Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Merger or Acquisition (September 2008)
23 slides from Jp Morgan Chase &'s merger presentation, Sep 26, 2008
Slide 1: Investor Presentation: Acquisition of Washington Mutual's banks by JPMorgan Chase
Exhibit 99.2 SE P T E M B E R 2 5 , 2 0 0 8 JPMorgan Chase & Co. has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents JPMorga
Slide 2: Key terms of acquisition of Washington Mutual's banks from FDIC acting as receiver
Key terms of acquisition of Washington Mutual’s banks from FDIC acting as receiver Transaction JPMorgan Chase to acquire: Substantially all of the assets of Washington Mutual’s banks All of the deposits and certain liabilities of Washington Mutual’s banks Transaction does not include: Assets and lia
Slide 3: WaMu provides unique opportunity to expand retail banking franchise
WaMu provides unique opportunity to expand retail banking franchise and generate attractive returns for JPMorgan Chase shareholders Strategic Fit Greatly enhances retail banking platform in attractive markets Combined deposits of $911 billion and 5,410 branches at close Expanding into attractive new
Slide 4: Leader in retail banking and deposit gathering
Leader in retail banking and deposit gathering Branches Deposits ($bn) Rank Institution Branches (#) Rank Institution Deposits ($bn) 1 Bank of America 6,138 (1) Pro forma JPMorgan Chase $911 (2) Pro forma JPMorgan Chase 5,410 1 Citi 804 2 Wells Fargo 3,430 2 Bank of America 785 3 Wachovia 3,348 3 JP
Slide 5: Creates broader branch network
Creates broader branch network Branch map Chase branches —3,203 WaMu branches —2,207 Branch overlap New markets Total JPMorgan Chase–WaMucombinedbranches —5,410 at close Source: SNL Financial Note: Data as of September 18, 2008 4
Slide 6: Adds branch presence in new markets
Adds branch presence in new markets # of branches State Combined JPMorgan Chase Washington Mutual New York 888 651 237 Texas 722 469 253 California 691 3 688 Illinois 463 348 115 Arizona 308 244 64 Michigan 298 298 - Ohio 285 285 - Florida 274 13 261 New Jersey 253 167 86 Washington 188 1 187 Indian
Slide 7: Combined retail franchise has leading market share in key states
Combined retail franchise has leading market share in key states Adjusted deposits in 10 key states ($bn) JPMorgan Chase Washington Mutual $88.2 $15.7 $75.7 $37.7 $72.5 $75.7 $9.1 $22.9 $1.4 $16.3 $28.7 $13.8 $13.0 $12.7 $12.4 $1.1 $10.8 $0.0 $13.0 $0.0 $3.3 $11.9 $21.5 $15.2 $13.8 $12.7 $7.5 $0.6 N
Slide 8: Top ranking in the country's largest MSAs
Top 3 ranking in the country’s largest MSAs Select MSAsby Deposits ($ millions) Deposits in Combined Deposit growth CAGR MSA market Market Share Combined Rank ‘07-‘12 ‘07-‘12 (%) New York, NY $438,371 20.3% 1 $36,209 2.1% Los Angeles, CA $253,285 13.1% 2 $28,970 2.9% Chicago, IL $190,703 11.8% 1 $19
Slide 9: Footprint covers 46% of expected population growth
Footprint covers 46% of expected population growth –up from 18% Combined Chase WaMu Network Comparisons U.S. Households 42.3% 25.0% 30.3% Hispanic Households 67.9% 33.9% 58.3% Average Income $72,332 $71,595 $74,747 Businesses 45.6% 26.5% 33.0% Total # of Branches 5,410 3,203 2,207 Population Growth
Slide 10: Transaction further strengthens the entire franchise
Transaction further strengthens the entire franchise Rank Size and metrics Retail Banking #2 14,300 ATMs 24.5mm checking accounts Credit cards #1 $181bn outstanding 1 Mortgage #3 $1,433bn total mortgage loans serviced Commercial Banking $113bn loans $106bn liabilities 1 Source: IMF Note: Data as of
Slide 11: Integration plan: invest to improve franchise, realize efficiencies and reduce risk
Integration plan: invest to improve franchise, realize efficiencies and reduce risk Integrate branch system Close less than 10% of combined branches Optimize staffing in the branches for right balance of sales specialists, bankers and support staff Convert Washington Mutual branches to Chase’s platf
Slide 12: Revenue growth: credit card and investment sales
