A equity research presentation for my Introduction to Financial Management Class

1. Equity Research Presentation Rutgers Business School Financial Management Professor John Longo Analysts: Daniel Esposito, Neal Patel, Justin Miko, Daniel Kostiw, Priyank Patel

8. JPM has not diluted existing shareholders… Capital Raising by JPM and Competitors: Source: Bloomberg

9. JPM has not diluted existing shareholders… Common Stock: $15.00 Billion Preferred Stock: $33.80 Billion Capital Notes, Convertible Bonds, Subordinated Debt: $1.82 Billion Other Capital Raisings: $0.07 Billion TOTAL: $50.69 Billion COMMON STOCK AS % of MARKET CAP: 8.96% Common Stock: $42.80 Billion Preferred Stock: $61.74 Billion Capital Notes, Convertible Bonds, $ 4.00 Billion Subordinated Debt: Other Capital Raisings: $ 10.10 Billion TOTAL: $118.64 Billion COMMON STOCK AS % of MARKET CAP: 30.75% Common Stock: $70.40 Billion Preferred Stock: $18.69 Billion Capital Notes, Convertible Bonds, Subordinated Debt: $00.00 Billion Other Capital Raisings: $44.74 Billion TOTAL: $133.83 Billion COMMON STOCK AS % of MARKET CAP: 73.31% Common Stock: $19.60 Billion Preferred Stock: $26.55 Billion Capital Notes, Convertible Bonds, $ 4.25 Billion Subordinated Debt: Other Capital Raisings: $00.00 Billion TOTAL: $50.40 Billion COMMON STOCK AS % of MARKET CAP: 15.01%

10. Earnings and Comparison of Peers JPM EPS and P/E: JPM Peer Analysis: 2.24% 0.23% 7.40% 0.70 182.84 $139.19 $16.09 BAC Bank of America Corporation 7.95% 0.73% 13.09% 1.43 32.78 $130.57 $27.87 WFC Wells Fargo & Company -10.82% -0.73% -28.95% 0.68 - $96.03 $4.20 C Citigroup 5.03% 0.36% 14.55% 1.09 26.49 $167.32 $42.46 JPM J.P. Morgan Chase Return on Equity (ttm): Return on Assets (ttm): Profit Margin (ttm): Price/Book: P/E(ttm): Market Cap (Bil): Stock Price: Ticker: Company: 19.00E $3.30E $.92E $.81E $.75E $.68E 2010 E 25.00E $2.18E $0.68E $0.82 $0.28 $0.40 2009 23.01 $1.37 $0.07 $0.11 $0.54 $0.68 2008 9.97 $4.38 $0.86 $0.97 $1.20 $1.34 2007 Fiscal Year P/E: Fiscal Year: Q4: Q3: Q2: Q1: EPS and P/E:

11. Industry Position “ The largest bank by market capitalization, JPMorgan is the only large financial institution that posted a profit during the financial crisis. This month, it posted its 20th-consecutive quarterly profit” - USA TODAY, 07/26/2009 "JPMorgan was conservative going into the downturn, and that strong financial position is enabling it to weather the current downturn better, and even be aggressive where required," -Tom Kersting, financial services analyst at Edward Jones. “ Among the four largest banks that received $25 billion each from the U.S. Treasury last fall as part of the Troubled Asset Relief Program (TARP), JPMorgan is the only one that has repaid the government. Citigroup and Bank of America went back to the trough, taking an additional $20 billion each, while Wells Fargo still hasn't been cleared to repay.” – USA TODAY, 07/26/2009 "You know, keep in mind, though there are a lot of banks that are actually pretty well managed, JPMorgan being a good example, Jamie Dimon, the CEO there, I don't think should be punished for doing a pretty good job managing an enormous portfolio," -President Barack Obama

13. Financial Statement Analysis (Continued) “ a precautionary step…While we recognize our tremendous obligation to shareholders to maintain dividend levels, we also understand that extraordinary times require extraordinary measures…Our action today is being done as a strong precautionary measure to help ensure that our fortress balance sheet remains intact -- even if conditions worsen significantly.“ Jamie Dimon, CEO, 02/23/2009 “ when we are confident that the economy doesn’t have another potential leg down….we would likely make a single significant move initially upping the dividend… to something in the range of $0.75 to $1.00 per year from the $0.20 level we’re currently at…we feel comfortable with our 30% to 40% payout rate of normalized type of earnings…first significant move could come sometime in the early part of 2010 but that requires the economy to stabilize…” Michael J. Cavanagh, CFO, 10/14/2009 Dividend Cut:

14. Valuation (Dividend Discount Model) Dividend Discount Model: 2010 Dividend: -$1.50 -Can payout according to historical figures -Increased earnings power in 2010 -Management to restore dividend Discount Rate for JPM: -9.837% -Fama-French 3 Factor Model Growth Rate: -6.63% -10 year historical ROE @ 10.20% -Payout Ratio @ 35%/ Plowback @65% Valuation: -1 Year JPM Target Price: $46.77 Expected Return: -1 Year JPM Return: 10.15% Source: JPM Investor Relations

16. Valuation Summary Equal Weighted P/E Model and Dividend Discount Model: -Expected 1 Yr Target Price of $54.74 -Expected 1 Yr Return of 28.92% -Implies a Market Capitalization of $216 Billion

20. Disclosures: Ownership and material conflicts of interest: The analysts of this report or their respective households do not own any shares, debt, or other financial instruments related to JPM. Furthermore, to the very best of our knowledge, we do not know of any other potential conflicts of interest that might bias this report. Compensation, Market Making, and Investment Banking: The analysts in this report are not compensated based on investment banking revenue. Furthermore, the analysts’ firm currently and has not been a market maker in J.P. Morgan & Co.’s securities. Additionally, the analysts’ firm has not, and does not have an investment banking relationship with J.P. Morgan Chase & Co. in any capacity. Disclaimer: The information set forth herein has been obtained or derived from sources generally available to the public and believed by the analysts to be reliable, but the analysts do not make any representation or warranty, express or implied, as to its accuracy or completeness. The information is not intended to be used as the basis of any investment decisions by any person or entity. This information does not constitute investment advice, nor is it an offer or a solicitation of an offer to buy or sell any security. This report should not be considered to be a recommendation by any individual affiliated with Rutgers University or Rutgers Business School. Ratings do not imply that the investor should allocate the security in a certain manner in their portfolio. Given when a security is expected to deliver negative returns over the twelve month period following the publication of the report. SELL Given when a security is believed to deliver flat returns over the twelve month period following the publication of the report. HOLD Given when a security is expected to deliver absolute returns of 15% or greater over the twelve month period following the publication of the report. BUY Significance of Rating: Rating: