JPMorgan Chase & Co.

– 2013
Forest R. David

A. Case Abstract

Headquartered in New York City, JP Morgan Chase & Co. (JPM) is a financial holding company that
serves customers in over 60 nations with a workforce over 240,000. Considered my many to be the
largest bank in the USA, JPM reported total assets in 2012 of over $2.3 trillion and is a Dow Jones
Industrial Average 30 member.

JPM operates in two broad segments, 1) JP Morgan and 2) Chase. JP Morgan brand focuses on large
corporations, governments and institutional investors; the Chase brand focuses on consumers and
smaller businesses.

About 80% of the JPM’s $100 billion in revenues is derived from businesses in the USA, leaving only
$20+ billion being derived from foreign markets, with Europe/Middle East & Africa accounting for
around 67% of foreign revenue. JPM enjoyed modest growth in 2012 especially in its Consumer &
Community Banking in overseas markets. This segment reported a 71% increase in sales to $10.6
billion in 2012. However, JPM’s Corporate and Private Equity segments in both USA and foreign
markets reported decreases in sales of 128% and 353% respectively in 2012 – so the company does
need a clear strategic plan for the future.

B. Vision Statement (actual)

At JPMorgan Chase, we want to be the best financial services company in the world. Because of our
great heritage and excellent platform, we believe this is within our reach.

C. Mission Statement (proposed)

JP Morgan Chase strives to be the number one choice for governments, institutions, small businesses
and consumers (1) for all of their banking needs (2). At JPM, we pride ourselves on our Consumer &
Community Banking (7) where we feel we are the best in the world (3). We are consistently
redeveloping ourselves and moving resources around to provide the maximum return for our
shareholders (5). Our mobile platforms (4) are used extensively by customers globally. At JMP, we
hire only the most experienced financial advisors (9) and believe good ethics is good business (6). We
strive to be great community citizens everywhere we operate (8).

1. Customers
2. Products or services
3. Markets
4. Technology
5. Concern for survival, growth, and profitability
6. Philosophy
 7. Self-concept
8. Concern for public image
9. Concern for employees

D. External Audit
Opportunities

1. Growing customer base for asset management and investment bank services in Asia, Latin
America, Africa and the Middle East.
2. USA small businesses are continuing to grow and recover.
3. Many customers still prefer to do banking business face to face when it comes to applying for a
credit card, seeking financial advice, and getting a loan.
4. Bank of America is laying off 36,000 people.
5. The USA government filed a civil lawsuit seeking $1 billion in damages for misrepresenting the
quality of home loans sold to Fannie Mae and Freddie Mac.
6. Smart phone providers such as Apple and Android may wish to form an alliance with banks to
help facilitate the usage of mobile phone payments.
7. Unemployment rate is improving, as a result qualifying more people for home loans.
8. More and more consumers prefer online banking and smartphone banking.

Threats

1. Banks are viewed like commodities to many potential customers.

2. Bank of America and Citigroup are two large domestic competitors.
3. Foreign banks have yet to enter the USA market on a wide scale.
4. Increase in online banks such as Ally and ING Direct are advertising heavily and marketing no
fees on many products where brick and mortar banks are increasing fees.
5. Low interest rates have helped to squeeze profits from banks.
6. The Dodd Frank Wall Street Reform and Customer Protection Act signed by President Obama, is
expected to greatly increase the fees all financial intuitions pay.
7. Mobile payments over smartphones and Near Field Communications (NFC) are expected to
greatly erode into credit card usage.
8. In 2012, around 25% of homes are in a delinquent state, 4.7 million homes.
9. Percent of Americans owning checking accounts dropped from 92 to 88% between 2010 and 2011
and the number owning a credit card dropped from 74 to 67%.
10. The Federal Reserve Board established the Consumer Financial Protection Bureau, which has
placed restrictions for lenders on credit cards, mortgage loans, student loans, and auto loans.
Competitive Profile Matrix

Bank of
JPM Citigroup
America
Critical Success Factors Weight Rating Score Rating Score Rating Score
Branch Locations 0.06 3 0.18 1 0.06 4 0.24
Revenue/Employee 0.10 4 0.40 2 0.20 3 0.30
Revenues 0.08 4 0.32 2 0.16 3 0.24
Income 0.12 4 0.48 2 0.24 1 0.12
Services Offered 0.12 3 0.36 4 0.48 2 0.24
Leverage 0.08 2 0.16 3 0.24 4 0.32
Stock Price Performance 0.09 3 0.27 4 0.36 2 0.18
Company Worth 0.06 4 0.24 3 0.18 2 0.12
Geographical Range Served 0.06 1 0.06 4 0.24 3 0.18
Amount of Goodwill 0.09 2 0.18 3 0.27 1 0.09
ROE 0.08 4 0.32 2 0.16 1 0.08
ATMs 0.06 3 0.18 1 0.06 4 0.24
Totals 1.00 3.15 2.65 2.35

Based on the factors in the CPM, JPM is out performing both major rivals Citigroup and Bank of
America. An area where JMP lags significantly behind is on geographic range of markets serviced.
One factor not considered because all their firms above are relatively the same was fees. Many online
banks such as Ally and E-Trade can offer services with much lower fees or no fees at all to customers.

EFE Matrix

Opportunities Weight Rating Weighted Score

1. Growing customer base for asset management and investment 0.07 2 0.14
bank services in Asia, Latin America, Africa and the Middle
East.
2. USA small businesses are continuing to grow and recover. 0.05 4 0.20
3. Many customers still prefer to do banking business face to face 0.03 4 0.12
when it comes to applying for a credit card, seeking financial
advice, and getting a loan.
4. Bank of America is laying off 36,000 people. 0.03 2 0.06
5. The USA government filed a civil lawsuit seeking $1 billion in 0.04 2 0.08
damages for misrepresenting the quality of home loans sold to
Fannie Mae and Freddie Mac.
6. Smart phone providers such as Apple and Android may wish to 0.04 1 0.04
form an alliance with banks to help facilitate the usage of mobile
phone payments.
7. Unemployment rate is improving, as a result qualifying more 0.03 3 0.09
people for home loans.
8. More and more consumers prefer online banking and 0.04 3 0.12
smartphone banking.
 Threats Weight Rating Weighted Score
1. Banks are viewed like commodities to many potential customers. 0.04 2 0.08
2. Bank of America and Citigroup are two large domestic
0.09 3 0.27
competitors.
3. Foreign banks have yet to enter the USA market on a wide scale. 0.09 4 0.36
4. Increase in online banks such as Ally and ING Direct are
advertising heavily and marketing no fees on many products 0.09 2 0.18
where brick and mortar banks are increasing fees.
5. Low interest rates have helped to squeeze profits from banks. 0.06 2 0.12
6. The Dodd Frank Wall Street Reform and Customer Protection
Act signed by President Obama, is expected to greatly increase 0.05 2 0.10
the fees all financial intuitions pay.
7. Mobile payments over smartphones and Near Field
Communications (NFC) are expected to greatly erode into credit 0.07 2 0.14
card usage.
8. In 2012, around 25% of homes are in a delinquent state, 4.7
0.07 3 0.21
million homes.
9. Percent of Americans owning checking accounts dropped from
92 to 88% between 2010 and 2011 and the number owning a 0.05 3 0.15
credit card dropped from 74 to 67%.
10. The Federal Reserve Board established the Consumer Financial
Protection Bureau, which has placed restrictions for lenders on 0.06 2 0.12
credit cards, mortgage loans, student loans, and auto loans.
TOTALS 1.00 2.58

JPM is addressing external issues slightly above average with a score of 2.58. A key area JPM
needs to focus on is entering more foreign markets. Currently JPM only serves 60 international
markets, while rivals Citigroup and Bank of America serve over 150 each. The threat of foreign
banks increasingly doing business in the USA is also a risk factor moving forward.

