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 nine months ended September 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 84-86 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.

Visa shares: On April 8, 2024, Visa Inc. commenced an initial exchange offer for its Class B-1 common shares. On May 6, 2024, the Firm announced that Visa had accepted the Firm’s tender of its 37.2 million Visa Class B-1 common shares in exchange for a combination of Visa Class B-2 common shares and Visa Class C common shares (“Visa C shares”), resulting in a $7.9 billion net gain on the share exchange recorded in the second quarter of 2024. As of September 30, 2024, the Firm had disposed of all of its Visa C shares through sales and through a donation to the Firm’s Foundation. Refer to Market Risk Management on pages 77-82, and Notes 2 and 5 for additional information.

First Republic: JPMorgan Chase acquired certain assets and assumed certain liabilities of First Republic Bank from the FDIC on May 1, 2023. As a result, the year-to-date results include the nine-month impact of First Republic compared with five months in the prior-year period. Where meaningful to the results, this is referred to in this Form 10-Q as the "timing impact" of First Republic. Refer to Notes 5 and 26 for additional information.

(a) Included operating lease income of $706 million and $695 million for the three months ended September 30, 2024 and 2023, respectively, and $2.1 billion and $2.2 billion for the nine months ended September 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 recorded in the second quarter of 2024. Refer to Notes 2 and 5 for additional information.

(d) Included the estimated bargain purchase gain of $2.8 billion for the nine months ended September 30, 2023 associated with the First Republic acquisition. Refer to Notes 5 and 26 for additional information.

Investment banking fees increased, reflecting in CIB:

•higher debt underwriting fees predominantly driven by higher industry-wide issuances in high-grade and high-yield bonds, as well as wallet share gains in investment-grade loans,

•higher advisory fees predominantly driven by the closing of several large transactions, and

•higher equity underwriting fees driven by increased industry-wide fees in follow-on offerings and wallet share gains in convertible securities offerings.

Refer to CIB segment results on pages 27-34 and Note 5 for additional information.

Principal transactions revenue decreased driven by:

•lower Fixed Income Markets revenue across most businesses, and

•a loss of $109 million in Credit Adjustments & Other in CIB, compared with a loss of $61 million in the prior year,

predominantly offset by

•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 27-34 and pages 40-42, respectively, and Note 5 for additional information.

Lending- and deposit-related fees decreased driven by:

•a decline in the amortization of the fair value discount on certain acquired lending-related commitments associated with First Republic in AWM, and to a lesser extent in CIB,

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

Refer to CIB and AWM segment results on pages 27-34 and pages 35-39, respectively, and Note 5 for additional information.

Asset management fees increased driven by higher average market levels in AWM and CCB, and net inflows in AWM. Refer to CCB and AWM segment results on pages 22-26 and pages 35-39, respectively, and Note 5 for additional information.

Commissions and other fees increased, predominantly due to higher brokerage commissions and fees, higher custody fees primarily in CIB, as well as higher annuity sales commissions in CCB. Refer to CCB, CIB and AWM segment results on pages 22-26, pages 27-34 and pages 35-39, respectively, and Note 5 for additional information.

Investment securities losses decreased, reflecting lower net losses associated with repositioning the investment securities portfolio in Treasury and CIO. Refer to Corporate segment results on pages 40-42 and Note 9 for additional information.

Refer to CCB segment results on pages 22-26 and Note 14 for information onmortgage fees and related income.

Card income increased in CCB, reflecting higher annual fees, and higher net interchange on increased debit and credit card sales volume, partially offset by an increase inamortization related to new account origination costs. Refer to CCB segment results on pages 22-26 and Note 5 for additional information.

Other income incre ased, reflecting:

•an increase associated with other equity investments in Corporate, primarily driven by a net gain compared to a net loss in the prior year related to Visa shares, 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 absence of the prior-year adjustment to the estimated bargain purchase gain associated with the First Republic acquisition in Corporate.

Both periods included impairment losses related to certain equity investments in CIB.

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 Notes 5 and 26 for additional information on the First Republic acquisition.

Net interest income increased, driven by theimpact of balance sheet mix and reinvestments in the investment securities portfolio; higher revolving balances in Card Services; higher Markets net interest income; and higher wholesale deposit balances. These factors were largely offset by lower average deposit balances in CCB and deposit margin compression across the lines of business.

The Firm’s average interest-earning assets were $3.6 trillion, up $290 billion, and the yield was 5.55%, up 23 basis points (“bps”). The net yield on these assets, on an FTE basis, was 2.58%, a decrease of 14 bps. The net yield excluding Markets was 3.86%, down 3 bps.

Refer to the Consolidated average balance sheets, interest and rates schedule on page 190 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 issuances in leveraged loans, high-grade and high-yield bonds,

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

•higher advisory fees predominantly driven by increased M&A activity.

