-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ZU7/ZxL3+4cDfHFt9WRMVwtyU543TJc9Ex0BIoN+Gr3iZSB3ZdLc33HUNKWjsTgE riqQUnuY6+3ICMdiIErjZg== 0000068100-95-000289.txt : 19950415 0000068100-95-000289.hdr.sgml : 19950414 ACCESSION NUMBER: 0000068100-95-000289 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950413 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19950413 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN J P & CO INC CENTRAL INDEX KEY: 0000068100 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 132625764 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05885 FILM NUMBER: 95528654 BUSINESS ADDRESS: STREET 1: 60 WALL ST CITY: NEW YORK STATE: NY ZIP: 10260 BUSINESS PHONE: 2124832323 MAIL ADDRESS: STREET 1: P O BOX 271 STREET 2: C/O WILLIAM D HALL CITY: WILMINGTON STATE: DE ZIP: 19899 8-K 1 COVER PAGES TO 4/13/95 PRESS RELEASE 1 _____________________________________________________________________ ______ _____________________________________________________________________ ______ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ______________ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ______________ Date of Report (Date of earliest event reported) April 13, 1995 J.P. MORGAN & CO. INCORPORATED (Exact name of registrant as specified in its charter) DELAWARE 1-5885 13-2625764 (State or other juris- (Commission (IRS Employer diction of File Number) Identification No.) incorporation) 60 WALL STREET, NEW YORK, NEW YORK 10260- 0060 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 483-2323 _________________________________________________________________ (Former name or former address, if changed since last report) _____________________________________________________________________ ______ _____________________________________________________________________ ______ 2 ITEM 5. OTHER EVENTS On April 13, 1995, the Registrant issued a press release announcing its earnings for the three-month period ended March 31, 1995. A copy of such press release is filed herein as Exhibit 99. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements NONE. The financial statements included in this report are not required to be filed as part of this report. (b) Pro Forma Financial Information NONE. (c) Exhibits 99. Copy of press release of J.P. Morgan & Co. Incorporated dated April 13, 1995. 3 SIGNATURES 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. J.P. MORGAN & CO. INCORPORATED ______________________________ (REGISTRANT) /s/ PATRICIA A. JONES ____________________________ NAME: PATRICIA A. JONES TITLE: MANAGING DIRECTOR DATE: April 13, 1995 EX-99 2 PRESS RELEASE ANNOUNCING FIRST QTR 1995 EARNINGS 1 April 13, 1995 J.P. MORGAN REPORTS 1995 FIRST QUARTER RESULTS J.P. Morgan & Co. Incorporated reported net income of $255 million in the first quarter of 1995, 26% lower than in the first quarter of 1994 and up 32% from the fourth quarter. Earnings per share were $1.27 in the first quarter compared with $1.69 a year earlier. The 1995 first quarter earnings reflected a previously announced special charge of $55 million ($33 million after tax), or $0.17 per share, related primarily to severance. Douglas A. Warner III, chairman, said: "Results improved from the fourth quarter, and the flow of business from clients was good. Trading revenues were up, demonstrating the benefits of diversification. Our focus for 1995 is clear: expand our business with clients and build in a disciplined way for the future." FIRST QUARTER RESULTS AT A GLANCE
Fourth (in millions of dollars, First quarter quarter except per share data) 1995 1994 1994 _____________________________________________________________________ _____________ Revenues $1,388 $1,391 $1,228 Operating expenses (1,002) (852) (963) Income taxes (131) (194) (72) ___________________________________ _______________________________________________ Net income $ 255 $ 345 $ 193 Net income per share $1.27 $1.69 $0.96 _____________________________________________________________________ _____________ Dividends declared per share $0.75 $0.68 $0.75 _____________________________________________________________________ _____________
REVENUES were approximately even with the first quarter of 1994 and 13% higher than in the fourth quarter: -Trading revenue declined 15% from a year earlier but nearly doubled from the fourth quarter on strong results in debt instruments, foreign exchange, and equities and commodities. -Net interest revenue rose 26% to $500 million from a year earlier. The rise was mostly attributable to improved results from asset and liability management. -Investment management fees, operational service fees, and corporate finance revenue were in line with levels of a year ago, while credit-related fees were lower. OPERATING EXPENSES, excluding the special charge, increased 11% from a year earlier and were essentially unchanged from the fourth quarter. The special charge related to an expense management program initiated during the first quarter to moderate the growth of expenses. The remainder of this release contains information on specific areas of results, a financial summary, and the consolidated financial statements. 