E. Internal Audit
Strengths

1. Largest bank in the USA with $2.3 trillion in assets and operations in over 60 countries.
2. Increased clients in Brazil, China, and India from 200 to 800 between 2008 and 2012 and expected to
increase to 2,000 by 2017.
3. Significant focus on USA small businesses providing $17 billion of credit in 2011 alone; added 1,200
relationship mangers and business bankers from 2009 to 2012.
4. Acquired Sempra in 2011 to become one of the top three firms in the world in commodity dealings.
5. Continue to add physical branches across the country while competitors are removing branches.
6. Provides detailed segment data for 7 different businesses.
7. Controls 12.3% of bonds in the USA, making JPM the largest holder among all banks.
8. JPM focuses heavily doing business with small businesses.
9. International Consumer & Community Banking segment reported a 71% increase in revenues in 2012.
Weaknesses

1. Many in upper management have dual titles.

2. Heavy reliance on the USA with over 80% of 2012 revenues derived from the USA up from 75% in
2011.
3. Less than 4% of Investment Bank revenues derived from Latin America.
4. Poor judgment in lending has resulted in JPM continued mortgage losses expected.
5. $48 billion in goodwill on the balance sheet.
6. Domestic Corporate/Private Equity reported $4 billion in revenues in 2011 and -$1 billion in 2012 for
a net change of -128%.
7. International Corporate/Private Equity experienced a -353% decrease in revenues from 2011 to 2012.
8. Domestic Consumer & community Banking segment reported only a 9% increase in revenues in 2012.
9. London Whale ethical issues plague JPM.

Financial Ratio Analysis

Profit Margin Percent JPM Industry S&P 500

Gross Margin NA NA 38.39
Pre-Tax Margin 32.28 -2.38 16.95
Net Profit Margin 23.82 -6.23 12.49

Liquidity Ratios
Debt/Equity Ratio 3.49 2.39 1.12
Current Ratio 0.31 NA 1.4
Quick Ratio 0.31 NA 1

Profitability Ratios
Return On Equity 11.32 8.13 22.17
Return On Assets 1 0.6 7.6
Return On Capital NA 0 10.1

Efficiency Ratios
Income/Employee 82,000 34,667 126,271
Revenue/Employee 373,827 285,591 1.04 Mil
Receivable Turnover NA 0 13.9
Inventory Turnover NA NA 13.3
Asset Turnover NA 0 0.8

JPM is a highly leveraged firm with over twice the current liabilities as current assets. Due to the high
levels of debt, JPM’s ROE is not as good as the number indicates.

Net Worth Analysis (in billions)

JPM Company Worth Analysis (in billions)

Stockholders' Equity $204
Net Income x 5 $107
(Share Price/EPS) x Net Income $202
Number of Shares Outstanding x Share Price $200
Method Average $178
 Citigroup Company Worth Analysis (in billions)
Stockholders' Equity $189
Net Income x 5 $39
(Share Price/EPS) x Net Income $142
Number of Shares Outstanding x Share Price $150
Method Average $130

JPM is worth slightly more than Citi, yet has substantially higher net income in 2012. Both JPM and
Citigroup are actually valued at a discount as stockholders’ equity is higher than shares outstanding x share
price.

IFE Matrix

Strengths Weight Rating Weighted Score

1. Largest bank in the USA with $2.3 trillion in assets and
0.11 4 0.44
operations in over 60 countries.
2. Increased clients in Brazil, China, and India from 200 to 800
between 2008 and 2012 and expected to increase to 2,000 by 0.08 4 0.32
2017.
3. Significant focus on USA small businesses providing $17 billion
of credit in 2011 alone; added 1,200 relationship mangers and 0.06 3 0.18
business bankers from 2009 to 2012.
4. Acquired Sempra in 2011 to become one of the top three firms in
0.06 4 0.24
the world in commodity dealings.
5. Continue to add physical branches across the country while
0.05 3 0.15
competitors are removing branches.
6. Provides detailed segment data for 7 different businesses. 0.04 3 0.12
7. Controls 12.3% of bonds in the USA, making JPM the largest
0.08 4 0.32
holder among all banks.
8. JPM focuses heavily doing business with small businesses. 0.04 3 0.12
9. International Consumer & Community Banking segment reported
0.06 4 0.24
a 71% increase in revenues in 2012.

