February 24, 2015 COMMERCIALBANKING Doug Petno, Chief

F ebruary 24, 2015 C O M M E R C I A L B A N K I N G Doug Petno , Chief Executive O fficer Commercial Banking
C O M M E R C I A L B A N K I N G Chas e Commercial Banking – a proven busines s model
Coverage s eg mented and focused on best serving client needs
Local delivery and decision making
Deep industry expertis e
Seasoned team with 20 years average experien ce Client an d community focus
Rigorous client selectio n
S tron g credit and co ntrol culture
Expense discipline
Lo ng-term, th rough-the -cycle orientation Through-the-cycle discipline
Building share in high p otential markets
Expanding our relations hips in targeted ind ustries
S electively growing C ommercial Real Es tate Investin g for growth
High quality, resilient earnings
Excellent returns
Steadily investing and adapting to regulatory changes Strong financial performance
Industry -leading, broad-based capabilities
Operating efficiencies as par t of J PMorg an Chase Competitive advantages 1
Agenda P age C O M M E R C I A L B A N K I N G 2 F ranchise s trength 2 2014 performance 8 Opportunities 15
F R A N C H I S E S T R E N G T H Commercial & Industrial overview Client focus thr ough dedicated segment an d industry coverage Small Business < $500K revenue Busines s Bank ing $500K - $20MM revenu e Corporate & Investment Banking > $2 B revenue Middle Market Banking & S pecialized Indus tries $ 20MM - $500MM revenue Corporate Client Banking & S pecialized Industries $ 500MM - $2B revenue Chase Commercial Banking Middle Market Banking & S pecialized Indus tries (MM) Corporate Client Banking & Specialized Indus tries (CCB) 41% CB net r evenue % CB net revenue1 28% CB net r evenue ~ 14,600 clients , ~3,000 government clients Clients ~1,500 corporate clients , ~1,800 F IG clients ~35,000 prospects Pr ospects ~1,400 pr ospects Mos tly private small to mid -s ized bus in es ses Client type Mos tly public companies with complex needs Local delivery an d personalized s ervice Coverage model Global coverage and d eep expertis e Note: Data as of YE2014 except w here noted. CB’s Commercial & Industrial (C&I) grouping is internally defin ed to include certain client segments (MM, which includes Nonprofit clients, and CCB ) and w ill not align w ith regulatory definitions. 1 CB revenue excludes 3% categor ized as oth er 3
F R A N C H I S E S T R E N G T H Commercial Real Estate overview Commercial Term Lending (CTL) Co mmunity Development Banking (CD B) N ote: D ata as of Y E2014 except where noted . CB’s Commercial Real Es tate (CRE) grou ping is internally defined to include certain client segments (Real Es tate Banking , Commercial Term Lending and Community D evelopment Banking) and will not align with regulatory definitions 1 CB revenue excludes 3% categorized as other Real Estate Ban king (REB) % CB net revenue1 18% 7% 3% Loans & co mmitments $54B in loans $ 23B in credit commitments $4B in credit commitments Clients ~35,0 00 investors & owners ~640 clients ~ 890 clients Portfolio attrib utes Multifamily, stabilized properties Top tier inv es tors w ith ins titutional quality as sets S pecialized con struction lending for affordable hous ing 4
F R A N C H I S E S T R E N G T H We pick the best clients Strong management track record Preferred industries w ith transparent operations Reputable in local markets S hared risk p hilosophy
H igh grow th, broad-based relations hips
S tr ong management and business fundamentals
D eeper, long-term relationsh ips – average of ~9 products /client
Well-diversified portfolio
Lower credit, operational and reputational risk ...results in hig her quality, lo wer risk...