2 REVENUES Revenues totaled $1.388 billion in the first quarter of 1995, about the same as a year earlier. Net interest revenue rose 26% to $500 million from the first quarter of 1994, due mostly to improved results from asset and liability management, principally in the United States, and to an increase in trading-related net interest revenue. The 1994 quarter included $20 million of past-due interest payments related to Brazilian and Argentine assets. Trading revenue declined 15% to $303 million from the first quarter of 1994. Reported trading revenue does not include net interest revenue associated with trading activities, which was $61 million in the first quarter of 1995 and $45 million in the first quarter of 1994. Combined trading and related net interest revenue declined 9% to $364 million from a year earlier. (For details, see the table of combined trading and related net interest revenue by principal markets on page 9.) Combined revenue for swaps and other interest rate contracts declined to $83 million from the strong $275 million in the first quarter of 1994. While total swap volumes were comparable, revenues from structured transactions were below the high level of last year's first quarter, and losses were recorded on positions arising from some client-related transactions. Combined revenue from debt instrument trading rose to $162 million from $93 million a year earlier, mostly from activities in Europe and Asia. Foreign exchange trading produced combined revenue of $69 million, up from $5 million a year ago, primarily from increased market-making. Trading in equities and commodities recorded combined revenue of $50 million, an increase from $28 million in the year-earlier quarter. Corporate finance revenue was $114 million in the first quarter, in line with the year-earlier quarter. Underwriting revenue declined 51% to $22 million from 1994's corresponding quarter. Advisory and syndication fees rose 28% to $92 million from the 1994 first quarter. Credit-related fees were $43 million in the first quarter, 23% lower than in the first quarter of 1994, primarily due to lower securities lending revenue. Investment management fees were $130 million in the first quarter, up slightly from a year ago as a result of an increase in assets under management, partially offset by lower performance fees. Operational service fees in the first quarter totaled $140 million, slightly lower than in the 1994 first quarter, due to a decline in custody and securities clearing fees. Net investment securities gains were $9 million in the first quarter, compared with gains of $91 million in the first quarter of 1994. The gains in the first quarter of 1994 were mostly attributable to the sale of European government securities. Other revenue was $149 million in the first quarter, compared with $103 million in the 1994 first quarter. The 1995 first quarter reflected net equity investment securities gains of $163 million, versus $97 million a year ago. Also included in the first quarter of 1995 was $40 million of costs associated with hedging anticipated foreign currency revenues and expenses. 3 OPERATING EXPENSES Operating expenses were $1.002 billion in the first quarter of 1995, up 18% from a year earlier. Excluding the $55 million special charge, operating expenses were up 11% from the first quarter of 1994. Employee compensation and benefit expenses, excluding the special charge, rose 4% to $571 million, reflecting growth in staff from a year ago. Technology and communications expenses were higher than in the year-earlier quarter, primarily due to expenditures on systems support and development. The weakening in the dollar's value accounted for 3 percentage points of the increase in operating expenses from the year-earlier quarter. The firm initiated an expense management program during the first quarter. While the emphasis was on lowering overall expense growth, staff was reduced 4% to 16,443 employees at March 31, 1995, from 17,055 employees at December 31, 1994. Technology and communications expenses were also down from fourth quarter levels as the firm focused on high-priority projects. Incentive compensation accruals were higher than in the fourth quarter. Income tax expense of $131 million in the first quarter is based on an effective tax rate of 34%, down from an effective tax rate of 36% in the first quarter of 1994. ASSETS Total assets were $167 billion at March 31, 1995, compared with $155 billion at December 31, 1994. Nonperforming assets decreased by $3 million to $217 million during the first quarter as new classifications were more than offset by repayments and charge-offs. No provision for credit losses was deemed necessary in the 1995 first quarter. The allowance for credit losses was $1.132 billion at March 31, 1995. (For details, see asset quality tables on page 10.) CAPITAL At March 31, 1995, J.P. Morgan's estimated Tier 1 and total risk- based capital ratios were 8.8% and 13.1%, respectively, compared with Tier 1 and total risk-based capital ratios of 9.6% and 14.2%, respectively, at December 31, 1994. The March 31, 1995, leverage ratio was 5.9%, versus 6.5% at December 31, 1994. The decreases in the first quarter in the risk-based capital and leverage ratios related primarily to the increase in total assets. J.P. Morgan's risk-based capital and leverage ratios remain well above the minimum standards set by the Federal Reserve Board. At March 31, 1995, stockholders' equity included approximately $449 million of net unrealized appreciation on debt investment and marketable equity investment securities, net the related deferred tax liability of $276 million. This compares with $456 million of net unrealized appreciation at December 31, 1994. The unrealized appreciation on debt investment securities was $227 million and $154 million at March 31, 1995, and December 31, 1994, respectively. The unrealized appreciation on marketable equity investment securities was $498 million and $576 million at