JPMORGAN CHASE & CO

This section provides a comparative discussion of JPMorgan Chase’s Consolidated Results of Operations on a reported basis for the three and six months ended June 30, 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 86-88 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 $689 million and $716 million for the three months ended June 30, 2024 and 2023, respectively, and $1.4 billion and $1.5 billion for the six months ended June 30, 2024 and 2023, respectively. Refer to Note 5 for additional information.

(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.

(c) Included the net gain related to Visa shares of $7.9 billion for the three and six months ended June 30, 2024. Refer to Notes 2 and 5 for additional information.

(d) Included the preliminary estimated bargain purchase gain of $2.7 billion for the three and six months ended June 30, 2023, associated with the First Republic acquisition. Refer to Notes 5 and 26 for additional information.

Investment banking fees increased in CIB reflecting:

•higher debt underwriting fees predominantly driven by higher industry-wide issuance in leveraged loans, high-yield bonds and high-grade bonds,

•higher equity underwriting fees driven by follow-on offerings, IPOs and private placements, reflecting wallet share gains amid favorable market conditions, and

•higher advisory fees driven by a higher number of large completed transactions compared with a challenging prior-year quarter.

Refer to CIB segment results on pages 28-35 and Note 5 for additional information.

Principal transactions revenue decreased, reflecting in CIB:

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

•a loss of $87 million in Credit Adjustments & Other in CIB, compared with a gain of $36 million in the prior year, and

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

The decrease in principal transactions revenue also included lower revenue in Treasury and CIO.

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 CIBand Corporate segment results on pages 28-35 and pages 41-43, respectively, and Note 5 for additional information.

Lending- and deposit-related fees was flat as higher other lending- and deposit-related fees in CIB were offset by lower amortization in the current quarter associated with the purchase discount on certain short-dated First Republic lending-related commitments, predominantly in AWM. Refer to CCB, CIB and AWM segment results on pages 23-27, pages 28-35 and pages 36-40, respectively, and Note 5 for additional information.

Asset management fees increased driven by higher average market levels and net inflows in AWM and CCB. Refer to CCB and AWM segment results on pages 23-27 and pages 36-40, respectively, and Note 5 for additional information.

Commissions and other fees increased and included higher brokerage commissions and fees in CIB and AWM, and higher annuity sales commissions in CCB. Refer to CCB, CIB and AWM segment results on pages 23-27, pages 28-35 and pages 36-40, respectively, and Note 5 for additional information.

Investment securities losses decreased related to sales of U.S. Treasuries and U.S. GSE and government agency MBS, associated with repositioning the investment securities portfolio in Treasury and CIO. Refer to Corporate segment results on pages 41-43 and Note 9 for additional information.

Mortgage fees and related income increased in Home Lending, predominantly reflecting higher production revenue. Refer to CCB segment results on pages 23-27 and Note 14 for additional information.

Card income increased in CCB, reflecting higher net interchange on increased debit and credit card sales volume, and higher annual fees, partially offset by an increase inamortization of new account origination costs, reflecting continued growth in Card Services.

The prior-year net interchange included an increase to the rewards liability due to adjustments to the terms of certain reward programs. Refer to CCB segment results on pages 23-27 and Note 5 for additional information.

Other income incre ased, reflecting:

•in Corporate

–the $7.9 billion net gain related to Visa shares;

–the prior year included the preliminary estimated bargain purchase gain of $2.7 billion associated with the First Republic acquisition, and

•the impact of 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.

Refer to Notes 1, 5 and 13 for additional information on the adoption of updates to the Accounting for Investments in Tax Credit Structures guidance; Notes 2 and 5 for additional information on Visa shares and; Note 26 for additional information on the First Republic acquisition.

Net interest income increased, driven by the impact of balance sheet mix and higher rates; higher revolving balances in Card Services; the timing impact of First Republic; and higher Markets net interest income, largely offset by deposit margin compression across the LOBs and lower average deposit balances in CCB.

The Firm’s average interest-earning assets were $3.5 trillion, up $166 billion, and the yield was 5.57%, up 56 basis points (“bps”). The net yield on these assets, on an FTE basis, was 2.62%, flat when compared to the prior year. The net yield excluding Markets was 3.86%, up 3 bps.

