run off. As of September 30, 2019, approximately 9% of the option ARM PCI loans were delinquent and approximately 71% of the portfolio had been modified into fixed-rate, fully amortizing loans. The borrowers for substantially all of the remaining option ARM loans are making amortizing payments, although such payments are not necessarily fully amortizing. This latter group of loans is subject to the risk of payment shock due to future payment recast. Default rates generally increase on option ARM loans when payment recast results in a payment increase. The expected increase in default rates is considered in the Firm’s quarterly impairment assessment.

57


The following table provides a summary of lifetime principal loss estimates included in either the nonaccretable difference or the allowance for loan losses.
Summary of PCI loans lifetime principal loss estimates
 
Lifetime loss
 estimates(a)
 
Life-to-date
liquidation losses(b)
(in billions)Sep 30,
2019

 Dec 31,
2018

 Sep 30,
2019

 Dec 31,
2018

Home equity$13.9
 $14.1
 $13.0
 $13.0
Prime mortgage4.1
 4.1
 3.9
 3.9
Subprime mortgage3.3
 3.3
 3.2
 3.2
Option ARMs10.3
 10.3
 10.0
 9.9
Total$31.6
 $31.8
 $30.1
 $30.0
(a)Includes the original nonaccretable difference established in purchase accounting of $30.5 billion for principal losses plus additional principal losses recognized subsequent to acquisition through the provision and allowance for loan losses. The remaining nonaccretable difference for principal losses was $476 million and $512 million at September 30, 2019, and December 31, 2018, respectively.
(b)Represents both realization of loss upon loan resolution and any principal forgiven upon modification.
Geographic composition of residential real estate loans
Refer to Note 11 for information on the geographic composition of the Firm’s residential real estate loans.
Current estimated loan-to-value ratio of residential real estate loans
Average current estimated loan-to-value (“LTV”) ratios have declined consistent with recent improvements in home prices, customer paydowns, and charge-offs or liquidations of higher LTV loans. Refer to Note 11 for information on current estimated LTVs of the Firm’s residential real estate loans.
Loan modification activities for residential real estate loans
The performance of modified loans generally differs by product type due to differences in both the credit quality and the types of modifications provided. Performance metrics for modifications to the residential real estate portfolios as measured through redefault rates, were not materially different from December 31, 2018. Refer to Consumer Credit Portfolio on pages 106–111 of JPMorgan Chase’s 2018 Form 10-K for further information on the Firm’s redefault rates.
Certain modified loans have interest rate reset provisions (“step-rate modifications”) where the interest rates on these loans generally began to increase commencing in 2014 by 1% per year, and will continue to do so, until the rate reaches a specified cap. The cap on these loans is typically at a prevailing market interest rate for a fixed-rate mortgage loan as of the modification date. At September 30, 2019, the carrying value of non-PCI loans and the unpaid principal balance of PCI loans modified in step-rate modifications, which have not yet met their specified caps, were $1.3 billion and $2.4 billion, respectively. The Firm continues to monitor this risk exposure and the impact of these potential interest rate increases is considered in the Firm’s allowance for loan losses.
 
The following table presents information as of September 30, 2019, and December 31, 2018, relating to modified retained residential real estate loans for which concessions have been granted to borrowers experiencing financial difficulty. Refer to Note 11 for further information on modifications for the three and nine months ended September 30, 2019 and 2018.
Modified residential real estate loans
 September 30, 2019 December 31, 2018
(in millions)Retained loans
Non-accrual
retained loans
(d)
 Retained loans
Non-accrual
retained loans
(d)
Modified residential real estate loans, excluding
PCI loans(a)(b)
     
Residential mortgage$4,118
$1,376
 $4,565
$1,459
Home equity1,961
981
 2,012
955
Total modified residential real estate loans, excluding PCI loans$6,079
$2,357
 $6,577
$2,414
Modified PCI loans(c)
     
Home equity$2,003
NA
 $2,086
NA
Prime mortgage2,929
NA
 3,179
NA
Subprime mortgage1,919
NA
 2,041
NA
Option ARMs5,879
NA
 6,410
NA
Total modified PCI loans$12,730
NA
 $13,716
NA
(a)Amounts represent the carrying value of modified residential real estate loans.
(b)At September 30, 2019, and December 31, 2018, $16 million and $4.1 billion, respectively, of loans modified subsequent to repurchase from Ginnie Mae in accordance with the standards of the appropriate government agency (i.e., Federal Housing Administration (“FHA”), U.S. Department of Veterans Affairs (“VA”), Rural Housing Service of the U.S. Department of Agriculture (“RHS”)) are not included in the table above. When such loans perform subsequent to modification in accordance with Ginnie Mae guidelines, they are generally sold back into Ginnie Mae loan pools. Modified loans that do not re-perform become subject to foreclosure. Refer to Note 13 for additional information about sales of loans in securitization transactions with Ginnie Mae.
(c)Amounts represent the unpaid principal balance of modified PCI loans.
(d)At September 30, 2019, and December 31, 2018, nonaccrual loans included $1.9 billion and $2.0 billion, respectively, of troubled debt restructurings (“TDRs”) for which the borrowers were less than 90 days past due. Refer to Note 11 for additional information about loans modified in a TDR that are on nonaccrual status.

