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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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UNITED
STATES FORM
8-K Current
Report
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC
20549
Pursuant to Section 13 or 15(d) of
the
Securities Exchange Act of
1934
Date of Report (Date of earliest event reported):
April 7,
2006
JPMorgan Chase & Co. | ||||
(Exact name of registrant as specified in its charter) | ||||
Delaware | 1-5805 | 13-2624428 | ||
(State or other jurisdiction of | (Commission File Number) | (I.R.S. Employer | ||
incorporation) | Identification Number) | |||
270 Park Avenue | 10017 | |||
New York, NY | ||||
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (212) 270-6000 (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01 Other Events |
On Saturday, April 8, 2006, JPMorgan Chase & Co. (JPMorgan) issued a press release announcing it and The Bank of New York Company, Inc. (Bank of New York) had entered into a definitive agreement pursuant to which JPMorgan agreed to acquire Bank of New Yorks consumer, small-business and middle-market banking businesses in exchange for JPMorgans corporate trust business plus a cash payment of $150 million. The transaction has been approved by both companies board of directors, and the completion of the transaction is subject to the receipt of necessary regulatory approvals.
On Monday, April 10, 2006, JPMorgan held an investor presentation providing additional information regarding the transactions contemplated by the agreement. Copies of the press release and the investor presentation materials are included herein as Exhibits 99.1 and 99.2. These materials are incorporated herein by reference and the foregoing description is qualified in its entirety by reference to such materials.
Item 9.01 Financial Statements and Exhibits
Exhibit No. Description
99.1 | Press Release, dated April 8, 2006, issued by JPMorgan Chase & Co. announcing the agreement to acquire The Bank of New Yorks consumer, small-business, and middle- market banking businesses in exchange for JPMorgan Chases corporate trust operations |
99.2 | Investor Presentation, dated April 10, 2006, regarding the agreement to acquire The Bank of New Yorks consumer, small-business, and middle-market banking businesses in exchange for JPMorgan Chases corporate trust operations |
SIGNATURE |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
JPMORGAN CHASE & CO. | ||||
Date: April 10, 2006 | By: /s/ Anthony J. Horan | |||
Name: Anthony J. Horan | ||||
Title: Corporate Secretary |
2
Exhibit Index
Exhibit No. Description
99.1 | Press Release, dated April 8, 2006, issued by JPMorgan Chase & Co. announcing the agreement to acquire The Bank of New Yorks consumer, small-business, and middle-market banking businesses in exchange for JPMorgan Chases corporate trust operations |
99.2 | Investor Presentation, dated April 10, 2006, regarding the agreement to acquire The Bank of New Yorks consumer, small-business, and middle-market banking businesses in exchange for JPMorgan Chases corporate trust operations |
JPMorgan Chase &
Co.
270 Park Avenue,
New York, NY 10017-2070
NYSE symbol: JPM
www.jpmorganchase.com
News release:
IMMEDIATE |
JPMorgan Chase to acquire The Bank of New Yorks consumer, small-business and middle-market banking businesses in exchange for corporate trust operations
Chase to add 338 branches serving 600,000 households; will gain deposits of $15 billion
Deal to significantly strengthen Chases leadership in New York City/Tri-State region
Deal to increase small-business and
commercial banking franchises, adding 100,000 small-business and 2,000 middle-market clients
New York, April 8, 2006 JPMorgan Chase (NYSE: JPM) today announced an agreement to acquire The Bank of New York Companys (NYSE: BK) consumer, small-business and middle-market banking businesses in exchange for JPMorgan Chases corporate trust business plus a cash payment of $150 million. The Bank of New York businesses being acquired are valued at a premium of $2.30 billion; the JPMorgan Chase corporate trust business being sold is valued at a premium of $2.15 billion. JPMorgan Chase may also make a future payment to The Bank of New York of up to $50 million tied to certain new account openings at Chase.
The Bank of New York business, which includes 338 bank branches serving 600,000 households and over 100,000 businesses, will increase Chases core consumer, small-business and middle-market banking businesses in the highly attractive New York City/Tri-State market.
The transaction has been approved by both companies boards of directors and is subject to regulatory approvals. It is expected to close in late third quarter or the fourth quarter of 2006.
With the addition of The Bank of New Yorks branches, Chase will expand the largest branch network in New York City, will create the largest branch presence both on Long Island and in New York Citys northern suburbs, and will triple its bank locations in New Jersey. In total, the combined business will have more than 750 branch locations and 2,000 ATMs in the New York City/Tri-State area alone.