Refer to the Consolidated average balance sheets, interest and rates schedule on page 192 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 18-19 for a further discussion of net yield excluding Markets.

Investment banking fees increased, reflecting in CIB:

•higher debt underwriting fees predominantly driven by higher industry-wide issuance in leveraged loans, high-grade bonds and high-yield bonds, and

•higher equity underwriting fees driven by higher IPOs, follow-on and convertible securities offerings.

Principal transactions revenue decreased predominantly in CIB, reflecting:

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

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

•losses of $102 million in Credit Adjustments & Other in CIB compared with losses of $117 million in the prior year.

Lending- and deposit-related fees incr eased, reflecting in CIB, higher lending-related fees, including loan commitment fees, and higher deposit-related fees, including cash management fees in Payments.

Asset management fees increased driven by higher average market levels and net inflows in AWM and CCB, as well as the timing impact of First Republic in CCB.

Commissions and other fees increased and included higher annuity sales commissions in CCB, as well as higher brokerage commissions and fees, and custody fees in CIB and AWM.

Investment securities losses decreased related to sales of U.S. GSE and government agency MBS and U.S. Treasuries, associated with repositioning the investment securities portfolio in Treasury and CIO.

Mortgage fees and related income increased in Home Lending, predominantly reflecting higher production revenue, which includedthe timing impact of First Republic.

Card income increased in CCB, reflecting higher net interchange on increased debit and credit card sales volume, as well ashigher annual fees, largely offset by an increase in amortization of new account origination costs, reflecting continued growthin Card Services.

Other income increased, reflecting:

•in Corporate

–the $7.9 billion net gain related to Visa shares;

–the prior year included the preliminary estimated bargain purchase gain of $2.7 billion associated with the First Republic acquisition, and

•the impact of 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 a gain of $339 million on the original minority interest in China International Fund Management ("CIFM") in AWM.

Refer to AWM segment results onpages 36-40 for additional information on CIFM.

Net interest income increased driven by the impact of balance sheet mix and higher rates; the timing impact of First Republic; higher revolving balances in Card Services; and higher Markets net interest income, partially offset by deposit margin compression across the LOBs and lower average deposit balances in CCB.

The Firm’s average interest-earning assets were $3.5 trillion, up $197 billion, and the yield was 5.56%, up 71 bps. The net yield on these assets, on an FTE basis, was 2.66%, an increase of 3 bps. The net yield excluding Markets was 3.85%, up 3 bps.

Refer to Executive Overview onpages 5-8 for additional information on the timing impact of First Republic.

The provision for credit losses was $3.1 billion, reflecting $2.2 billion of net charge-offs and an $821 million net addition to the allowance for credit losses.

Net charge-offs included $2.0 billion inconsumer, driven by Card Services, reflecting the seasoning of newer vintages and continued credit normalization, and $267 million inwholesale.

•$609 million inconsumer, driven by Card Services, predominantly due to loan growth and updates to certain macroeconomic variables, and

•$189 million inwholesale, driven by the impact of incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates, as well as net downgrade activity, primarily in Real Estate, largely offset by the impact of changes in the loan and lending-related commitment portfolios.

The provision in the prior year was $2.9 billion, reflecting a $1.5 billion net addition to the allowance for credit losses and net charge-offs of $1.4 billion. The net addition included $1.2 billion to establish the allowance for the First Republic loans and lending-related commitments.

Refer to CCB segment results on pages 23-27, CIB on pages 28-35, AWM on pages 36-40, Corporate on pages 41-43; Allowance for Credit Losses on pages 75-77; Critical Accounting Estimates Used by the Firm onpages 86-88; Notes 11 and 12 for additional information on the credit portfolio and the allowance for credit losses.

The provision for credit losses was $4.9 billion, reflecting $4.2 billion of net charge-offs and a $749 million net addition to the allowance for credit losses.

Net charge-offs included $3.8 billion inconsumer, predominantly driven by Card Services, reflecting the seasoning of newer vintages and continued credit normalization, and $353 million inwholesale, primarily in Real Estate, concentrated in Office.