58


Nonperforming assets
The following table presents information as of September 30, 2019, and December 31, 2018, about consumer, excluding credit card, nonperforming assets.
Nonperforming assets(a)
   
(in millions)September 30,
2019

 December 31,
2018

Nonaccrual loans(b)
   
Residential real estate$2,839
 $3,088
Other consumer380
 373
Total nonaccrual loans3,219
 3,461
Assets acquired in loan satisfactions   
Real estate owned(c)
209
 196
Other26
 30
Total assets acquired in loan satisfactions235
 226
Total nonperforming assets$3,454
 $3,687
(a)At September 30, 2019, and December 31, 2018, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $1.6 billion and $2.6 billion, respectively, and REO insured by U.S. government agencies of $50 million and $75 million, respectively. These amounts have been excluded based upon the government guarantee.
(b)Excludes PCI loans, which are accounted for on a pool basis. Since each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, the past-due status of the pools, or that of individual loans within the pools, is not meaningful. The Firm is recognizing interest income on each pool of loans as each of the pools is performing.
(c)The prior period amount has been revised to conform with the current period presentation.
Nonaccrual loans in the residential real estate portfolio at September 30, 2019 decreased to $2.8 billion from $3.1 billion at December 31, 2018, of which 20% and 24% were greater than 150 days past due, respectively. In the aggregate, the unpaid principal balance of residential real estate loans greater than 150 days past due was charged down by approximately 31% and 32% to the estimated net realizable value of the collateral at September 30, 2019, and December 31, 2018, respectively.
Nonaccrual loans: The following table presents changes in consumer, excluding credit card, nonaccrual loans for the nine months ended September 30, 2019 and 2018.
Nonaccrual loan activity  
Nine months ended September 30,
(in millions)
 2019
2018
Beginning balance $3,461
$4,209
Additions 1,674
2,174
Reductions:   
Principal payments and other(a)
 766
1,119
Charge-offs 301
354
Returned to performing status 657
1,057
Foreclosures and other liquidations 192
217
Total reductions 1,916
2,747
Net changes (242)(573)
Ending balance $3,219
$3,636
(a)Other reductions includes loan sales.
 
Active and suspended foreclosure: Refer to Note 11 for information on loans that were in the process of active or suspended foreclosure.
Credit card
Total credit card loans increased from December 31, 2018 reflecting increased sales volumes from existing customers and new account growth, partially offset by the impact of seasonality. The September 30, 2019 30+ and 90+ day delinquency rates of 1.84% and 0.90%, respectively, were relatively flat compared to the December 31, 2018 30+ and 90+ day delinquency rates of 1.83% and 0.92%, respectively. Net charge-offs increased for the three and nine months ended September 30, 2019 when compared with the same period in the prior year due to loan growth, in line with expectations.
Consistent with the Firm’s policy, all credit card loans typically remain on accrual status until charged off. However, the Firm establishes an allowance, which is offset against loans and reduces interest income, for the estimated uncollectible portion of accrued and billed interest and fee income.
Geographic and FICO composition of credit card loans
Refer to Note 11 for information on the geographic and FICO composition of the Firm’s credit card loans.
Modifications of credit card loans
At September 30, 2019 and December 31, 2018, the Firm had $1.4 billion and $1.3 billion, respectively, of credit card loans outstanding that have been modified in TDRs. Refer to Note 11 for additional information about loan modification programs to borrowers.

59


WHOLESALE CREDIT PORTFOLIO
In its wholesale businesses, the Firm is exposed to credit risk primarily through its underwriting, lending, market-making, and hedging activities with and for clients and counterparties, as well as through various operating services (such as cash management and clearing activities), securities financing activities and cash placed with banks. A portion of the loans originated or acquired by the Firm’s wholesale businesses is generally retained on the balance sheet. The Firm distributes a significant percentage of the loans that it originates into the market as part of its syndicated loan business and to manage portfolio concentrations and credit risk.
The credit performance of the wholesale portfolio remained favorable for the nine months ended September 30, 2019, characterized by continued low levels of criticized exposure, nonaccrual loans and charge-offs. Refer to the industry discussion on pages 62–64 for further information. Loans held-for-sale decreased, driven by a loan syndication in CIB. The wholesale portfolio is actively managed, in part by conducting ongoing, in-depth reviews of client credit quality and transaction structure inclusive of collateral where applicable, and of industry, product and client concentrations.
 