Higher revenue per client
Low er credit costs through the cycle
Lower cost-to-serve (e.g . credit, compliance, o n-boarding, monitor ing)
Gr eater earnings resiliency O ur client s election criteria… Strategic clients with complex needs Client selection leads to s uperior through-the-cycle returns ...and more valuable clients 5
F R A N C H I S E S T R E N G T H Leveraging the entire JPM organ Chase platform Consumer & C ommunity Banking
A ccess to top is suer of U.S. Commercial Cards 3
Market- leading payments capab ilities fo r CB clien ts
Convenience of ~5,600 bran ches for CB clients
Small bus iness partnership w ith Busines s Bank ing As set Management
~ $120B in AUM from C B clients
Client refer rals to and from Private Bank Note: Data as of YE2014 1 Calculated based on gross domestic I B revenue for S LF, M&A, Equity U nderw riting and Bond Underwriting 2 G reenw ich Ass ociates : Greenwich 2014 Online Survey 3 2014 Nilson Report: Ranked b y purchase volume in 2013 Financial Strength & s tability Ass et Managemen t Corporate & Investment Bank Consumer & Community Banking Chase Commercial Bank ing Operational efficien cy Acces s to to p talent Iconic brands Technology, secu rity & infras tructure Community impact G lo bal fo otprint Thought leaders hip
International presence in more than 60 countries w ith capabilities to serve CB clients abroad
Joint IB coverage provides CB clients acces s to market-leading investment banking coverage
CB clients represent 35% of N orth America IB fees 1
C ollaboration w ith Tr easury Services to meet the u nique needs of CB client segments
#1 cas h manag ement portal in North America2 Corporate & Investment Bank 6
F R A N C H I S E S T R E N G T H D elivering our broad-bas ed, g lobal capabilities locally 1 Based on total count of revenu e-producing employees
P res ence in 118 U .S . cities, 46 of the top 50 M SA s and 14 majo r international cities
~ 1,370 b ankers1; average 20+ years o f industry experience
Bankers rooted and active in th eir communities
D e-centralized operating model with local client coverage, underwriting and service 200+ years in N ew Y ork 15 0+ years in Chicago Local delivery of underw riting, capital and service 25,000+ hours of community service Making a pos itive difference in our communities Global capabilities Civic involvemen t 5+ years in S eattle 7
Agenda P age C O M M E R C I A L B A N K I N G 8 2014 performance 8 Franchis e strength 2 Opportunities 15
2 0 1 4 P E R F O R M A N C E Expansion market revenue ($MM) 297 327 10% New offices opened 4 4 H eadcount 6,848 7,262 6% 2014 results – strong underlying bu sines s performance 1 Investment Ban king and Card Services revenue represent gros s revenue generated by CB clients . Investment Banking inclu des Banking and Markets revenue. Card Services in cludes Commercial Card and Paymentech revenue 2 P rior year revenue for Card Services and Inter national Revenue w ere restated to conform to cu rrent pres entation 3 D eno tes overseas revenue from U .S . multinatio nal clients ($B, except w here noted) 2013 2014 Y oY (%) Loan balan ce (EO P) 1 37 149 8% Client deposits & other third-party liabilities (avg.) 198 204 3% Investment Banking revenue1 1.7 2.0 18% C ard Services revenu e1,2 ($M M) 469 4 90 4% International revenue2,3 ($MM ) 264 304 15% Record Risk discipline Achieving target returns Net charge-offs (%) 0.03 % 0.00% N on-performing loans (%) 0.37% 0.22 % Revenue 7.1 6.9 (3%) Net income 2.6 2.6 (0%) Overhead ratio (%) 37% 39% A llocated capital 13.5 14 .0 4% Return on equity (%) 19% 18% Record res ults Steady investment 9
2 0 1 4 P E R F O R M A N C E 5 6% 35% 9% M M CCB CRE Stab le and div ers ified deposit base Excellent deposit gathering franchise M anaging depo sits closely Average 2014 dep osits by segment1 ($B) Commercial Banking is w ell pos itioned for ris in g rates
D epo sit base built th rough s elective new clien t acquisition and deep, broad-bas ed relationships
Anticipate red uction in depos its over time – clients w ill d eploy cash as economy s trengthens
Despite ad jus tments and impact of regulation, our p ortfolio pos sesses tremendous future value
Continuing to monitor market in anticipation of changes in r ate environment $204 B 56% 23% 11 % 10% DD A S avings S weeps O ther $204B A verage 2014 deposits by type1 ($B) 1 Deposit balance includes client deposits and other third party liabilities 10