March 31, 1995, and December 31, 1994, respectively. # # # 4 J.P. Morgan is a leading global financial intermediary that has built its business, over 150 years, on a commitment to serve the long-term interests of clients with complex financial needs. Corporations, governments, financial institutions, private firms, nonprofit institutions, and a limited number of individuals throughout the world are our clients. We advise on corporate financial structure; arrange financing in capital and credit markets; underwrite, trade, and invest in an array of currencies and the full range of securities and derivative instruments; serve as investment advisor; and provide selected trust, agency, and operational services. Attached are the financial summary, the financial statements, the combined trading and related net interest revenue table, and the asset quality tables. 5 FINANCIAL SUMMARY J.P. Morgan & Co. Incorporated _____________________________________________________________________ _____________
Dollars in millions, except per share data First Quarter Fourth _______________________ Quarter ____ 1995 1994 1994 ____________________________________ ______ Net income $255 $345 $193 PER COMMON SHARE (a) Net income $ 1.27 $ 1.69 $ 0.96 Dividends declared 0.75 0.68 0.75 Book value (b) 47.19 47.14 46.73 _____________________________________________________________________ _____________ Weighted average number of common and 196,905,106 201,291,982 196,197,704 common equivalent shares outstanding _____________________________________________________________________ _____________ Dividends declared on common $141 $131 $140 stock Dividends declared on preferred 6 5 5 stock SELECTED RATIOS Annualized rate of return on average 11.1 % 14.7 % 8.1 % common stockholders' equity (c) As % of period-end total assets: Common equity 5.5 5.6 5.9 Total equity 5.8 5.8 6.2 Regulatory capital ratios (d) Tier 1 risk-based capital 8.8 8.9 9.6 ratio (e) Total risk-based capital ratio 13.1 13.1 14.2 (e) Leverage ratio 5.9 6.2 6.5 _____________________________________________________________________ _____________ AVERAGE BALANCES Total interest-earning assets $135,310 $136,925 $137,281 Total assets 175,694 175,769 170,739 Total interest-bearing 129,279 129,631 132,049 liabilities Total liabilities 166,128 165,923 161,093 Common stockholders' equity 9,072 9,352 9,152 Total stockholders' equity 9,566 9,846 9,646 Net interest earnings (fully taxable 529 426 549 basis) Net yield on interest-earning 1.59 % 1.26 % 1.59 % assets _____________________________________________________________________ _____________ Employees at period-end 16,443 15,386 17,055 _____________________________________________________________________ _____________ (a) Earnings per share amounts represent both primary and fully diluted earnings per share. (b) Excluding the impact of SFAS No. 115, book value per common share would have been $44.87, $42.14 and $44.39 for the three months ended March 31, 1995, March 31, 1994, and December 31, 1994 respectively. (c) Excluding the impact of SFAS No. 115, the rate of return on average common stockholders' equity would have been 11.7%, 16.9% and 8.6% for the three months ended March 31, 1995, March 31, 1994, and December 31, 1994 respectively. (d) In accordance with Federal Reserve Board guidelines, these ratios exclude the equity, assets and off-balance-sheet exposures of J.P. Morgan Securities, Inc. and the effect of SFAS No. 115. (e) Ratios for March 31, 1995, are estimates. Effective December 31, 1994, the risk-based capital ratios reflect Federal Reserve Board amendments to recognize risk-reducing benefits of bilateral netting arrangements.
6 CONSOLIDATED STATEMENT OF INCOME J.P. Morgan & Co. Incorporated _____________________________________________________________________ _____________
In millions, except per share data Three months ended ______________________________________________ __________ March March Increase December Increase 31 31 / 31 / 1995 1994 (Decreas 1994 (Decreas e) e) ______________________________ _________________________ NET INTEREST REVENUE Interest revenue $2,470 $1,837 $633 $2,369 $101 Interest expense 1,970 1,440 530 1,851 119 _____________________________________________________________________ _____________ Net interest revenue 500 397 103 518 (18) NONINTEREST REVENUE Trading revenue 303 356 (53) 153 150 Corporate finance 114 117 (3) 122 (8) revenue Credit-related fees 43 56 (13) 44 (1) Investment management fees 130 127 3 130 - Operational service 140 144 (4) 127 13 fees Net investment securities 9 91 (82) 23 (14) gains Other revenue 149 103 46 111 38 _____________________________________________________________________ _____________ Total noninterest 888 994 (106) 710 178 revenue Total revenue 1,388 1,391 (3) 1,228 160 OPERATING EXPENSES Employee compensation and 626 548 78 501 125 benefits Net occupancy 80 64 16 74 6 Technology and communications 172 129 43 209 (37) Other expenses 124 111 13 179 (55) _____________________________________________________________________ _____________ Total operating 1,002 852 150 963 39 expenses Income before income taxes 386 539 (153) 265 121 Income taxes 131 194 (63) 72 59 _____________________________________________________________________ _____________ Net income 255 345 (90) 193 62 PER COMMON SHARE (a) Net income $1.27 $1.69 ($0.42) $0.96 $0.31 Dividends declared 0.75 0.68 0.07 0.75 - _____________________________________________________________________ _____________ (a) Earnings per share amounts represent both primary and fully diluted earnings per share.
