JPMORGAN CHASE & CO

This section provides a comparative discussion of JPMorgan Chase’s Consolidated Results of Operations on a reported basis for the three months ended March 31, 2024 and 2023, unless otherwise specified. Factors that relate primarily to a single business segment are discussed in more detail within that business segment's results. Refer to pages 78-80 of this Form 10-Q and pages 155–158 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Results of Operations.

(a) Included operating lease income of $672 million and $755 million for the three months ended March 31, 2024 and 2023, respectively.

(b)Effective January 1, 2024, as a result of adopting updates to the Accounting for Investments in Tax Credit Structures guidance, the amortization of certain of the Firm’s alternative energy tax-oriented investments that was previously recognized in other income is now being recognized in income tax expense. Refer to Notes 1, 5 and 13 for additional information.

Investment banking fees increased, reflecting in CIB:

•higher underwriting fees that benefited from improved market conditions, and consisted of

–an increase in debt underwriting fees predominantly driven byhigher industry-wide issuance in leveraged loans and high-yield bonds, as well as higher issuance in high grade bonds reflecting wallet share gains, and

–an increase in equity underwriting fees driven by IPO and convertible securities offerings, reflecting wallet share gains,

•lower advisory fees driven by a lower number of large completed transactions.

Refer to CIB segment results on pages 24-28 and Note 5 for additional information.

Principal transactions revenue decreased, reflecting in CIB the net impact of:

•lower Fixed Income Markets revenue in Rates and Commodities, partially offset by higher revenue in Securitized Products,

•higher Equity Markets revenue in Equity Derivatives and Prime Finance, and

•lower losses of $15 million in Credit Adjustments & Other compared with losses of $153 million in the prior year.

Principal transactions revenue in CIB generally has offsets across other revenue lines, including net interest income. The Firm assesses the performance of its Markets business on a total net revenue basis.

Refer to CIB results on pages 24-28 and Note 5 for additional information.

Lending- and deposit-related fees incr eased, reflecting:

•higher lending-related revenue predominantly driven by the amortization of the purchase discount on certain acquired lending-related commitments associated with First Republic, predominantly in AWM and CB, and

•higher other lending- and deposit-related fees in CIB and CB.

Refer to CIB, CB and AWM segment results on pages 24-28, pages 29-31 and pages 32-34, respectively, and Note 5 for additional information.

Asset management fees increased driven by strong net inflows and higher average market levels in AWM and CCB, as well as the impact of First Republic in CCB. Refer to CCB and AWM segment results on pages 21-23 and pages 32-34, respectively, and Note 5 for additional information.

Commissions and other fees increased predominantly due to higher commissions from annuity sales in CCB and higher custody fees associated with a higher level of assets under custody in CIB. Refer to CCB and CIB Segment results on pages 21-23 and pages 24-28, respectively, and Note 5 for additional information.

Investment securities losses reflected lower net losses on sales of U.S. GSE, government agency MBS and U.S. Treasuries associated with repositioning the investment securities portfolio in Treasury and CIO. Refer to Corporate segment results on pages 35-36 and Note 9 for additional information.

Mortgage fees and related income increased in Home Lending, reflecting higher production revenue, which includedthe impact of First Republic. Refer to CCB segment results on pages 21-23 and Notes 5 and 14 for additional information.

Card income decreased due to an increase in new account origination costs, largely offset by higher annual fees, reflecting continued growth in the portfolio, in CCB.

Refer to CCB and CB segment results on pages 21-23 and page 29, respectively, and Note 5 for additional information.

Other income incre ased predominantly driven by the adoption of updates to the Accounting for Investments in Tax Credit Structures guidance on January 1, 2024, resulting in the amortization of certain of the Firm's alternative energy tax-oriented investments previously recognized in other income now being recognized in income tax expense.

The prior year included net valuation gains in AWM, including $339 million on the original minority interest in China International Fund Management (“CIFM”).

Refer to AWM segment results onpages 32-34 for additional information on CIFM; Notes 1, 5 and 13 for additional information on the adoption of updates to the Accounting for Investments in Tax Credit Structures guidance.

Net interest income increased, driven by the acquisition of First Republic, the impact of balance sheet mix and higher rates, as well as higher revolving balances in Card Services, partially offset by deposit margin compression reflecting higher rates paid across the LOBs, and lower average deposit balances in CCB.

The Firm’s average interest-earning assets were $3.4 trillion, up $229 billion, and the yield was 5.55%, up 87 basis points (“bps”). The net yield on these assets, on an FTE basis, was 2.71%, an increase of 8 bps. The net yield excluding Markets was 3.83%, up 3 bps.