Weaknesses Weight Rating Weighted Score

1. Many in upper management have dual titles. 0.02 2 0.04
2. Heavy reliance on the USA with over 80% of 2012 revenues
0.09 1 0.09
derived from the USA up from 75% in 2011.
3. Less than 4% of Investment Bank revenues derived from Latin
0.05 1 0.05
America.
4. Poor judgment in lending has resulted in JPM continued
0.05 1 0.05
mortgage losses expected.
5. $48 billion in goodwill on the balance sheet. 0.05 2 0.10
6. Domestic Corporate/Private Equity reported $4 billion in
revenues in 2011 and -$1 billion in 2012 for a net change of - 0.05 1 0.05
128%.
7. International Corporate/Private Equity experienced a -353%
0.05 1 0.05
decrease in revenues from 2011 to 2012.
8. Domestic Consumer & Community Banking Segment reported
0.04 2 0.08
only a 9% increase in revenues in 2012.
9. 0 0.02 2 0.04
TOTALS 1.00 2.68
JPM is doing slightly above average on addressing internal issues as indicated by the 2.68 score. A major weakness
of the firm is that they only have operations in 60 nations while competitors Citigroup and Bank of America have
business operations in over 150 nations. However, the company remains the largest in the USA based on assets and
net worth. JPM should expand further into Latin America and Europe.

F. SWOT
SO Strategies

1. Continue with plans to increase customer base in Latin America to 2,000 by 2017 (S2, S9, O1).
2. Form an alliance with Apple or Samsung to help facilitate mobile phone payments (S1, S8, S9, O6,
O8).
3. Allocate $200 million through 2015 to develop new relationships with small businesses in the USA
(S5, S8, O2, O4, O7).

WO Strategies

1. Spend $300 million in Europe for customer acquisitions (W2, O1).

2. Spend $100 million in Latin America to acquire new customers, especially in the investment bank
segment (W2, W3, O1).
3. Divest both the domestic and international Corporate/Private Equity segments (W6, O1, O2, O6).

ST Strategies

1. Spend $200 million on advertising in the USA to attract more small business customers (S1, S3, S5,
S8, T1, T2, T9).
2. Increase free checking and feeless products for customers who have a checking account with Chase
(S1, S5, T1, T2, T3, T4,T9).
3. Spend $2 billion by 2015 to increase stake in bonds and commodity financial instruments (S4, S7, T4,
T7, T9, T10).

WT Strategies

1. Divest both the domestic and international Corporate/Private Equity segments (W6, T5, T8, T10).
2. Spend $500 million to develop a better statistical model for predicting whom (and whom not) to lend
to and at what interest rate (W4, W6, W7, T5, T8, T10).
G. SPACE Matrix
FP
Conservative Aggressive
7

3 X = 1.0
Y = 1.4
2

CP IP
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7
-1

-2

-3

-4

-5

-6

-7
Defensive Competitive
SP

Internal Analysis: External Analysis:

Financial Position (FP) Stability Position (SP)
ROE 6 Rate of Inflation -1
Leverage 4 Technological Changes -6
Income 7 Customers Reliance on Banks -4
Net Worth 7 Competitive Pressure -7
Revenues 7 Barriers to Entry into Market -6
Financial Position (FP) Average 6.2 Stability Position (SP) Average -4.8

Internal Analysis: External Analysis:

Competitive Position (CP) Industry Position (IP)
Market Share -2 Growth Potential 6
Global Presence -4 Financial Stability 5
Branch Locations -2 Ease of Entry into Market 2
Variety of Services Offered -1 Government Regulation 2
Leverage -4 Profit Potential 3
Competitive Position (CP) Average -2.6 Industry Position (IP) Average 3.6

