JPMORGAN CHASE & CO

Consolidated balance sheets analysis

The following is a discussion of the significant changes between December 31, 2023 and 2022. Refer to pages 155–158 for a discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Balance Sheets.

Cash and due from banks and deposits with banks increased reflecting the higher level of excess cash placed with the Federal Reserve Banks. The Firm’s excess cash primarily resulted from:

•the net issuance of long-term debt, and

•the impact of maturities and paydowns of investment securities in Treasury and CIO,

•the impacts associated with the First Republic acquisition in the first half of 2023.

Federal funds sold and securities purchased under resale agreements decreased, reflecting a reduction in client-driven market-making activities, partially offset by higher cash deployment in Treasury and CIO.

Securities borrowed increased driven by Markets, reflecting a higher demand for securities to cover short positions and client-driven activities.

Refer to Note 11 for additional information on securities purchased under resale agreements and securities borrowed.

Trading assets increased, reflecting in Markets higher debt and equity instruments on client-driven market-making activities, partially offset by lower derivative receivables, primarily as a result of market movements. Refer to Notes 2 and 5 for additional information.

Investment securities decreased due to:

•lower available-for-sale ("AFS") securities driven by maturities and paydowns, predominantly offset by the impact of First Republic, net purchases, and the transfer of securities from held-to-maturity (“HTM”) in the first

quarter of 2023, and

•lower HTM securities driven by maturities and paydowns, and the transfer of securities to AFS.

Refer to Corporate segment results on pages 84–85, Investment Portfolio Risk Management on page 134 and Notes 2 and 10 for additional information on investment securities.

Loans increased, reflecting:

•$146 billion of loans associated with First Republic,

•growth in new accounts in Card Services, as well as higher revolving balances, which continued to normalize to pre-pandemic levels, and

•growth in Auto loans due to net originations.

The allowancefor loan losses increased, reflecting:

•a net addition to the allowance for loan losses of $2.2 billion, consisting of:

–$1.3 billion inconsumer, predominantly driven by CCB, reflecting $1.4 billion in Card Services driven by loan growth, including an increase in revolving balances, partially offset by a net reduction of $176 million in Home Lending, and

–$930 million in wholesale, driven by net downgrade activity and the net effect of changes in the Firm's weighted average macroeconomic outlook, and

•$1.1 billion to establish the allowance for the First Republic loans in the second quarter of 2023.

The allowance for loan losses also reflected a reduction of $587 million, on January 1, 2023, as a result of the adoption of the Financial Instruments - Credit Losses: Troubled Debt Restructurings accounting guidance.

References in this Form 10-K to "changes to the TDR accounting guidance" pertain to the Firm's adoption of this guidance.

There was also a $408 million net reduction in the allowance for lending-related commitments recognized in other liabilities on the Consolidated balance sheets.

Refer to Consolidated Results of Operations and Credit and Investment Risk Management on pages 54–57 and pages 111–134, respectively, and Notes 2, 3, 12 and 13 for additional information on loans and the total allowance for credit losses; and Business Segment Results on page 67 and Note 34 for additional information on the First Republic acquisition.

Accrued interest and accounts receivable decreased due to lower client receivables related to client-driven activities in Markets.

Premises and equipment increased as a result of the construction-in-process associated with the Firm's headquarters, the First Republic acquisition, largely lease right-of-use assets, and higher capitalized software. Refer to Note 16 and 18 for additional information.

Goodwill, MSRs and other intangibles increased predominantly due to:

•other intangibles and goodwill related to the acquisition of the remaining 51% interest in CIFM,

•core deposit intangibles associated with the First Republic acquisition, and

•higher MSRs as a result of net additions primarily from purchases, and the impact of higher interest rates, partially offset by the realization of expected cash flows.

Refer to Note 15 and 34 for additional information.

Other assets decreased reflecting the impact of the change in the type of collateral placed with CCPs from cash to securities.

Deposits increased, reflecting the net impact of:

•higher balances in CIB due to net issuances of structured notes as a result of client demand, as well as deposit inflows from client-driven activities in Payments and Securities Services, partially offset by deposit attrition, including actions taken to reduce certain deposits,

•growth in Corporate related to the Firm's international consumer initiatives,

•lower balances in CCB reflecting higher customer spending,

•a decline in AWM due to continued migration into higher-yielding investments driven by the higher interest rate environment, predominantly offset by growth from new and existing customers as a result of new product offerings, and

•a decrease in CB due to continued deposit attrition as clients seek higher-yielding investments, predominantly offset by the retention of inflows associated with disruptions in the market in the first quarter of 2023.