Refer to the Consolidated average balance sheets, interest and rates schedule on page 175 for further information. Net yield excluding Markets is a non-GAAP financial measure. Refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures on pages 16-17 for a further discussion of net yield excluding Markets.

The provision for credit losses was $1.9 billion, reflecting $2.0 billion of net charge-offs, an increase of $819 million, predominantly driven by Card Services, as the portfolio continued to normalize.

The allowance for credit losses was relatively flat, reflecting:

•a net reduction in the allowance of $142 million inwholesale, which included a net addition to the allowance for credit losses associated with net downgrade activity, largely in Real Estate, primarily in CB, which was more than offset by the net impact of changes in the loan and lending-related commitment portfolios, as well as updates to certain macroeconomic variables, and

•a net addition of $44 million in consumer, consisting of $153 million in Card Services, predominantly offset by a $125 million net reduction in Home Lending.

The provision in the prior year was $2.3 billion, reflecting a $1.1 billion net addition to the allowance for credit losses and net charge-offs of $1.1 billion.

Refer to CCB segment results on pages 21-23, CIB on pages 24-28, CB on pages 29-31, AWM on pages 32-34, Corporate on pages 35-36; Allowance for Credit Losses on pages 67-69; Notes 9 and 12 for additional information on the credit portfolio and the allowance for credit losses.

(a)Includes depreciation expense associated with auto operating lease assets.

(b)Included Firmwide legal (benefit)/expense of $(72) million and $176 million for the three months ended March 31, 2024 and 2023, respectively; as well as FDIC-related expense of $973 million and $317 million for the three months ended March 31, 2024 and 2023, respectively. Refer to Note 5 for additional information.

(c)Included the impact of First Republic of $454 million for the three months ended March 31, 2024. Refer to Business Segment Results on page 20 for additional information.

Compensation expense increased driven by:

•an increase in employees, primarily in front office and technology,

•the impact of First Republic, predominantly in CCB and Corporate, and

•higher volume- and revenue-related compensation, predominantly in CCB and AWM.

Noncompensation expense increased as a result of:

•the $725 million increase to the FDIC special assessment in Corporate,

•the impact of First Republic in CCB and Corporate, and

•higher investments in technology and marketing in CCB,

•lower legal expense in CIB.

Refer to Business Segment Results on page 20 and Note 26 for additional information on First Republic; Note 5 for additional information on other expense.

(a)Effective January 1, 2024, as a result of adopting updates to the Accounting for Investments in Tax Credit Structures guidance, the amortization of certain of the Firm’s alternative energy tax-oriented investments is now being recognized in income tax expense. Refer to Notes 1, 5 and 13 for additional information.

Theeffective tax rate increased driven by:

•the adoption of updates to the Accounting for Investments in Tax Credit Structures guidance on January 1, 2024, resulting in an increase to income tax expense of approximately $450 million,

•higher benefits related to the vesting of employee share-based awards in the current period as a result of the Firm's higher share price.

The prior year included tax benefits from changes in the level and mix of income and expenses subject to U.S. federal, state and local taxes.

CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS

Consolidated balance sheets analysis

The following is a discussion of the significant changes between March 31, 2024 and December 31, 2023. 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 decreased driven by CIB Markets activities and cash deployment in Treasury and CIO.

Federal funds sold and securities purchased under resale agreements increased driven by Markets, reflecting higher client-driven market-making activities and higher demand for securities to cover short positions, as well as when compared with seasonally lower levels at year-end. Refer to Note 10 for additional information on securities purchased under resale agreements and securities borrowed.

Trading assets increased due to:

•higher levels of equity and debt instruments in Markets, reflecting strong client-driven market-making activities, and when compared with seasonally lower levels at year-end, and to a lesser extent

•higher short-term cash deployment in Treasury and CIO.

Refer to Notes 2 and 4 for additional information.

Investment securities was relatively flat, reflecting:

•lower HTM securities as a result of maturities and paydowns, and

•higher available-for-sale ("AFS") securities, reflecting net purchases, partially offset by maturities and paydowns.

Refer to Corporate segment results on pages 35-36, Investment Portfolio Risk Management onpage 70, and Notes 2 and 9 for additional information.

Loans decreased, reflecting:

•a reduction in Card Services due to the impact of seasonality,

•a decline in Home Lending as sales outpaced originations, and

•lower wholesale loans in AWM due to paydowns.