JPM lands in the aggressive quadrant of the SPACE Matrix buoyed by a strong internal financial position
and a favorable position vs their top competitors. External issues are a bit more problematic as the industry
is less stable than other industries and online competitors and community banks are easily able to enter. In
addition, smartphones with mobile payments may eventually replace credit card usage in the future.
Nevertheless, JPM should add more operations in Latin America, Europe, and Asia. In addition, more
devotion to commodities and bonds would be a better strategy than focusing on individual mortgages.
H. Grand Strategy Matrix

Rapid Market Growth

Quadrant II Quadrant I

Weak Strong
Competitive Competitive
Position Position

Quadrant III Quadrant IV

Slow Market Growth

JPM is located in Quadrant IV of the Grand Strategy Matrix based on its strong competitive position and
slow market growth of the industry. The banking industry is facing more governmental regulation, ease of
entry of online competitors, and a climate of low interest rates. As a result, banks are forcing higher fees
on consumers to make up for lost revenues, and overall the industry has experienced negative sales growth
over the last 5 years of around 3% compared to the SP 500 average of positive 3%. JPM should divest
areas of their business that deal with private and corporate equity, rethink its strategy of adding more
branch offices, and focus more on commodities and bonds.
I. The Internal-External (IE) Matrix
The Total IFE Weighted Scores
Strong Average Weak
4.0 to 3.0 2.99 to 2.0 1.99 to 1.0
4.0 I II III

High 2

3.0 IV V VI

JPM
The 3
EFE
Total Medium
Weighted 1
Scores

2.0 VII VIII IX

Low

1.0

Services Offered 2012 Revenues (in millions) Percent

Revenues
(1) Consumer &Community Banking $60,556 50%
(2) Corporate & Investment Banking 42,732 35
(3) Commercial Banking 9,471 8
(4) Asset Management 11,649 10
(5) Corporate/Private Equity (3,234) (3)
Totals $121,174 100%
JPM overall is in the hold and maintain cell of the IE Matrix. Corporate/Private Equity should be divested and an
expansion of the bonds and commodities found in the Corporate & Investment Banking division should be
expanded. While Consumer & Community Banking has the largest total revenues, it is unclear what margins are
obtained from this division. Increased competition from online banks may soon weight heavily on this division.

J. QSPM

Increase
Marketing to Increase
Small Global
Businesses in Presence
the USA
Opportunities Weight AS TAS AS TAS
1. Growing customer base for asset management and investment
bank services in Asia, Latin America, Africa and the Middle 0.07 1 0.07 4 0.28
East.
2. USA small businesses are continuing to grow and recover. 0.05 4 0.20 1 0.05
3. Many customers still prefer to do banking business face to face
when it comes to applying for a credit card, seeking financial 0.03 3 0.09 2 0.06
advice, and getting a loan.
4. Bank of America is laying off 36,000 people. 0.03 3 0.09 4 0.12
5. The USA government filed a civil lawsuit seeking $1 billion in
damages for misrepresenting the quality of home loans sold to 0.04 0 0.00 0 0.00
Fannie Mae and Freddie Mac.
6. Smart phone providers such as Apple and Android may wish to
form an alliance with banks to help facilitate the usage of mobile 0.04 0 0.00 0 0.00
phone payments.
7. Unemployment rate is improving, as a result qualifying more
0.03 3 0.09 2 0.06
people for home loans.
8. More and more consumers prefer online banking and
0.04 0 0.00 0 0.00
smartphone banking.
 Threats Weight AS TAS AS TAS
1. Banks are viewed like commodities to many potential customers. 0.04 3 0.12 1 0.04
2. Bank of America and Citigroup are two large domestic
0.09 4 0.36 2 0.18
competitors.
3. Foreign banks have yet to enter the USA market on a wide scale. 0.09 1 0.09 3 0.27
4. Increase in online banks such as Ally and ING Direct are
advertising heavily and marketing no fees on many products 0.09 4 0.36 1 0.09
where brick and mortar banks are increasing fees.
5. Low interest rates have helped to squeeze profits from banks. 0.06 0 0.00 0 0.00
6. The Dodd Frank Wall Street Reform and Customer Protection
Act signed by President Obama, is expected to greatly increase 0.05 0 0.00 0 0.00
the fees all financial intuitions pay.
7. Mobile payments over smartphones and Near Field
Communications (NFC) are expected to greatly erode into credit 0.07 0 0.00 0 0.00
card usage.
8. In 2012, around 25% of homes are in a delinquent state, 4.7
0.07 0 0.00 0 0.00
million homes.
9. Percent of Americans owning checking accounts dropped from
92 to 88% between 2010 and 2011 and the number owning a 0.05 1 0.05 3 0.15
credit card dropped from 74 to 67%.
10. The Federal Reserve Board established the Consumer Financial
Protection Bureau, which has placed restrictions for lenders on 0.06 1 0.06 3 0.18
credit cards, mortgage loans, student loans, and auto loans.