The net increase also included $61 billion of deposits associated with First Republic, primarily reflected in CCB, AWM and CB.

Federal funds purchased and securities loaned or sold under repurchase agreements increased, reflecting the impact of a lower level of netting on reduced repurchase activity.

Refer to Liquidity Risk Management on pages 102–109 for additional information on deposits, federal funds purchased and securities loaned or sold under repurchase agreements, and short-term borrowings; Notes 2 and 17 for deposits and Note 11 for federal funds purchased and securities loaned or sold under repurchase agreements; Business Segment Results on page 67 and Note 34 for additional information on the First Republic acquisition.

Trading liabilities increased due to client-driven market-making activities in Fixed Income Markets, which resulted in higher levels of short positions in debt instruments, partially offset by lower derivative payables primarily as a result of market movements. Refer to Notes 2 and 5 for additional information.

Accounts payable and other liabilities decreased primarily due to lower client payables related to client-driven activities in Markets, partially offset by higher accounts payable and accrued liabilities, including the $2.9 billion payable related to the FDIC special assessment. Refer to Note 19 for additional information.

Beneficial interests issued by consolidated VIEs increased in CIB primarily driven by higher levels of Firm-administered multi-seller conduit commercial paper held by third parties, reflecting changes in the Firm’s short-term liquidity management. Refer to Liquidity Risk Management on pages 102–109; and Notes 14 and 28 for additional information on Firm-sponsored VIEs and loan securitization trusts.

Long-term debt increased, reflecting the impact of First Republic, which included the Purchase Money Note issued to the FDIC and additional FHLB advances, as well as net issuance consistent with the Firm’s long-term funding plans. The increase was also attributable to net issuances of structured notes in Markets due to client demand and an increase in fair value. Refer to Liquidity Risk Management on pages 102–109 and Note 34 for additional information on the First Republic acquisition.

Stockholders’ equity: refer to Consolidated Statements of changes in stockholders’ equity on page 169, Capital Actions on page 99, and Note 24 for additional information.

Consolidated cash flows analysis

The following is a discussion of cash flow activities during the years ended December 31, 2023 and 2022. Refer to Consolidated cash flows analysis on page 57 of the Firm’s 2022 Form 10-K for a discussion of the 2021 activities.

Operating activities

JPMorgan Chase’s operating assets and liabilities primarily support the Firm’s lending and capital markets activities. These assets and liabilities can vary significantly in the normal course of business due to the amount and timing of cash flows, which are affected by client-driven and risk management activities and market conditions. The Firm believes that cash flows from operations, available cash and other liquidity sources, and its capacity to generate cash through secured and unsecured sources, are sufficient to meet its operating liquidity needs.

•In 2023, cash provided primarily reflected net income, lower other assets, and accrued interest and accounts receivable, predominantly offset by higher trading assets, lower accounts payable and other liabilities, and higher securities borrowed.

•In 2022, cash provided resulted from higher accounts payable and other liabilities, lower securities borrowed, and net proceeds from sales, securitizations, and paydowns of loans held-for-sale, partially offset by higher trading assets.

Investing activities

The Firm’s investing activities predominantly include originating held-for-investment loans, investing in the investment securities portfolio and other short-term instruments.

•In 2023, cash provided resulted from net proceeds from investment securities, proceeds from sales and securitizations of loans held-for-investment and lower securities purchased under resale agreements, largely offset by net originations of loans and net cash used in the First Republic Bank acquisition.

•In 2022, cash used resulted from net originations of loans and higher securities purchased under resale agreements, partially offset by net proceeds from investment securities.

Financing activities

The Firm’s financing activities include acquiring customer deposits and issuing long-term debt and preferred stock.

•In 2023, cash used reflected lower deposits, which included the impact of the repayment of the deposits provided to First Republic Bank by the consortium of large U.S. banks that the Firm assumed as part of the First Republic acquisition, partially offset by higher securities loaned under repurchase agreements and net proceeds from long- and short-term borrowings.

•In 2022, cash used reflected lower deposits, partially offset by net proceeds from long- and short-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 58–60, Capital Risk Management on pages 91-101, and Liquidity Risk Management on pages 102–109, and the Consolidated Statements of Cash Flows on page 170 for a further discussion of the activities affecting the Firm’s cash flows.