Investor Contact: | Julia B. Bates | Media Contact: | Joseph Evangelisti | |||
212-270-7325 | 212-270-7438 |
J.P. Morgan Chase
& Co. News Release |
In the transaction, Chase will also receive consumer, small-business and middle-market loan balances of about $8 billion. And Chase will gain about 2,000 Bank of New York middle-market clients, who will gain access to a full suite of cash management, trade finance and commercial banking services.
JPMorgan Chase CEO Jamie Dimon said, This is a great addition to our New York City/Tri-State franchise. We fully intend to remain the winner here. He added, The transaction reflects our disciplined strategy of investing capital in core businesses where we can leverage scale and expertise for competitive advantage. In addition to being a great strategic fit, the deal is compelling financially.
Charlie Scharf, head of Chases Retail business, added, This unique opportunity creates an unparalleled platform to deliver a wider array of products to customers in the region. The fit is terrific, and it would have taken many years for either of us alone to forge such a powerful network. The Bank of New York branches bring us a proud history, dedicated employees, loyal customers, and terrific locations, especially in the commuter suburbs. Now, we will begin planning the integration of the new business, which is a top priority.
Commenting on the sale of the corporate trust business, Dimon said, We are proud of the outstanding corporate trust business weve built, and we are confident it will thrive as part of The Bank of New York, which will continue to invest in it as a core business.
Dimon affirmed JPMorgan Chases commitment to its other processing and securities services businesses: Our securities processing and cash management franchises are an important and profitable part of our company. These core businesses have meaningful links with our other main business lines and are critical to servicing client needs across the firm. We will continue to make strategic investments to support their technology, product innovation and best-in-class client service.
Heidi Miller, head of the firms Treasury & Securities Services business, added, We will now concentrate even more on the growth of our securities processing franchise and its connectivity
Investor Contact: | Julia B. Bates | Media Contact: | Joseph Evangelisti | |||
212-270-7325 | 212-270-7438 |
J.P. Morgan Chase
& Co. News Release |
with our treasury services businesses as we aim to be the global provider of choice to all sectors of the market. Our platform, people, product functionality and firmwide partnerships will enable us to achieve this goal.
Customers of both companies should continue banking as usual. Chase expects to convert The Bank of New Yorks consumer, small-business and middle-market banking businesses in the New York City/Tri-State area to the Chase brand and technology platform in 2007. Bank of New York customers should be able to access Chases extensive ATM network in late 2006.
JPMorgan Chase expects to recognize an after-tax gain on the sale of the corporate trust business estimated at approximately $600 million to $700 million upon the deals closing.
JPMorgan Chase will host a conference call for investors on Monday, April 10, at 10:30 a.m. to review the acquisition of Bank of New York's consumer, small-business and middle-market banking businesses. Investors can call (800) 819-9193 (domestic) / (913) 981-4911 (international) or listen via live audio webcast. The live audio webcast and presentation slides will be available on www.jpmorganchase.com under Investor Relations, Investor Presentations. A replay of the conference call will be available beginning at 1:30 p.m. (Eastern time) on April 10, 2006, through midnight, April 17, 2006, at (888) 203-1112 (domestic) or (719) 457-0820 (international); access code 4461532. The replay also will be available on www.jpmorganchase.com.
About JPMorgan Chase
JPMorgan Chase is a leading global financial services firm with assets of $1.2 trillion and operations in more than 50 countries. The firm is a leader in financial services for consumers and businesses, investment banking, financial transaction processing, asset and wealth management, and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase has its corporate headquarters in New York and its U.S. consumer and commercial banking headquarters in Chicago. Under the JPMorgan, Chase, and Bank One brands, the firm serves millions of consumers in the United States and many of the worlds most prominent
Investor Contact: | Julia B. Bates | Media Contact: | Joseph Evangelisti | |||
212-270-7325 | 212-270-7438 |
J.P. Morgan Chase &
Co.
