FEBRUARY 26, 2009 RETAIL BANKING Charlie Scharf, Retail Fancial Services Chief Executive Officer
Agenda Retail Bankg 1 Page WaMu Update 22 1
Retail Fancial Services With acquisition of WaMu, Retail Bankg becomes the domant source of Retail Fancial Services profit Evolution of branch footprt has resulted a national, highly profitable, and consistently growg franchise Strategy and busess focus has been consistent sce 2000 8 years of consistent organic growth Acquisition competency has enabled us to opportunistically transform franchise and brg our ability to grow organically to the expanded footprt 2
Footprt evolution - JPMorgan Chase before Bank One merger Branch Branch map map Chase 2003 Branches 539 Highly concentrated Checkg accts (# 000s) 2,331 States 4 Population growth footprt (2008-2013) Consumer & Busess Bankg pretax mm) 3.3% 12) Lack of scale Low growth Unprofitable Source: SNL Fancial and past acquisition vestor presentations; company filgs and ternal analysis; Claritas demographic data and projections 3
Footprt evolution JPMorgan Chase and Bank One Branch Branch map map Chase Chase/Bank One 2003 2005 Branches 539 2,295 More scale Checkg accts (# 000s) 2,331 8,793 States 4 16 Population growth footprt (2008-2013) Consumer & Busess Bankg pretax mm) 3.3% 3.2% 12) $2,760 Profitable and growg Source: SNL Fancial and past acquisition vestor presentations; company filgs and ternal analysis; Claritas demographic data and projections 4
Footprt evolution JPMorgan Chase and Bank of New York Branch Branch map map Chase Chase/Bank One Chase/Bank of NY 2003 2005 2007 Branches 539 2,295 2,937 Contued growth Checkg accts (# 000s) 2,331 8,793 10,839 States 4 16 16 Population growth footprt (2008-2013) Consumer & Busess Bankg pretax mm) 3.3% 3.2% 3.5% 12) $2,760 $3,711 Solidified position NY market Source: SNL Fancial and past acquisition vestor presentations; company filgs and ternal analysis; Claritas demographic data and projections 5
Footprt evolution JPMorgan Chase and Washgton Mutual Branch Branch map map National Much higher growth Chase 2003 Chase/Bank One 2005 Chase/Bank of NY 2007 Chase/WaMu 4Q081 539 2,295 2,937 5,410 2,331 8,793 10,839 24,499 B AN K I N G States 4 16 16 23 Population growth footprt (2008-2013) 3.3% 3.2% 3.5% 5.4% R E T A I L Very profitable Consumer & Busess Bankg pretax mm) 12) $2,760 $3,711 $6,880 Branches Checkg accts (# 000s) 1 4Q08 annualized pretax Source: SNL Fancial and past acquisition vestor presentations; company filgs and ternal analysis; Claritas demographic data and projections 6
Consistent strategy and busess focus sce 2000 Consistent management practices Branch P&Ls Monthly busess reviews by branch Be the branches Daily sales reportg Create local excitement and recognition Active customer engagement Culture Customers at the top of the org. chart Front le employees next Management and staff at the bottom branch support Simple compensation plans critical Community bankg with the benefits of a global bank Success Acquire and deepen Customer engagement and service Grow profit 7
Consumer and Busess Bankg consistent profit growth Pretax Pretax millions) millions) $8,000 $7,000 $6,000 $5,000 $4,000 Chase BNY WaMu 26% CAGR (total) 14% CAGR (Chase only) $3,000 $2,000 $1,000 $0 2005 2006 2007 2008 4Q08 Run Rate Similar trend revenue growth 8
Background branch bankg has evolved dramatically Our activities and reportg are built around the changg nature of the busess Pretax Pretax Deposits, loans, and traditional bankg fees 1975 2001 2008 100% 90% 74% Investments, debit and credit cards 0% 10% 26% 9
Our activities and determants of success What What We We Talk Talk About About Acquire What What We We Track Track Checkg account growth Deepen Customer Engagement Deposit growth Convenience services (e.g. Debit, Chase.com, bill pay) Additional products (e.g. Credit cards, loans, vestments) Customer service Mystery shops / surveys Growth Same branch (all of the above) New builds Profit Growth 10