Theallowance for loan losses was relatively flat, reflecting:

•a net reduction of $92 million inwholesale, which included a net addition to the allowance associated with net downgrade activity, largely in Real Estate, primarily in CB, which was more than offset by the impact of changes in the loan portfolios as well as updates to certain macroeconomic variables, and

•a net addition of $23 million in consumer, consisting of $153 million in Card Services, predominantly offset by a $146 million net reduction in Home Lending.

There was also a $58 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 10-12 and pages 52-70, and Notes 2, 3, 11 and 12 for additional information on loans and the total allowance for credit losses; and Business Segment Results on page 20 and Note 26 for additional information on the First Republic acquisition.

Accrued interest and accounts receivable increased predominantly driven by higher client receivables related to client-driven activities in Markets.

Goodwill, MSRs and other intangible assets: refer to Note 14 for additional information on goodwill, mortgage servicing rights and other intangible assets.

Deposits increased, reflecting the net impact of:

•higher balances in CIB, driven by net inflows related to client-driven activities in Payments and Securities Services,

•an increase in CCB due to new accounts and seasonal inflows, largely offset by a decline in deposits in existing accounts due to migration into higher-yielding investments,

•a decrease in AWM due to continued migration into higher-yielding investments, partially offset by an increase in deposits in existing accounts due to a change in product offerings associated with First Republic, and

•a decrease in CB primarily due to seasonal outflows and continued deposit attrition, largely offset by the realignment of additional clients associated with First Republic from CCB to CB that began in the fourth quarter of 2023.

Federal funds purchased and securities loaned or sold under repurchase agreements increased driven by Markets, reflecting higher client-driven market-making activities and higher secured financing of trading assets, as well as when compared with seasonally lower levels at year-end.

Refer to Liquidity Risk Management on pages 44-51 for additional information on deposits, federal funds purchased and securities loaned or sold under repurchase agreements, and short-term borrowings; Notes 2 and 15 for deposits and Note 10 for federal funds purchased and securities loaned or sold under repurchase agreements; Business Segment Results on page 20 and Note 26 for additional information on the First Republic acquisition.

Trading liabilities increased due to higher levels of short positions in debt instruments in Fixed Income Markets, reflecting client-driven market-making activities, and when compared with seasonally lower levels at year-end. Refer to Notes 2 and 4 for additional information.

Accounts payable and other liabilities increased predominantly due to higher client payables related to client-driven activities in Markets.

Beneficial interests issued by consolidated VIEs increased driven by:

•higher levels of Firm-administered multi-seller conduit commercial paper held by third parties in CIB, reflecting changes in the Firm’s short-term liquidity management, and

•the issuance of credit card securitizations in Treasury and CIO.

Refer to Liquidity Risk Management on pages 44-51 and Notes 13 and 22 for additional information, specifically Firm-sponsored VIEs and loan securitization trusts.

Long-term debt increased driven by issuances in Treasury and CIO, predominantly offset by maturities. Refer to Liquidity Risk Management on pages 44-51; and Note 26 for additional information on the First Republic acquisition.

Stockholders’ equity: refer to Consolidated statements of changes in stockholders’ equity onpage 86, Capital Actions on page 42, and Note 19 for additional information.

Consolidated cash flows analysis

The following is a discussion of cash flow activities during the three months ended March 31, 2024 and 2023.

Operating activities

•In 2024, cash used resulted from higher trading assets and higher accrued interest and accounts receivable, partially offset by higher trading liabilities, accounts payable and other liabilities, and lower other assets.

•In 2023, cash used resulted from higher trading assets and lower accounts payable and other liabilities, partially offset by lower other assets and accrued interest and accounts receivable.

Investing activities

•In 2024, cash used resulted from higher securities purchased under resale agreements, partially offset by proceeds from sales and securitizations of loans held-for-investment.

•In 2023, cash provided primarily reflected net proceeds from investment securities.

Financing activities

•In 2024, cash provided reflected higher securities loaned or sold under repurchase agreements, higher deposits, net proceeds from long- and short-term borrowings and proceeds from the issuance of preferred stock.

•In 2023, cash provided reflected higher securities loaned or sold under repurchase agreements and deposits, partially offset by net payments on 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 13-14, Capital Risk Management on pages 38-43, and Liquidity Risk Management on pages 44-51, and the Consolidated Statements of Cash Flows on page 87 of this Form 10-Q, and pages 102–109 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of the activities affecting the Firm’s cash flows.