In the following tables, the Firm’s wholesale credit portfolio includes exposure held in CIB, CB, AWM and Corporate. It excludes all exposure managed by CCB, scored prime mortgage and scored home equity loans held in AWM and prime mortgage loans held in Corporate.
Wholesale credit portfolio
 Credit exposure 
Nonperforming(c)
(in millions)Sep 30,
2019

Dec 31,
2018

 Sep 30,
2019

Dec 31,
2018

Loans retained$437,507
$439,162
 $1,470
$1,150
Loans held-for-sale5,750
11,877
 86

Loans at fair value5,760
3,151
 176
220
Loans – reported449,017
454,190
 1,732
1,370
Derivative receivables55,577
54,213
 26
60
Receivables from customers and other(a)
32,218
30,063
 

Total wholesale credit-related assets536,812
538,466
 1,758
1,430
Lending-related commitments395,619
387,813
 446
469
Total wholesale credit exposure$932,431
$926,279
 $2,204
$1,899
Credit derivatives used in credit portfolio management activities(b)
$(15,031)$(12,682) $
$
Liquid securities and other cash collateral held against derivatives(15,482)(15,322) NA
NA
(a)Receivables from customers and other include $32.2 billion and $30.1 billion of prime brokerage-related held-for-investment customer receivables at September 30, 2019, and December 31, 2018, respectively, to customers in CIB and AWM; these are classified in accrued interest and accounts receivable on the Consolidated balance sheets.
(b)Represents the net notional amount of protection purchased and sold through credit derivatives used to manage both performing and nonperforming wholesale credit exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP. Refer to Credit derivatives on page 66 and Note 4 for additional information.
(c)Excludes assets acquired in loan satisfactions.

60


The following tables present the maturity and ratings profiles of the wholesale credit portfolio as of September 30, 2019, and December 31, 2018. The ratings scale is based on the Firm’s internal risk ratings, which generally correspond to the ratings assigned by S&P and Moody’s. Refer to Note 12 of JPMorgan Chase’s 2018 Form 10-K for additional information on wholesale loan portfolio risk ratings.
Wholesale credit exposure – maturity and ratings profile      
 
Maturity profile(d)
 Ratings profile
 Due in 1 year or lessDue after 1 year through 5 yearsDue after 5 yearsTotal Investment-grade Noninvestment-gradeTotalTotal % of IG
September 30, 2019
(in millions, except ratios)
 AAA/Aaa to BBB-/Baa3 BB+/Ba1 & below
Loans retained$132,888
$199,877
$104,742
$437,507
 $337,298
 $100,209
$437,507
77%
Derivative receivables   55,577
    55,577
 
Less: Liquid securities and other cash collateral held against derivatives   (15,482)    (15,482) 
Total derivative receivables, net of all collateral8,332
8,263
23,500
40,095
 32,535
 7,560
40,095
81
Lending-related commitments75,484
307,093
13,042
395,619
 291,144
 104,475
395,619
74
Subtotal216,704
515,233
141,284
873,221
 660,977
 212,244
873,221
76
Loans held-for-sale and loans at fair value(a)
   11,510
    11,510
 
Receivables from customers and other   32,218
    32,218
 
Total exposure – net of liquid securities and other cash collateral held against derivatives   $916,949
    $916,949
 
Credit derivatives used in credit portfolio management activities(b)(c)
$(864)$(8,013)$(6,154)$(15,031) $(13,606) $(1,425)$(15,031)91%
 
Maturity profile(d)
 Ratings profile
 Due in 1 year or lessDue after 1 year through 5 yearsDue after 5 yearsTotal Investment-grade Noninvestment-gradeTotalTotal % of IG
December 31, 2018
(in millions, except ratios)
 AAA/Aaa to BBB-/Baa3 BB+/Ba1 & below
Loans retained$138,458
$196,974
$103,730
$439,162
 $339,729
 $99,433
$439,162
77%
Derivative receivables   54,213
    54,213
 
Less: Liquid securities and other cash collateral held against derivatives   (15,322)    (15,322) 
Total derivative receivables, net of all collateral11,038
9,169
18,684
38,891
 31,794
 7,097
38,891
82
Lending-related commitments79,400
294,855
13,558
387,813
 288,724
 99,089
387,813
74
Subtotal228,896
500,998
135,972
865,866