Financial Controls: JPMorgan to Announce Earnings on Thursday, October 13 (Charts) *Financial Performance Review* JPM

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JPMorgan (JPM) will report Q3 2011 financial results on Thursday, October 13

JPMorgan (JPM) Financial Performance Review

JPMorgan will report Q3 2011 financial results on Thursday, October 13, before market open. The conference call will be at 10:00 a.m. ET.

JPMorgan financial performance charts for prior quarters have been posted on the JPMorgan Financial Performance page and will be updated for this next quarterly report.

The JPMorgan financial performance charts are:

JPMorgan Performance by the Quarters

Earnings per Share

Net Revenues, Operating Income, Net Income

Operating Margin, Net Margin, Capital-to-Assets Ratios
Return on Assets

Income Statement Components
Net Revenues and Earnings per Share Growth YoY
Operating Expense Ratio

JPMorgan Future and Past Financial Performance

Earnings per Share

Yahoo Finance Analysts Estimates: $0.96 avg, low estimate $0.77, high estimate $1.25, 28 analysts

Prior Quarter: $1.27

Prior Year: $1.01
JPMorgan Outlook: not provided

Prior Q2 2011 Financial Results

When JPMorgan reports Q3 2011, the 3 months ended September, financial results on October 13, JPMorgan is expected to miss, meet, or beat various Q2 2011 various prior quarterly results. These financial results are charted on the JPMorgan Financial Performance page. These prior quarterly GAAP financial results were:

Net Revenues $26.78 billion

Operating Income $8.13 billion

Net Income $5.43 billion

Earnings per Share $1.27

Operating Income Margin 30.35%

Net Income Margin 20.28%

Summary

Overall, Q3 2011 is expected to miss both prior Q2 2011 and prior year Q3 2010 financial results. The analysts average earnings per share estimate of $0.96 is reasonable, but lower than either quarter. Therefore, JPMorgan is projected to miss QoQ and YoY on all key metrics: Earnings per Share, Net Revenues, Operating Income, Net Income, Operating Margin, and Net Margin. The detailed quarter by quarter charts are on the JPMorgan Financial Performance page.

JPMorgan Chase Reports Flat Q2 2011 Financial Results: Strong, But Not Accelerating

JPMorgan Summary Q2 2011 JP Morgan's Q2 2011 financial results overall were strong, but somewhat mixed, and not an overall improvement over the prior Q1 2011. JPMorgan has definitely rebounded from the depths of the Great Recession and USA Financial System Crisis in 2008 and 2009, has adequate capital, and is profitable. Annual return on assets are a respectable 0.94%. Whether financial performance can be accelerated anytime soon is the question.

JPMorgan Income Statement Q2 2011 Financial performance continues strong, compared to the dismal results during the USA Financial System Crisis and Great Recession. Q2 2011 was $26.8B net revenues, $5.4B net income, and $1.27 earnings per share. For QoQ, net revenues were up +6.18%, net income was down -2.23%, and earnings per share were down -0.78% from the prior quarter Q1 2011. For YoY, net revenues were up +6.68%, net income was up +13.26%, and earnings per share were up +16.51% from prior year Q1 2010. However, QoQ results were slightly disappointing and YoY results are downshifting and will become flat if future quarterly financial performance does not accelerate. Net income has been above $4 billion and earnings per share above $1.00 for 5 quarters, maintaining an overall improvement since the dismal performance of Q3 and Q4 of 2008 at the lows of the USA Financial System Crisis. Both the operating margin of 30.35% and net margin of 20.28% continue strong, but dipped below the prior quarter Q1 2011 of 31.95% and 22.03%, respectively. The operating expense ratio (55.08%) continues historically high.

JPMorgan Balance Sheet Q2 2011 JPMorgan's "fortress balance sheet" of $2.247 trillion in total assets maintains an adequate capital ratio of 8.14% and adequate Tier 1 Capital and Tier 1 Common ratios of 12.4% and 10.1%, respectively. Total assets were up QoQ +2.21%.