Increase
Marketing to Increase
Small Global
Businesses in Presence
the USA
Strengths Weight AS TAS AS TAS
1. Largest bank in the USA with $2.3 trillion in assets and
0.11 2 0.22 4 0.44
operations in over 60 countries.
2. Increased clients in Brazil, China, and India from 200 to 800
between 2008 and 2012 and expected to increase to 2,000 by 0.08 1 0.08 4 0.32
2017.
3. Significant focus on USA small businesses providing $17 billion
of credit in 2011 alone; added 1,200 relationship mangers and 0.06 4 0.24 1 0.06
business bankers from 2009 to 2012.
4. Acquired Sempra in 2011 to become one of the top three firms in
0.06 1 0.06 4 0.24
the world in commodity dealings.
5. Continue to add physical branches across the country while
0.05 4 0.20 1 0.05
competitors are removing branches.
6. Provides detailed segment data for 7 different businesses. 0.04 0 0.00 0 0.00
7. Controls 12.3% of bonds in the USA, making JPM the largest
0.08 1 0.08 2 0.16
holder among all banks.
8. JPM focuses heavily doing business with small businesses. 0.04 4 0.16 1 0.04
9. International Consumer & Community Banking segment reported
0.06 1 0.06 4 0.24
a 71% increase in revenues in 2012.
 Weaknesses Weight AS TAS AS TAS
1. Many in upper management have dual titles. 0.02 0 0.00 0 0.00
2. Heavy reliance on the USA with over 80% of 2012 revenues
0.09 1 0.09 4 0.36
derived from the USA up from 75% in 2011.
3. Less than 4% of Investment Bank revenues derived from Latin
0.05 1 0.05 4 0.20
America.
4. Poor judgment in lending has resulted in JPM continued
0.05 0 0.00 0 0.00
mortgage losses expected.
5. $48 billion in goodwill on the balance sheet. 0.05 0 0.00 0 0.00
6. Domestic Corporate/Private Equity reported $4 billion in
revenues in 2011 and -$1 billion in 2012 for a net change of - 0.05 0 0.00 0 0.00
128%.
7. International Corporate/Private Equity experienced a -353%
0.05 1 0.05 4 0.20
decrease in revenues from 2011 to 2012.
8. Domestic Consumer & Community Banking Segment reported
0.04 4 0.16 1 0.04
only a 9% increase in revenues in 2012.
0.02 0 0.00 0 0.00
9. 0TOTALS 3.03 3.83

The QSPM reveals that increasing global presence, especially in Latin America, Europe, and Asia, is a
more attractive strategy than marketing further to small businesses in the USA. This makes intuitive sense,
since 80% of all revenues in 2012 were derived from the USA.