Principal transactions revenue decreased driven by:

•lower Fixed Income Markets revenue, reflecting the net impact of declines across macro businesses and higher revenue in Securitized Products,

predominantly offset by

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

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

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, on higher volume. These factors were largely offset by a decline in the amortization of the fair value discount, primarily in AWM, as certain of the acquired First Republic lending-related commitments have expired.

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, predominantly due to higher brokerage commissions and fees, and custody fees, in both CIB and AWM, as well as higher annuity sales commissions in CCB.

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

Mortgage fees and related income increased in Home Lending, reflecting higher production revenue, which included the 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, partially offset by an increase in amortization related to new account origination costs.

Other income increased, reflecting:

•in Corporate

–the $7.9 billion net gain related to Visa shares recorded in the second quarter of 2024,

–the absence of the prior-year $2.8 billion estimated bargain purchase gain 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.

Both periods included impairment losses related to certain equity investments in CIB.

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 35-39 for additional information on CIFM.

Net interest income increased, driven by theimpact of balance sheet mix, reinvestments in the investment securities portfolio, and higher rates; higher revolving balances in Card Services; the timing impact of First Republic; higher Markets net interest income; and higher wholesale deposit balances. These factors were largely offset by deposit margin compression across the lines of business and lower average deposit balances in CCB.

The Firm’s average interest-earning assets were $3.5 trillion, up $228 billion, and the yield was 5.56%, up 55 bps. The net yield on these assets, on an FTE basis, was 2.64%, a decrease of 2 bps. The net yield excluding Markets was 3.85%, relatively flat when compared to the prior year.

The provision for credit losses was $3.1 billion, reflecting $2.1 billion of net charge-offs and a $1.0 billion net addition to the allowance for credit losses.

Net charge-offs included $1.9 billion inconsumer, predominantly driven by Card Services, reflecting the seasoning of newer vintages and continued credit normalization, and $158 million inwholesale.

The net addition to the allowance for credit losses consisted of:

•$882 million inconsumer, driven by Card Services, due to growth in revolving balances and changes in certain macroeconomic variables, and

•$144 million inwholesale, reflecting the impact of changes in the loan and lending-related commitment portfolios, and net downgrade activity, primarily in Real Estate, partially offset by changes in certain macroeconomic variables.

The provision in the prior year was $1.4 billion, reflecting net charge-offs of $1.5 billion and a $113 million net reduction in the allowance for credit losses.

Refer to CCB segment results on pages 22-26, CIB on pages 27-34, AWM on pages 35-39, and Corporate on pages 40-42; Allowance for Credit Losses on pages 73-75; Critical Accounting Estimates Used by the Firm on pages 84-86; and Notes 11 and 12 for additional information on the credit portfolio and the allowance for credit losses.

The provision for credit losses was $8.0 billion, reflecting $6.3 billion of net charge-offs and a $1.8 billion net addition to the allowance for credit losses.

Net charge-offs included $5.8 billion inconsumer, predominantly driven by Card Services, reflecting the seasoning of newer vintages and continued credit normalization, and $511 million inwholesale, including in Real Estate, concentrated in Office.

The net addition to the allowance for credit losses consisted of:

•$191 million inwholesale, reflecting:

The provision in the prior year was $6.6 billion, reflecting net charge-offs of $4.0 billion and a $2.5 billion net addition to the allowance for credit losses, which 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 recorded in the second quarter of 2024. Refer to Note 5 for additional information.

Compensation expense increased driven by:

•higher revenue-related compensation particularly in CIB and AWM, and

•growth in the number of employees, primarily in front office and technology.

Noncompensation expense decreased as a result of:

•lower legal expense, reflecting a decline in CIB, partially offset by an increase in AWM,

•lower indirect tax expense in CIB, and

•lower restructuring costs associated with First Republic,

•higher investments in the business, including marketing in CCB as well as in technology, and

•higher operating losses, predominantly in CCB.

Refer to Note 5 for additional information on other expense and Note 26 for additional information on the First Republic acquisition.

Compensation expense increased driven by:

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

•growth in the number of employees, primarily in front office and technology, and

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

Noncompensation expense increased as a result of:

•the $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation recorded in the second quarter of 2024 in Corporate,

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

•higher investments in technology, as well as marketing, predominantly in CCB,

•higher occupancy expense, which included the impact of net additions to the Firm's properties,

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

•higher distribution fees in AWM,

•lower legal expense, primarily reflecting the net impact of declines in CIB and Corporate, and an increase in AWM.

Refer to Notes 2 and 5 for additional information on Visa shares.

(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 predominantly 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.

Theeffective tax rate increased predominantly 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 recorded in the second quarter of 2024.

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