News
Release
corporate, institutional and government clients. Information about the firm is available at www.jpmorganchase.com.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of JPMorgan Chases management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause this differencemany of which are beyond the firms controlinclude the following: changes in local, national or international economic or market conditions that affect the retail banking business or the corporate trust business; changes in the financial performance of the business JPMorgan Chase is purchasing or the business it is selling; regulatory or legal issues, such as unanticipated difficulties in securing the regulatory or other approvals or consents required in connection with the transactions; difficulties or delays in converting the businesses between the parties information systems, or any inability to integrate the business being purchased as fully, or in as timely or cost-efficient a manner, as is expected; and costs associated with the transaction, or employee or customer attrition, are greater than expected. Additional factors that could cause JPMorgan Chases results to differ materially from those described in the forward-looking statements are discussed in Part 1, Item 1A: Risk Factors, and under the heading Forward-looking Statements on the Firms Annual Report on Form 10-K for the year ended December 31, 2005. There is no assurance that any list of risks and uncertainties or risk factors is complete. The Annual Report is on file with the Securities and Exchange Commission and available at the Securities and Exchange Commissions Internet site (http://www.sec.gov).
# # #
Investor Contact: | Julia B. Bates | Media Contact: | Joseph Evangelisti | |||
212-270-7325 | 212-270-7438 |
INVESTOR PRESENTATION
A P R I L 1 0 , 2 0 0 6
Acquisition of Bank of New Yorks consumer, small-
business and middle-market banking businesses in
exchange for JPMorgan Chases corporate trust business
This presentation contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations
of
JPMorgan Chases management and are subject to significant risks and uncertainties. Actual results
may differ from those set forth in the forward-looking statements. Factors that could cause this
differencemany
of which are beyond the firms controlinclude the following: changes in local,
national or international economic or market conditions that affect the retail banking business or the
corporate trust business; changes in the financial performance
of the business JPMorgan Chase is
purchasing or the business it is selling; regulatory or legal issues, such as unanticipated difficulties in
securing the regulatory or other approvals or consents required in connection with the transactions;
difficulties
or delays in converting the businesses between the parties information systems, or any
inability to integrate the business being purchased as fully, or in as timely or cost-efficient a manner,
as is expected; and costs associated with the transaction,
or employee or customer attrition, are
greater than expected. Additional factors that could cause JPMorgan Chases results to differ
materially from those described in the forward-looking statements are discussed in Part 1, Item 1A:
Risk Factors, and under the heading Forward-looking Statements in the firms Annual Report on Form
10-K for the year ended December 31, 2005. There is no assurance that any list of risks and
uncertainties or risk factors
is complete. The Annual Report is on file with the Securities and Exchange
Commission and available at the Securities and Exchange Commissions Internet site
(http://www.sec.gov).
2
Strategic rationale
Acquisition of BKs consumer, small-business and middle-market
banking significantly enhances Tri-state franchise
High-quality customer and deposit base
Expands presence in attractive suburban locations
Balanced opportunity - cost savings and significant opportunity to
grow BK branches
Exchange of Corporate Trust business provides unique opportunity for
each institution to strategically improve its businesses, in a
financially compelling way
Continued focus on growing our industry-leading securities services
and cash management businesses, which are unaffected by the sale
3
Transaction overview
Key terms
1 Excluding ADR, escrow and commercial paper businesses
2 Tied to certain new account openings at Chase
Taxable gain subject to like-kind exchange treatment for suitable
assets and liabilities
Tax:
Late Q3 or Q4 2006
Expected closing:
Subject to customary regulatory approvals
Regulatory approvals:
Purchase Agreement and Transition Services Agreement executed
Agreements:
Extensive due diligence completed
Due diligence:
JPM and BK to swap Trust (premium of $2.15bn) and Retail
(premium of $2.30bn) businesses
JPM to pay BK $150mm cash for difference in premium, plus a
potential contingent payment of up to $50mm2
Valuation & consideration:
JPM acquires BKs consumer, small business and middle market
units (BKs Retail & Middle Market Banking segment)
JPM sells to BK corporate trust business1
Businesses exchanged:
4
Financial impact to JPM
Estimated $600-$700mm after-tax gain at closing
Estimated earnings impact to JPM immaterial in 2007; modestly accretive in 2008
Swap of businesses with roughly equivalent 2005 earnings -- approximately
$250mm
Expect cost savings to be partially offset by investments to upgrade and grow
BK franchise
Preliminary transaction-related costs of up to $100mm after-tax expected by
end of 2007
GAAP earnings negatively affected by CDI amortization
Cash earnings accretive immediately
Modest impact to capital
Tier 1 ratio reduced by an estimated 15bps
Intangible assets increase by approximately $1.6 billion
5
New York is a very attractive banking market
Top 15 MSAs by Retail Deposits
Source: SNL Financial as of June 30, 2005
Note: Retail deposits in each MSA estimated by subtracting from total deposits any
balances exceeding $500mm in a single branch. Per branch metrics based on
Active branches with non-zero deposit balances.