•$653 million inconsumer, reflecting a $753 million net addition in Card Services, predominantly driven by the seasoning of newer vintages, loan growth, and updates to certain macroeconomic variables, and a $125 million net reduction in Home Lending, and

•$47 million inwholesale, driven by

–a net addition of $707 million, reflecting net downgrade activity, primarily in Real Estate, and the impact of incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates,

The provision in the prior year was $5.2 billion, reflecting a $2.6 billion net addition to the allowance for credit losses and net charge-offs of $2.5 billion. The net addition included $1.2 billion to establish the allowance for the First Republic loans and lending-related commitments in the second quarter of 2023.

(a)Includes depreciation expense associated with auto operating lease assets. Refer to Note 16 for additional information.

(b)Refer to Note 5 for additional information.

(c)Predominantly fraud losses in CCB associated with customer deposit accounts, credit and debit cards.

(d)Included a $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation. Refer to Note 5 for additional information.

Compensation expense increased driven by:

•higher volume- and revenue-related compensation across the LOBs,

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

•the impact of First Republic, predominantly in CCB and Corporate, as the prior-year expense related to individuals associated with First Republic who were not employees of the Firm until July 2023, was recognized in other expense in Corporate,

Noncompensation expense increased as a result of:

•the $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation in Corporate,

•higher investments in technology and marketing, predominantly in CCB, and

•higher occupancy expense,

•lower legal expense, reflecting a decline in Corporate, largely offset by an increase in CIB, and

•the alignment of expense to compensation expense, as noted above, partially offset by the timing impact associated with First Republic.

Refer to Note 26 for additional information on the First Republic acquisition; Notes 2 and 5 for additional information on Visa shares and other expense.

Compensation expense increased driven by:

•higher volume- and revenue-related compensation across the LOBs,

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

•the impact of First Republic, predominantly in CCB and Corporate, as the prior-year expense related to individuals associated with First Republic who were not employees of the Firm until July 2023, was recognized in other expense in Corporate.

Noncompensation expense increased as a result of:

•the $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation in Corporate,

•the $725 million increase to the FDIC special assessment recognized in the first quarter of 2024 in Corporate,

•higher investments in technology and marketing, predominantly in CCB,

•the timing impact associated with First Republic, partially offset by the alignment of expense to compensation expense, as noted above, and

•higher occupancy expense,

•lower legal expense in Corporate and CIB.

Refer to Executive Overview onpages 5-8 for additional information on the timing impact of First Republic.

(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, and

•changes in the level and mix of income and expenses subject to U.S. federal, state and local taxes, which included the impact of the net gain on Visa shares and the contribution of Visa shares to the JPMorgan Chase Foundation.

The prior year included the impact of the income tax expense associated with the First Republic acquisition that was reflected in thepreliminary estimated bargain purchase gain, which resulted in a reduction in the Firm's effective tax rate.

Theeffective tax rate increased driven by:

•the adoption of updates to the Accounting for Investments in Tax Credit Structures guidance on January 1, 2024, and

•changes in the level and mix of income and expenses subject to U.S. federal, state and local taxes, which included the impact of the net gain on Visa shares and the contribution of Visa shares to the JPMorgan Chase Foundation.

The prior year included the impact of the income tax expense associated with the First Republic acquisition that was reflected in thepreliminary estimated bargain purchase gain, which resulted in a reduction in the Firm's effective tax rate.

CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS

Consolidated balance sheets analysis

The following is a discussion of the significant changes between June 30, 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 Markets activities in CIB 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.

Securities borrowed decreased driven by Markets, reflecting lower client-driven activities, predominantly offset by higher demand for securities to cover short positions.

Trading assets increased due to higher levels of equity and debt instruments in Markets related to client-driven market-making activities, and compared with seasonally lower levels at year-end; and to a lesser extent, an increase in short-term cash deployment in Treasury and CIO.

Refer to Notes 2 and 4 for additional information.