Consistent growth acquire new customers Net Net New New Checkg Checkg Accounts Accounts by by Quarter Quarter 1 ( ( thousands) thousands) 350 300 40% CAGR 250 200 Reflects h-chase April 2004 23% CAGR 150 100 50 0 Reflects BNY October 2006 (50) (100) 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 Acquisition rate has grown from 15% to 25% Net checkg growth rate of 8% Note: Reflects h-bank One from January 2000 through March 2004 1 Net new checkg accounts is new checkg accounts mus lost checkg accounts 11
Growth deposit balances Retail Retail Bankg Bankg End End of of Period Period Deposits Deposits billions) billions) WaMu Chase Bank One $172 h-chase 6% CAGR $342 $126 Bank One 3% CAGR $79 $182 $202 $212 $216 $87 $88 $89 $93 2001 2002 2003 2004 2005 2006 2007 2008 Goal to grow balances 4 8% (without sacrificg marg) Additional profit growth through enhanced cross-sell 12
Consistent and high growth debit Debit Debit Card Card Revenue Revenue millions)1 1 $315 Bank One Chase WaMu 25% CAGR $941 $166 18% $57 $218 $257 $443 $537 $667 $775 2003 2004 2005 2006 2007 2008 Checkg Checkg Accounts Accounts with with Debit Debit Card Card 80% 83% 84% 88% 89% 91% 2003 2004 2005 2006 2007 2008 1 Debit card revenue cludes signature and p terchange, contra/pots cost, annual fees and foreign exchange come for Retail Bankg Note: Consumer Bankg only; cludes all enrolled accounts 13
Consistent growth convenience services Bill Bill Pay Pay Percentage Percentage of of Accounts Accounts Enrolled Enrolled Chase.com Chase.com Percentage Percentage of of Accounts Accounts Enrolled Enrolled 41% 71% 29% 33% 44% 47% 56% 59% 38% 16% 17% 11% 2003 2004 2005 2006 2007 2008 2003 2004 2005 2006 2007 2008 Expansion of convenience services solidifies customer relationship Growth convenience services is a core part of strategy Note: Consumer Bankg only; Percentages are based on total year end Consumer Bankg checkg accounts 14
Growth branch cross-sell Credit Credit Cards Cards ( ( thousands) thousands) Mortgage Mortgage Sales Sales billions) billions) 133 243 363 53% CAGR 663 1,152 1,421 1,707 $2.5 $6.2 47% CAGR $8.0 $10.4 $11.7 2002 2003 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Investment Investment Sales Sales billions) billions) Home Home Equity Equity Sales Sales billions) billions) $4.3 $4.9 $5.4 $5.9 19% CAGR $8.8 $11.1 $14.9 $18.4 $17.6 $8.5 $17.6 $16.8 $17.7 $7.7 2000 2001 2002 2003 2004 2005 2006 2007 2008 Note: Includes h-bank One 1/2000-6/2004. Includes h-chase startg 7/2004, BNY startg 10/2006, and WaMu startg 10/2008 2004 2005 2006 2007 2008 15
Investment revenue and assets under management Revenue Revenue millions) millions) Assets Assets under under Management Management billions) billions) $900 $750 Chase WaMu 14% CAGR $812 $120 $100 Chase WaMu 13% CAGR $91 $103 $600 $450 $483 $548 $559 $588 $80 $60 $64 $66 $80 $300 $40 $150 $20 $0 $0 2004 2005 2006 2007 2008 Note: Includes h-bank One, h-chase startg 7/2004, BNY startg 10/2006, and WaMu startg 10/2008 2004 2005 2006 2007 2008 Note: End of year; Includes h-bank One and h-chase 2004-2005; Chase and BNY 2006; Chase 2007; and Chase and WaMu 2008 16
Acquisition competency Bank One Growth sales h-bank One branches Credit Credit Cards Cards ( ( thousands) thousands) Net Net New New Checkg Checkg Accounts Accounts ( ( thousands) thousands) 49% CAGR 243 298 393 438 133 (6) 2002 2003 2004 (222) (115) 2000 2001 2002 2003 2004 Investment Investment Sales Sales billions) billions) Infrastructure $4.3 $4.9 13% CAGR $5.4 $5.9 $6.9 14 major systems converted and over 500 other applications consolidated prior to merger 2000 2001 2002 2003 2004 17