2 0 1 4 P E R F O R M A N C E $51 $62 $74 $74 $78 2010 2011 201 2 2013 2014 Commercial & Indus trial loan portfolio – s teady, disciplined grow th Note: CB’s Commercial & Industrial (C &I) grouping is internally defined to include certain client s egments (M M, w hich includes N onprofit clients , an d CCB) an d will not align with regulatory definition s. 1 I ndustry data sources from FRB H.8 A ssets and Liabilities of Commercial Banks in the Un ited S tates (not s eas onally adjusted) 2 Ass et Bas ed Lending Commercial & Industrial por tfolio ($B, EOP ) 30% 31% 32% 30% 32% 0.61% 0.09% 0.00% 0 .06% 0.02% Utilization (% ) Total N COs
D ivers ified loan grow th acros s C&I business
F ifth cons ecutive year of EO P loan gr owth in M M with expansion market loan growth up 7% YoY
CCB loans up 8% w ith in creased utilization fro m indu strials, energy, cons umer goods & tech clients
A BL2 up 28% Y oY with $4B in origin ations
Limited expos ure to private equity
Competition fo r quality as sets continues to be strong
Seeing higher hold levels, longer tenors and some covenant light d eals
Continued loan spread compr es sion
Loan utilization and early 2015 indicators show s oft volume CB performance s ummary 2014 industry o bservations 11
2 0 1 4 P E R F O R M A N C E Commercial Real Estate – industry-leading loan growth
Strong, double digit loan growth in CTL an d REB
CRE loan balances have increas ed for 28 consecutive months with reco rd originations in 2014
New originations’ credit metrics in line w ith p ortfolio
CTL p ortfolio grew $5B with $13B in originations
63% of 2014 CTL originations from n ew financings
Remained the #1 multifamily lender in the U.S.2
R EB portfolio grew $2.3B w ith $10.3 B in originations CB performance summary
Continu ed strong fundamentals acros s pro perty types and markets, p articularly in multifamily
Demand for U .S. commercial real estate remains s trong
Transaction v olume continues to increas e
Equity inflow s help main tain LTV and LTC ratios
Pres sure on spreads, but credit structures remain s ound
Expect 2015 to look like 2014 2014 indus try observations $48 $50 $ 55 $63 $71 2 010 2011 2012 2013 2014 Commun ity D evelopment Bank ing Real Es tate Banking Commercial Term Lend ing CRE loan portfolio ($B, EOP ) $3 $14 $21 $22 $23 1.23% 0.24% 0.04 % 0.01% (0.01%) Total Originations ($B) Total NCO s Note: CB’s CRE grouping is internally defined to include certain client s egments (R EB, CTL and CDB) and will not align with regulatory definitions 1 Industry data s ourced from FRB H.8 A ss ets an d Liabilities of Commercial Banks in the U nited S tates (not seas onally adjusted) 2 SN L Financial based on FD IC data as o f 3Q1 4 12
2 0 1 4 P E R F O R M A N C E 2008 2009 2010 2 011 2012 2013 2014 2008 2009 2010 2 011 2012 2013 2014 1 Based on end of period loans 2 Peer averages include CB-equivalent s egments or wholesale portfolios at BAC, CM A, F ITB, K EY, PN C, US B, WF C 3 Through-the-cycle, 2008-20 14 average 4 Excluding pre-acquisition WaM u originations, Chase represented 1.67% in 2009 and 1.02% in 2010 5 Excluding pre-acquisition WaM u originations, Chas e repres ented 0.93% in 2009 and 0.74% in 2 010 6 Commercial Banking net charge-offs for 2012 and 2013 were 0.03% Commercial Ban king Peer average2 Commercial Banking P eer average2 Continued strong credit performance N on-perfo rming loans1 Net charge-o ffs TTC average3 Peers: 0.98% CB : 0.36% CB Target: < 0.50% 2.1% 4.2% 3.1% 2.0% 1.1% 0.6% 0.4% 0.9% 2.9% 2.0% 0.9% 0.5% 0.4% 0.2% Peers CB 1.4% 2.2% 2.0% 0.8% 0.3% 0.1% 0.1% 0.4% 1.0% 0.9% 0.2% 0.0%6 0.0%6 0 .0% Peers CB Client s election and thr ough-the -cycle dis cipline driv e superior credit performance 4 4 5 5 13
2 0 1 4 P E R F O R M A N C E Clos ely monitorin g mark et fun damentals 1 A verage for senior bankers, underw riters, engineers and credit management 2 Source: Tho ms on Reuters ; Spons or volume includes deals for s ponsor owned borrowers per Thomson Reuters league table data; Middle Market defined as s ales size ≤ $500MM ; Deal size ≤$500 MM CB O il & gas total outstand ings ($6.0B) O il & gas
Total portfolio of $6.0B in outstandings and $15.0B in exposure
4% of overall CB outstanding s
5% of overall CB exposure