Investment securities increased due to:

•higher available-for-sale ("AFS") securities, reflecting net purchases, primarily U.S. Treasuries and non-U.S. government debt securities, partially offset by maturities and paydowns, and

•lower HTM securities primarily driven by maturities and paydowns.

Refer to Corporate segment results on pages 41-43, Investment Portfolio Risk Management onpage 78, and Notes 2 and 9 for additional information.

Loans were relatively flat, and included:

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

•higher loans in Card Services driven bygrowth in new accounts and revolving balances.

Theallowance for loan losses incre ased, reflecting a net addition to the allowance for loan losses of $571 million, consisting of:

•$636 million inconsumer, primarily in Card Services, predominantly driven by the seasoning of newer vintages, loan growth, and updates to certain macroeconomic variables, and a $141 million net reduction in Home Lending,

•a net reduction of $65 million inwholesale, driven by

–a net reduction of $763 million, primarily due to the impact of changes in the loan portfolio and updates to certain macroeconomic variables,

–a net addition of $698 million, including net downgrade activity and the impact of incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates.

Refer to Consolidated Results of Operations and Credit and Investment Risk Management on pages 9-14 and pages 59-78, respectively, Critical Accounting Estimates Used by the Firm on pages 86-88, and Notes 2, 3, 11 and 12 for additional information on loans and the total allowance for credit losses; and Note 26 for additional information on the First Republic acquisition.

Accrued interest and accounts receivable increased predominantly driven by higher client activities in Markets.

Goodwill, MSRs and other intangible assets: refer to Note 14 for additional information.

Other assets increased predominantly as a result of higher deferred tax assets and the fair value of the Visa C shares. Refer to Notes 2 and 5 for additional information on Visa shares.

Deposits decreased, reflecting:

•a decline in CCB in existing accounts, primarily driven by seasonal tax outflows and migration into higher-yielding investments, largely offset by new accounts,

•higher deposits in CIB due to net inflows in Securities Services and Payments, partially offset by net maturities of structured notes in Markets,

•higher deposits in Corporate predominantly driven by new product offerings related to the Firm's international consumer initiatives, and

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

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.

Short-term borrowings increased driven by higher net issuance of structured notes in Markets.

Refer to Liquidity Risk Management on pages 51-58 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; Note 26 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, and compared with seasonally lower levels at year-end. Refer to Notes 2 and 4 for additional information.

Accounts payable and other liabilities increased due to higher client activities in Payments and Markets.

Beneficial interests issued by consolidated VIEs increased driven by the issuance of credit card securitizations in Treasury and CIO, and higher levels of Firm-administered multi-seller conduit commercial paper held by third parties in CIB, in line with the Firm’s funding plans.

Refer to Liquidity Risk Management on pages 51-58 and Notes 13 and 22 for additional information, specifically Firm-sponsored VIEs and loan securitization trusts.

Long-term debt increased driven by net issuances of structured notes in CIB due to client demand, and net issuances of long-term debt in Treasury and CIO, largely offset by lower FHLB advances. Refer to Liquidity Risk Management on pages 51-58; and Note 26 for additional information on the First Republic acquisition.

Stockholders’ equity increased reflecting net income, largely offset by the impact of capital actions, including repurchases of common shares, common and preferred stock dividend payments and net redemption of preferred stock. Refer to Consolidated statements of changes in stockholders’ equity onpage 94, Capital Actions on page 49, and Note 19 for additional information.

Consolidated cash flows analysis

The following is a discussion of cash flow activities during the six months ended June 30, 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 and higher accounts payable and other liabilities.

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

Investing activities

•In 2024, cash used resulted from higher securities purchased under resale agreements and net purchases of investment securities.

•In 2023, cash provided reflected net proceeds from investment securities, largely offset by higher net originations of loans, higher securities purchased under resale agreements, and net cash used in the First Republic acquisition.

Financing activities

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

•In 2023, cash provided reflected higher securities loaned or sold under repurchase agreements, largely offset by net activity in 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, as well as 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 15-16, Capital Risk Management on pages 45-50, and Liquidity Risk Management on pages 51-58, and the Consolidated Statements of Cash Flows on page 95 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.