JPMorgan Financial Performance by the Quarters (Charts)

JPMorgan Earnings Per Share (Chart) Below is a chart of quarterly earnings per diluted share. The EPS dipped during the Global Recession and USA Financial System Crisis but subsequently improved and has remained above $1.00 for 5 consecutive quarters. The Post-Great Recession peak has been the prior Q1 2011 of $1.28 as Q2 2011 dipped slightly below at $1.27.

JPMorgan Net Revenues, Operating Income, and Net Income (Chart) Below is a chart of quarterly net revenues, operating income, and net income. Because JPMorgan is a huge, complex financial organization with several divisions, consolidated revenues are reported net of interest expense. Therefore, there is no gross profit and margin compared to companies in other industries or sectors. Net Revenues peaked in Q1 2010 ($27.671B) and have yet to be regained although Q2 2011 is the second highest to-date ($26.779B). Current Operating Income of $8.127B is at an all-time high. Current Net Income of $5.431B has dipped just below the all-time high of $5.555B last quarter, Q1 2011.

JPMorgan Operating Margin, Net Margin, and Capital to Assets Ratio (Chart) Below is a chart of quarterly operating margin, net margin, and the capital to assets ratio. The current Operating Margin of 30.35% continues strong, but below the prior quarter and Post-Great Recession high of 31.95%. The current Net Margin of 20.28% continues strong, but below prior quarter and Post-Great Recession high of 22.03%. The Capital-to-Assets ratio (Capital Ratio) is stockholders' equity to total assets ratio, not the Tier 1 capital or common ratio. Tier 1 ratios are financial regulatory ratios and generally higher than the capital to assets ratio. JPMorgan's latest quarterly capital ratio is reasonable at 8.14% and within range of the previous 4 quarters. The December regulatory Tier 1 and Tier 1 capital and common ratios are 12.4% and 10.1%, respectively, which is adequate.

JPMorgan Return on Assets (Chart) Below is a chart of annual return on average assets per quarter. The total net income for the most recent 4 quarters is divided into average assets for the most recent 4 quarters to obtain a rolling annualized ROA, an annualized return on average assets for the 12 months (4 quarters) ended. The ROA dipped during the Global Recession but has significantly rebounded. The ROA has improved an impressive 9 consecutive quarters to the current and respectable 0.94%. Although JPMorgan is a huge, complex financial organization with $2+ trillion in total assets, a 1.00% ROA is a banking benchmark that has not quite been reached.

JPMorgan Income Statement Components (Chart) Below is a chart of major income statement components: NonInterest Revenue, Net Interest Income, Provision for Credit Losses, NonInterest Expense, and Net Income. Current NonInterest Revenue jumped to an all-time and Post-Great Recession high of $14.943B. Net Interest Income however has decreased 5 consecutive quarters to the current $11.836B, an 11-quarter low (since Q3 September 2008). Current Provision for Credit Losses rose above the prior quarter Post-Great Recession and multi-year low ($1.169B) to $1.810B. The Provision is still well below the damaging heights reached prior years in excess of $7B and $8B. Current NonInterest Expense, operating expenses, at $16.842B continue to increase dramatically and are almost double compared to Q1 2008. Current Net Income of $5.431B dipped below the prior quarter Post-Great Recession and multi-year high ($5.555B).

JPMorgan Growth Rates (Chart) Below is a chart of the annual (YoY, Y/Y, annual change) growth rates for net revenues and earnings per share. Current Net Revenues Growth of +6.68% is historically above average, but not exceptionally strong. The NRG chart average is +0.00%. Current Earnings per Share Growth of +16.51% is historically below average. The EPSG chart average is +41.00%.

JPMorgan Operating Expense Ratio (Chart) Below is a chart of the operating expense ratio for JPMorgan. This is a negative trend of an increasing operating expense ratio (NonInterest Expense divided by Total Revenues which are NonInterest Income and Interest Income). An increasing share of each dollar of revenues is being spent on operating expenses. Ultimately a continuation of this trend will affect profitability and already has. The current Operating Expense Ratio (55.08%) has exceeded 55% for the 2nd consecutive quarter. The ratio peaked last quarter at 55.23% has been above 50% for 6 consecutive quarters.