Revenue growth: credit card and investment sales Branch network provides opportunity to cross-sell more products, particularly credit card and investment sales: Credit card — In 2007, Chase produced 2x the per branch credit card production of WaMu — Achieving this productivity from WaMu brancheswoul
Slide 13: Chase has a solid track record in enhancing branch productivity
Chase has a solid track record in enhancing branch productivity Bank of New York branches - credit cards¹ Bank of New York branches - investment sales¹ 1.4x higher 1.0x 20.0x higher 1.0x 2005 BNY 1H08 2005 BNY 1H08 Note: 1H07 and 1H08 are averages of 1Q and 2Q ¹ Based on average of comparable deposi
Slide 14: Anticipated cost savings and merger costs
Anticipated cost savings and merger costs Cost savings Projected cost savings of approximately $1.5 billion, or approximately 15%-20% of Washington Mutual’s non-interest expense base, net of significant investments in the business Majority of synergies achievable by end of 2010 Majority of branch co
Slide 15: Branches in new markets create opportunity for Business and Commercial Banking
Branches in new markets create opportunity for Business and Commercial Banking Business Banking Significant opportunity to expand BusinessBanking as WaMuhad limited market penetration Chase has 5x WaMu’saverage Business Banking checking balances Chase has 40% more fee income per customer Plans inclu
Slide 16: Remaining life loss estimates and marks
Remaining life loss estimates and marks Washington Mutual Home Loan portfolio ($ millions) Projected remaining Remaining life loss estimates life losses as of Estimated Total Fair as of 12/31/2007 09/30/2008 balances as of Value Marks $ (%) $ 9/30/2008 Option ARMs ($8,189) $11,803 20% $10,346 $50,30
Slide 17: Home lending loss sensitivities
Home lending loss sensitivities ($ billions) Current estimates Deeper recession Severe recession Current to trough HPA1 California (10%) (14%) (24%) Florida (16) (21) (36) US (8) (11) (20) Peak to trough HPA1 California (44%) (48%) (58%) Florida (44) (49) (64) US (25) (28) (37) Unemployment 7.0% 7.5
Slide 18: Capital impact from transaction before capital raise
Capital impact from transaction before capital raise Tier 1 capital impact ($ billions) Tangible assets assumed1 $296 1 Liabilities assumed 265 Net assets2 $31 Loan marks (31) Reversal of loan loss reserve 8 3 Other PAA (6) Adjusted net asset value $2 Consideration (2) Pro forma capital impact $0 Co
Slide 19: Capital ratio analysis, includes expected $8bn capital raise
Capital ratio analysis –includes expected $8bn capital raise Capital over time 6/30/08 Estimated 9/30/2008 JPMorgan Chase JPMorgan Chase pro forma Pro forma assets (reg) Total assets $1,776 $2,050 Tangible assets 1,727 2,000 RWA 1,080 1,300 Average assets for leverage ratio 1,536 1,550 Pro forma cap
Slide 20: Illustrative income statement impact
Illustrative income statement impact $ billions 2009 2010 2011 JPMorgan Chase GAAP earnings - consensus $11.7 $15.8 $16.7 JPMorgan Chase GAAP EPS - consensus $3.29 $4.41 $4.67 Pro forma contribution from Washington Mutual $2.4 $3.0 $3.4 Pro forma GAAP net income $14.2 $18.8 $20.1 Pro forma GAAP EPS
Slide 21: Illustrative capital generation from Washington Mutual franchise
Illustrative capital generation from Washington Mutual franchise $ billions 2009 2010 2011 Operating income (after-tax) $2.4 $3.0 $3.4 Capital from balance sheet reduction 2.0 1.1 0.5 Washington Mutual total excess capital $4.4 $4.1 $3.9 Washington Mutual total cumulative excess capital $4.4 $8.5 $1
Slide 22: JPMorgan Chase 3Q08 earnings outlook
JPMorgan Chase 3Q08 earnings outlook Note that the below 3Q08 outlook is necessarily preliminary pending completion of the Firm’s third fiscal quarter. Accordingly the information remains subject to trading results for several remaining days, changes in JPM credit spreads, allowance additions based
Slide 23: Forward-Looking Disclosure
Forward-Looking Disclosure:This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, the earnings information presented on page 21 is necessarily preliminary pending completion of the Firm's third fiscal quarter o
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