7 CONSOLIDATED BALANCE SHEET J.P. Morgan & Co. Incorporated _____________________________________________________________________ _____________
Dollars in millions March December March 31 31 31 1995 1994 1994 ____________________________ ____ ASSETS Cash and due from banks $ $ 2,210 $ 1,153 1,760 Interest-earning deposits with banks 1,650 1,362 2,037 Debt investment securities available-for- sale 21,655 22,657 18,436 carried at fair value Trading account assets 68,198 57,065 61,875 Securities purchased under agreements to resell ($27,434 in March 1995, $21,170 in December 1994, and $30,231 in March 27,478 21,350 30,261 1994) and federal funds sold Securities borrowed 11,073 12,127 10,285 Loans 24,434 22,080 25,388 Less: allowance for credit losses 1,132 1,131 1,143 _____________________________________________________________________ _____________ Net loans 23,302 20,949 24,245 Customers' acceptance liability 658 586 610 Accrued interest and accounts receivable 3,011 5,028 4,411 Premises and equipment 3,395 3,318 2,990 Less: accumulated depreciation 1,361 1,302 1,153 _____________________________________________________________________ _____________ Premises and equipment, net 2,034 2,016 1,837 Other assets 6,865 9,567 12,983 _____________________________________________________________________ _____________ Total assets 167,077 154,917 168,740 _____________________________________________________________________ _____________ LIABILITIES Noninterest-bearing deposits: In offices in the U.S. 2,889 3,693 4,288 In offices outside the U.S. 682 767 617 Interest-bearing deposits: In offices in the U.S. 2,015 1,826 2,218 In offices outside the U.S. 41,238 36,799 36,435 _____________________________________________________________________ _____________ Total deposits 46,824 43,085 43,558 Trading account liabilities 45,210 36,407 36,576 Securities sold under agreements to repurchase ($32,884 in March 1995, $30,179 in December 1994, and $47,158 in March 1994) and federal funds purchased 35,843 35,768 51,522 Commercial paper 2,309 3,507 4,539 Other liabilities for borrowed money 11,334 10,900 8,386 Accounts payable and accrued expenses 3,949 6,231 5,651 Liability on acceptances 658 586 617 Long-term debt not qualifying as risk- based capital 5,009 3,605 2,563 Other liabilities 3,018 2,063 2,544 _____________________________________________________________________ _____________ 154,154 142,152 155,956 Long-term debt qualifying as risk-based 3,283 3,197 2,933 capital _____________________________________________________________________ _____________ Total liabilities 157,437 145,349 158,889 STOCKHOLDERS' EQUITY Preferred stock (authorized shares: 10,000,000): Adjustable rate cumulative preferred stock 244 244 244 (issued and outstanding: 2,444,300) Variable cumulative preferred stock (issued and 250 250 250 outstanding: 250,000) Common stock, $2.50 par value (authorized shares: 500,000,000; issued: 200,672,173 in March 1995, 502 502 501 200,668,373 in December 1994 and 200,279,108 in March 1994) Capital surplus 1,448 1,452 1,439 Retained earnings 7,149 7,044 6,595 Net unrealized gains on investment securities, 449 456 993 net of taxes Other 368 367 268 _____________________________________________________________________ _____________ 10,410 10,315 10,290 Less: treasury stock (13,272,339 shares in March 1995, 12,966,917 shares in December 1994 and 8,019,142 shares in 770 747 439 March 1994) at cost _____________________________________________________________________ _____________ Total stockholders' equity 9,640 9,568 9,851 _____________________________________________________________________ _____________ Total liabilities and stockholders' 167,077 154,917 168,740 equity _____________________________________________________________________ _____________
8 CONSOLIDATED STATEMENT OF CONDITION Morgan Guaranty Trust Company of New York _____________________________________________________________________ _____________
Dollars in millions March 31 December 1995 31 1994 _____________________ ____ ASSETS Cash and due from banks $ 1,124 $ 2,182 Interest-earning deposits with banks 1,751 1,605 Debt investment securities available-for- sale 20,370 21,292 carried at fair value Trading account assets 54,201 45,386 Securities purchased under agreements to resell 20,303 16,562 and federal funds sold Loans 21,344 19,397 Less: allowance for credit losses 1,027 1,025 _____________________________________________________________________ _____________ Net loans 20,317 18,372 Customers' acceptance liability 628 556 Accrued interest and accounts receivable 2,968 3,594 Premises and equipment 3,031 2,967 Less: accumulated depreciation 1,197 1,149 _____________________________________________________________________ _____________ Premises and equipment, net 1,834 1,818 Other assets 5,931 7,360 _____________________________________________________________________ _____________ Total assets 129,427 118,727 _____________________________________________________________________ _____________ LIABILITIES Noninterest-bearing deposits: In offices in the U.S. 2,847 3,698 In offices outside the U.S. 732 770 Interest-bearing deposits: In offices in the U.S. 1,726 1,480 In offices outside the U.S. 41,849 38,566 _____________________________________________________________________ _____________ Total deposits 47,154 44,514 Trading account liabilities 39,396 30,730 Securities sold under agreements to repurchase 19,217 22,099 and federal funds purchased Other liabilities for borrowed money 6,023 5,320 Accounts payable and accrued expenses 2,464 2,902 Liability on acceptances 628 556 Long-term debt not qualifying as risk-based 2,360 1,968 capital Other liabilities 3,491 2,080 _____________________________________________________________________ _____________ 120,733 110,169 Long-term debt qualifying as risk-based 1,233 1,249 capital _____________________________________________________________________ _____________ Total liabilities 121,966 111,418 STOCKHOLDER'S EQUITY Preferred stock, $100 par value (authorized shares: 2,500,000) - - Common stock, $25 par value (authorized and outstanding shares: 250 250 10,000,000) Surplus 2,670 2,670 Undivided profits 4,398 4,266 Net unrealized gains on investment securities, net of 147 124 taxes Foreign currency translation (4) (1) _____________________________________________________________________ _____________ Total stockholder's equity 7,461 7,309 _____________________________________________________________________ _____________ Total liabilities and stockholder's equity 129,427 118,727 _____________________________________________________________________ _____________ Member of the Federal Reserve System and the Federal Deposit Insurance Corporation.
9 COMBINED TRADING AND RELATED NET INTEREST REVENUE J.P. Morgan & Co. Incorporated _____________________________________________________________________ _____________
Dollars in millions Foreign Swaps and exchange other spot and Equities interest rate Debt option and contractsinstruments contracts commoditiesTotal ___________________________________ _______________________________________________ FIRST QUARTER 1995 Trading revenue $ 76 $ 94 $ 70 $ 63 $303 Net interest revenue* 7 68 (1) (13) 61 _____________________________________________________________________ _____________ Combined total 83 162 69 50 364 _____________________________________________________________________ _____________ _____________________________________________________________________ _____________ FIRST QUARTER 1994 Trading revenue 266 36 10 44 356 Net interest revenue 9 57 (5) (16) 45 _____________________________________________________________________ _____________ Combined total 275 93 5 28 401 _____________________________________________________________________ _____________ * Estimated
10 ASSET QUALITY J.P. Morgan & Co. Incorporated _____________________________________________________________________ _____________ NONPERFORMING ASSETS
March 31 December 31 March 31 Dollars in millions 1995 1994 1994 _____________________________________________________________________ _____________ Nonaccrual loans: Commercial and industrial $148 $136 $143 Other 65 81 94 ____________________________________ ______________________________________________ 213 217 237 Restructuring countries 3 2 8 _____________________________________________________________________ _____________ Total nonaccrual loans 216 219 245 Other nonperforming assets 1 1 2 _____________________________________________________________________ _____________ Total nonperforming assets 217 220 247 _____________________________________________________________________ _____________ ALLOWANCE FOR CREDIT LOSSES March 31 December 31 March 31 Dollars in millions 1995 1994 1994 _____________________________________________________________________ _____________ Allowance for credit losses $1,132 $1,131 $1,143 _____________________________________________________________________ _____________ First Quarter _________________________ 1995 1994___ _____________________________________________________________________ __________ Charge-offs: Commercial and industrial ($6) ($21) Restructuring countries - - Other (2) (1) Recoveries 9 8___ _____________________________________________________________________ __________
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