K. Recommendations
1. Continue with plans to increase customer base in Latin America to 2,000 by 2017.
2. Form an alliance with Apple or Samsung to help facilitate mobile phone payments.
3. Spend $300 million in Europe for customer acquisitions.
4. Spend $100 million in Latin America to acquire new customers, especially in the investment bank
segment.
5. Divest both the domestic and international Corporate/Private Equity segments.
6. Increase free checking and feeless products for customers who have a checking account with Chase.
7. Spend $2 billion by 2015 to increase stake in bonds and commodity financial instruments.
8. Spend $500 million to develop a better statistical model for predicting whom and whom not to lend to
and at what interest rate.

L. EPS/EBIT Analysis (in millions expect for EPS and Share Price)
Amount Needed: $4,000
Stock Price: $53
Shares Outstanding: 3,780
Interest Rate: 5%
Tax Rate: 26%
 Common Stock Financing Debt Financing
Recession Normal Boom Recession Normal Boom
EBIT $35,000 $40,000 $45,000 $35,000 $40,000 $45,000
Interest 0 0 0 200 200 200
EBT 35,000 40,000 45,000 34,800 39,800 44,800
Taxes 9,100 10,400 11,700 9,048 10,348 11,648
EAT 25,900 29,600 33,300 25,752 29,452 33,152
# Shares 3,855 3,855 3,855 3,780 3,780 3,780
EPS 6.72 7.68 8.64 6.81 7.79 8.77

35 Percent Stock 65 Percent Stock

Recession Normal Boom Recession Normal Boom
EBIT $35,000 $40,000 $45,000 $35,000 $40,000 $45,000
Interest 130 130 130 70 70 70
EBT 34,870 39,870 44,870 34,930 39,930 44,930
Taxes 9,066 10,366 11,666 9,082 10,382 11,682
EAT 25,804 29,504 33,204 25,848 29,548 33,248
# Shares 3,806 3,806 3,806 3,829 3,829 3,829
EPS 6.78 7.75 8.72 6.75 7.72 8.68

The EPS/EBIT Analysis reveals debt financing is the most attractive option for JPM under all economic
situations presented. However, the analysis assumes JPM can obtain financing at 5% and with their
leverage this may or may not be feasible.

M. Epilogue
According to the Center for Responsive Politics, JPM spent more than $3 million in Q4 of 2012 on
special interest lobbying, the most for JPM since 2008. These expenditures were aimed at minimizing
JPM’s “London Whale” scandal, which led (unsuccessfully) to shareholder pressure to strip CEO Jamie
Dimon of his Chairman title. JPM’s spending on lobbying in Q4 dwarfed that of all other banks. For
calendar 2012, JPM spent more than $8 million on lobbying, compared to Citigroup spending $5.52
million, Goldman Sachs $3.54 million, Morgan Stanley $3.35 million, and Bank of America $2.95
million.or Q1 of 2013, USA banks collectively as well as JPM did exceptionally well. Collectively, USA
banks reported earnings of $40.3 billion, according to the FDIC. This Q1 2013 number was up from
$34.7 billion in Q4 of 2012, and up from $34.8 in Q1 2012. The FDIC also reported that "only 8.4
percent of USA banks reported negative net income in Q1 2013, the lowest proportion of unprofitable
banks since Q3 of 2006. The FDIC said that banks’ loan loss provisions fell to a six-year low during Q1
of 2013 to $11 billion, compared to $14.3 billion during Q1 of 2012. Citibank’s loan loss reserves
declined by $1.4 billion during Q1 2013, whereas JPM’s declined by $792 million. JPM’s reserves
covered 2.63 percent of their total loans in Q1 2013, while the bank’s net charge-off ratio was 0.54
percent.

Chapter 7: JP Morgan Chase

10 Basic Questions

1: D

2: A
3 B
4: D

5: A

6: A

7: D

8: A

9: A

10: C

15 Applied Questions

Earning per Share/Earnings before Interest and Tax (EPS/EBIT) Analysis

1: B

2: C

3: C

4: B

5: B

Company Valuation

1: A

2: C

3: C

4: B

5: A

Organizational Structure

1: A

2: C

3: D

4: D

5: A