Well structured portfolio with strong as set coverage
94% of E&P outstandings s ecured by reserves
Deep industry exp erience throug h cycles
24 years aver age experience1
Limited s econdary impact on portfolio
Texas economy remains strong
Limited real estate expos ure Leveraged len ding
M onitoring regulatory and competitive environment closely
Limited s ponsor -backed exposure representin g only 1 .3% of CB ex posure
Maintained cr edit discipline on structure
Focus on long -term clients
#1 in non-spons or ow ned middle market loan syndications vs. #21 in spons or ow ned2 K ey watch areas 79% 84% 95% 88% 11% 21% 16% 89% $25.0 $23.7 $22.9 $10.6 $10.3 F irm A Firm B Ch as e Firm C Firm D Non -s ponsor Ow ned Spons or O wned 201 4 M iddle M arket loan s yndication league table2 ($B) O verall #3 Non-s ponsor #1 S ponsor #21 5% 12% Midstream/ pipeline 6% Refining 1% O il field S ervices 14% Explo ration & p roduction 70% Other 7% Integrated 1% 14
A genda Page C O M M E R C I A L B A N K I N G 15 Opportunities 15 F ranchise strength 2 2014 performance 8
O P P O R T U N I T I E S Extending our proven business mod el to new , high potential markets 2010 20 11 2012 2013 2014 Long-term target Total expansion market revenue1 ($MM ) $1,000 $53 $139 $232 $297 $3 27 # Clients # Bankers2 Loans EOP ($B) Avg. deposits3 ($B) 19 Expans ion cities 201 0 footprint 34 Expansion cities 2014 footprint 820 1,100 1,350 1,460 1,6 70 74 103 12 2 127 152 $1 .6 $4.4 $6.8 $8.2 $8.8 $1.3 $3.0 $4.7 $5.9 $7.8 P atien t, disciplined franchise expansion 1 Prior year revenue is restated to con fo rm to current presentation 2 Bas ed on total count of revenue-producing employees 3 Includes client deposits and other third party liabilities 16
O P P O R T U N I T I E S Indus try-focused to better s erve our clients and manage ris ks
Clients expect flu ency in th eir indus try and the iss ues / opportunities they face
A bility to deliver client-tailored s olutions
Indus try-s pecific risk management parameters
Credit specialists aligned with industries
Demon strate continuity through the industry and company lifecycle … w hile best managing industry ris ks Aligning to client industry needs… Specialized indus tries Apparel Pow er & utility Financial s ervices H eavy equ ipment Beverage F oreign mu ltinational ~4% of G DP Healthcare ~7% of G DP Agribusiness & food ~3% of G DP Media & entertainment ~ 4% of GD P O il & gas ~6% o f GD P Technology ~ 6% of GD P G overnments Source: Bureau of Economic A nalys is , GD P es timates fo r full-y ear 2 014 by industry calculated to bes t mirror scope of each specialized industry ~1% of GD P ~2% of G DP ~7% of G DP ~1% of G DP ~1% of GDP N /A 17
O P P O R T U N I T I E S $238 $264 $304 20 12 2013 2014 Gross IB fees $1.6 $1.7 $ 2.0 2012 201 3 2014 $429 $469 $490 2012 2013 201 4 Gr oss IB fees Deepening client relationsh ips through unique capabilities Note: C&I client defined as any active relation ship w ith banker as signment at 12/31/2014 1 P rior year revenue for Card Services and Intern ational Revenue w er e res tated to conform to curr ent p res entation 2 F X/markets represents number of clients with total F X/market related fees paid to JPM C exceeding $ 10,000 in 2014 3 International repres ents total u nique holding companies utilizing any international product or s ervice, including liquidity, core TS , credit, FX/markets or trade finance 4 Corporate finance represents n umber of clients p aying investment bank ing related fees exceeding $10 0,000 in any one of the last three years as a ratio to 2014 clients 82% 79% 47% 28% 22% 21% 14% 7% 7% 4% Liquidity Core TS Credit Commercial card Merchant services FX/ markets ² International³ Inves tment management Corporate finance Trade finance CB C&I client usage rates by product1 (%) Inves tment Banking revenue ($B) Card Services revenue1 ($MM ) International reven ue1 ($MM ) 12% CAG R 7% CAG R 13% CAG R 4 18
O P P O R T U N I T I E S Continuing build-out of Inves tment Banking capabilities – new $3B revenue targ et 1 Represents the total r evenue related to investmen t ban king products s old to CB clients 2 Commercial Banking clients and pros pects jointly covered by CIB CIB partnership has resulted in differentiated client coverage Commercial Banking gr oss in ves tment banking revenue1 ($B) 2008 2009 2010 2011 20 12 2013 2014 New long -term target $1.2 $1.3 $1.4 $1.6 $1.7 $3.0 $1.0 $2.0 19
O P P O R T U N I T I E S O pportun ity to con tinue capturing market share in Commercial Real Es tate
D ifferentiated platform from bank and non-bank competitors
Full pro duct capabilities
Service and supp ort throughout life of loan
F ocus o n sp eed and simp licity at every client touch point
Loan proces s efficiency
Certainty of execution
Execution of any sized deal
Continue investmen t in business
S calab le o rigination platform
O ver $1T in near-term maturities to drive future orig ination volumes1
S ignificant o pportunity to refinance GS E maturities
JPM C attractive for clients looking to divers ify financing s ources
C apital inflows continu e to suppo rt strong credit metrics Continue taking share
D is ciplined market s election based on fundamentals
Proactively manage originations
A void volatile as set class es
Limit concentration levels
S elect high quality clients
CTL: Long -term investors focus ed on stable cash flow s
REB: Leading real estate companies with strong tr ack r ecords Identify markets & clients Relatio nship-driven mo del U nique value proposition Focus on fundamentals Capture market opportunities M aintaining close watch on market fundamentals while positioning our CR E fran chise fo r grow th 1 Trepp LLC, data as of 9/30/2014 20
O P P O R T U N I T I E S We remain confident in our ability to produce s uperior returns through the cycle Proven business model Deeper relations hips through unmatch ed capabilities
F oreign exchange
I nterest rate risk management
International banking
Investmen t management
P remier investment banking
Leadin g treas ury s ervices platform
Top iss uer of commercial cards1
P roprietary mer chant s ervices Revenue N ote: D ata as of Y E201 4 except w here noted through-the-cycle (TTC); TTC represents average of last seven years 1 2014 Nils on Report: Ranked by purchas e volume in 2013 2 Loan-to -d epos it ratio peer average includes C B-equivalent s egments at BA C, CMA , KEY, P NC, U SB, WFC 3 O verhead ratio peer average includes CB -equivalent s egments at CM A, F ITB, K EY , PN C, USB, WF C 4 NCO ratio peer av erage includes CB-equivalent segments or wholesale p ortfolios at BAC, CMA , FITB, KEY , PNC, U SB, WFC Superior returns Our proven bus ines s model allow s us to abs orb incremental capital and continue to invest w hile prod ucing superior results through the cycle
Low er loan-to- deposit ratio vs. peer average2 (69% vs. 121%)
Significant value from deposits
Firm-wide funding advantage fr om being part of J PMo rgan Chase D epos its
Relentles s exp ens e management
600bps low er overhead ratio vs. peer average3 fo r 2014 (39% v s. 45%) Expens es 62bps lower through -the-cycle N COs vs. peer average4 (36bps vs . 98bps) Credit costs 21
O P P O R T U N I T I E S Executing our proven s trategy N ote: TTC = through -the-cycle 1 Inves tment banking revenue represents gros s investment bank ing revenue generated by CB clients – including B anking and Markets revenue 2 Denotes overseas revenue from U.S. multinational clients F inancial targets Execute grow th initiatives I nves tment bankin g 1 International2 M ark et expansion Optimize returns TTC retu rn on eq uity Long -term target $327 MM $2.0 B $304M M 18% 2014 actual $1.0B $3.0B $ 500MM 18% +/- 2010-2014 grow th 57% CAG R 10% CAG R 22% CAG R M aintain expens e & credit discipline TTC overhead ratio TTC net charg e-offs 39% 0.00% 35% < 0.50% 36% avg. 0.24% avg. 24% avg. 22
O P P O R T U N I T I E S Delivering for our clients
Safeguard our clients and o ur bus iness
C ontinue to enhance critical capabilities Fortres s con trols and compliance
Execute our dis ciplined growth strategy
Adapt to new regulatory fr amework
Deploy capital efficiently O ptimize r eturns
D eliver proactive, bes t-in-clas s cus tomer s ervice
Improve s peed to respond Be the eas iest bank to do business with
Our people are our competitive advantage
Have the best people in our markets Inves t in our team
Bring to bear capital, advice and ideas
D eliver industry insight and solutions
Stand by our clients Help our clients succeed Our commitment is to build the bes t commercial bank by helping our clients succeed and making a positive d ifference in our communities Chase Commercial Banking priorities 23