Acquisition competency Chase Growth sales h-chase branches Credit Credit Cards Cards ( ( thousands) thousands) Net Net New New Checkg Checkg Accounts Accounts ( ( thousands) thousands) 77 111 64% CAGR 186 337 76 65% CAGR 144 206 (52) 2003 2004 2005 2006 2003 2004 2005 2006 Investment Investment Sales Sales billions) billions) Merger-related expense and frastructure 11% CAGR $3.6 $3.9 $3.6 $4.9 20 major systems converted and over 2,000 other applications consolidated $3.4B expense reductions 2003 2004 2005 2006 16K+ headcount reductions 18
Acquisition competency Bank of New York Growth sales h-bny branches Credit Credit Cards Cards ( ( thousands) thousands) 3 8 177% CAGR 2005 2006 2007 2008 55 74 Net Net New New Checkg Checkg Accounts Accounts ( ( thousands) thousands) (14) 4 312% CAGR 2005 2006 2007 2008 23 61 Investment Investment Sales Sales millions) millions) Mortgage Mortgage and and Home Home Equity Equity millions) millions) 9% CAGR $437 $447 $377 $569 $725 $583 20% CAGR $1,081 $1,248 2005 2006 2007 2008 2005 2006 2007 2008 Merger-related expense and frastructure 15 major systems converted; approximately 150 other applications consolidated $50mm expense reductions 480 headcount reductions 19
New branches New New Build Build Initiative Initiative 2002 2003 2004 2005 2006 2007 2008 Branches opened 35 59 124 146 125 127 126 Cumulative branches opened 35 94 218 364 489 616 742 New checkg accounts (# 000 s) 8 40 122 218 366 530 665 Checkg accounts (# 000 s) 7 40 139 298 537 854 1,226 Targetg 120 new branches 2009, cludg 30 WaMu Focused on expansion major footprt markets New builds generated 21% of overall checkg production 2008 New build checkg account portfolio represents 10% of total Chase 20
Consumer & Busess Bankg position Strategy Sales focus Service focus National and community Product novation Execution All Busess practices, culture, management systems, management, etc. consistent for 8 years Organic growth is clear and consistent Franchise is enviable Great and improvg brand National High growth footprt Great and consistent culture JPM product set JPM strength 21
Agenda Retail Bankg 1 Page WaMu Update 22 22
A different kd of transaction Transaction announced at 7PM on September 25 Immediate ownership of bank subsidiary WaMu brand tarnished by seizure need to move quickly Immediate communication from Jamie Employee town halls next day Initial advertisg launched first week Conversion meetgs began first week Need to align rates Need to stop attrition Need to work closely with FDIC as receiver Complication of holdg company bankruptcy WAMU UPDATE 23
Initial advertisg strength and stability of JPM WAMU UPDATE 24
Stabilized deposits immediately WaMu WaMu Deposit Deposit Daily Daily Trend Trend (Total (Total Deposits Deposits excludg excludg Official Official Checks/PAA) Checks/PAA) billions) billions) $150 Managed balances despite rate reductions Oct 08 Jan 09 B(W) Checkg 0.37% 0.07% (0.30%) $140 Savgs 1.89% 0.77% (1.12%) Time 3.82% 3.81% (0.01%) Total 2.20% 1.74% (0.46%) $130 Deal announced 9/25 $124.9 $124.4 $120 8/1/08 8/15/08 8/29/08 9/12/08 9/26/08 10/10/08 10/24/08 11/7/08 11/21/08 12/5/08 12/19/08 1/2/09 1/16/09 1/30/09 2/13/09 WAMU UPDATE 9/12 thru 9/26 balance decle of ~$15B 9/26/08 through 2/13/09 balances were up $0.5B, even with the significant reduction customer rate from Fed cuts and repositiong the WaMu book 25
Reversed checkg account loss WaMu WaMu Net Net Retail Retail Checkg Checkg Accounts Accounts Average Average Daily Daily Change Change by by Week Week ( ( thousands)¹ thousands)¹ 10 5 Sales campaign begs Direct mail drops 0 Fri 9/05 Fri 9/19 Fri 10/03 Fri 10/17 Fri 10/31 Fri 11/14 Fri 11/28 Fri 12/12 Fri 12/26 Fri 1/09 Fri 1/23 Fri 2/06 (5) (10) WAMU UPDATE Significant direct mail drops December Contued focus branches on net checkg growth ¹ Daily average by week of net retail checkg accounts excludg transfers; excludes dynamic closures that occur 1 st busess day of every month and closes accounts that are unfunded, have never been activated, or accounts that have been brought down to $0 balance and has had no customer-itiated activity the last 60 days 26