6
Household Income: $87,481
27% higher than national average
Projected deposit growth: $61 billion
over next 5 years
3.6x higher than average of other top
15 MSAs
Deposits per branch: $83 million
73% higher than national average
More than 1 million households with
investable assets between $250,000 and
$1 million
4x more than average of other top 15
MSAs
New York MSA in Perspective
MSA
Deposits
($mm)
Deposit growth
2000
-
2005
($mm)
CAGR
2000
-
2005
(%)
New York
429,714
101,586
5.5
Los Angeles
237,331
76,829
8.1
Chicago
177,334
43,255
5.8
Miami
110,557
34,322
7.7
San Francisco
103,765
27,631
6.4
Philadelphia
99,591
23,541
5.5
Bos
ton
93,174
22,931
5.8
Washington, DC
84,539
26,988
8.0
Dallas
63,867
16,056
6.0
Atlanta
62,712
18,963
7.5
Houston
60,433
14,623
5.7
Detroit
60,318
7,544
2.7
Seattle
45,147
14,462
8.0
San Diego
44,828
17,375
10.3
San Jose
43,055
11,996
6.8
Acquisition significantly enhances Tri-state franchise
Small Business
100,000 small business clients
$3.6 billion in deposits
$0.7 billion in loans
What We Are Acquiring
Middle Market
2,000 middle market clients
$1.6 billion in deposits
$2.9 billion in middle market and
commercial real estate loans
Consumer Banking
600,000 consumer clients
338 branches; 400 ATMs
238 branches in New York
117 in Northern suburbs1
85 on Long Island
36 in New York City
93 in New Jersey
7 in Connecticut
$9.3 billion in deposits
$4.2 billion in loans
1 Includes Westchester, Rockland, Putnam, and Dutchess counties
7
Our Proforma Positioning in NY Tri-state
#1 with more than 750 branches1
#1 with deposits of approx. $80bn1
BK branches located in priority areas
based upon projected growth
BK
JPM
12 miles
30 miles
Suburban franchise complements city leadership
1 Source: Company data. Proforma branches and deposits as of 3/31/06. Assumes 50
branch closures. Ranking based on SNL data as of
6/30/05.
8
9
1 Statistics based on internal sources for 2005
Production Statistics
Substantial growth opportunity
2005 vs. 2004
Tri
-
state
JPM
BK
Checking account growth
1
JPM
vs
BK
1
National
sales
(
per branch
)
Tri
-
state
sales
(p
er branch
)
Investment Sales
3x higher
4.5x higher
Credit Cards
25x higher
35x higher
Home Equity
4x higher
7x h
igher
Mortgage
3x higher
3x higher
Retain attractive & industry leading securities
services and cash management businesses
Corporate Trust business sold includes: Trustee and paying agent for CDO & ABS/MBS,
Municipal, Corporate debt, Loan agency services, Document management1
Emphasis remains on strategic and high-value securities services and cash management
businesses
Significant growth potential
Meaningful links to other lines of business
Critical to servicing client needs
#1 in assets under custody with $11.2 trillion
#1 in U.S. Dollar Clearing, ACH Originations, CHIPS and Fedwire
Invest in key areas of strategic growth in the Securities Services arena
Fund administration and accounting
Investment operations outsourcing
Alternative investment services build out
Use strategic acquisitions to add new products, extend client base and grow
international
1 Excludes ADR, escrow and commercial paper businesses
10
Summary
Financially compelling transaction
Significantly enhances retail leadership position in
Tri-state market
Unwavering commitment to invest in and grow
securities services and cash management businesses
11
Appendix
Loan and deposit mix
13
Acquired Loans and Deposits as of December 2005 ($ in billions)
Loans
Deposits
Consumer
$
4.2
Noninterest bearing
$5.5
Mortgage
1.
3
DDA
2.
2
Home Equity
2.
9
Savings
6.
1
Small Business
0.7
Time
0.
7
Middle Market &
Commercial Real Estate
2
.
9
Total
$7.
8
Total
$1
4
.
5
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