Integration activities completed to date Deal announced on September 25, 2008 WAMU UPDATE Date Date Oct. 8 Oct. 31 Nov. 5 Nov. 13 Dec. 1 Dec. 15 Dec. 15 Jan. 7 Activity Activity No-Fee access to 14,000 ATMs less than 2 weeks after deal Conform deposit and loan pricg Conversion dates set Technology decisions announced People decisions communicated all 45,000 people Sales campaigns Field reorganization under 4 regions New compensation plans announced Branch Manager Assistant Branch Manager Personal Banker Teller 27
Integration activities WAMU UPDATE Branch consolidations 300 by end of 1 st quarter 92 between 2 nd and 4 th quarters Need for dual operations overlap markets California rebrand 708 branches on 3/30/09 Conversion schedule Washgton, Oregon, Idaho, Utah 341 branches 2 nd quarter Florida, Georgia, Connecticut, New Jersey, New York, Illois, Texas 701 branches 3 rd quarter California, Nevada, Arizona, Colorado 802 branches 4 th quarter 28
Integration activities, contued 672 technology conversions 31,800 new workstations branches 45% Teller / 55% Platform 3 data center conversions representg 4,200 servers 1,844 terior refurbishments 896 Occasio 948 other 32,000 new signs 1 representg 1,844 branches 4,800 ATM sign conversions WAMU UPDATE 1 Includes all signage, both exterior and terior 29
Cost save detail Gross expense reductions of $2,750mm expected to be achieved across all busesses Approximately 12,000 projected headcount reductions from time of merger announcement Major components of expense saves clude the followg: millions) millions) Compensation & employee-related $1,350 Marketg, Technology, Real Estate, Other 1,400 Gross savgs $2,750 Additional vestment spend (750) Projected net savgs $2,000 WAMU UPDATE Majority of savgs to be achieved by end of 2009 Additional vestment spend of $750mm comprised of: Sales people Facilities Marketg 30
Revenue growth potential: credit card and vestment sales Branch network provides opportunity to cross-sell more products, particularly credit card and vestment sales: Credit card In 2007, Chase produced 2x the per branch credit card production of WaMu Achievg this productivity from WaMu branches would generate an additional 500,000 credit cards sold annually through the branches Investment sales Chase s % of retail bank households that have an vestment product is 2x greater than WaMu Chase s Fancial Advisors produce on average 60% more vestment sales per year Achievg Chase vestment sales productivity and creasg number of Fancial Advisors could lead to an additional $8-10B sales annually through the branches Credit Credit Card Card Sales Sales per per Branch Branch per per Month Month 2007 2007 Investment Investment Sales Sales per per Branch Branch per per Month Month 2007 2007 WaMu Chase 2x higher WaMu Chase 3x higher WAMU UPDATE 31
WaMu provides unique opportunity to expand retail bankg franchise and generate attractive returns for JPMorgan Chase shareholders Strategic Fit Greatly enhances retail bankg platform attractive markets Combed deposits of $911B and 5,410 branches at close Expandg to attractive new markets (CA + FL) Increases market share existg largest fast-growg markets (NY, TX, IL, AZ, CO, UT) Fancially Compellg Accretive immediately; should be substantially so future Asset write-downs reduce risk to volatility future earngs Allows significant marg for error Opportunity to grow revenue and realize significant cost savgs Ability to brg expanded Chase products and services to WaMu branches Drive efficiencies branch network and back office JPMorgan Chase matas strong capital and liquidity positions Retail deposits add to stable fundg base WAMU UPDATE Ability to execute Proven capabilities with success Bank One/Chase and Bank of New York transactions Little overlap with Bear Stearns tegration 32