JPMorgan Chase & Co.

1. JPMorgan Chase & Co. Presentation for RCMP December 6, 2005 By Kristoffer Inton

2. Agenda • History • Macroeconomic view • Industry glance • Past performance • Business line review • Financial analysis • Recommendation

3. History Chase Manhattan • 1799- The Manhattan Company formed as a water provider, but also participates in banking • 1824- The New York Chemical Manufacturing Company formed to manufacture chemicals, but expands into banking and changes its name to Chemical Bank of New York • 1877- John Thompson formed Chase National • 1955- Chase National merged with Bank of Manhattan to form Chase Manhattan • 1996- Chemical Bank acquired Chase Manhattan and begins operating under the Chase Manhattan brand name * Courtesy of Hoover’s Online

4. History JP Morgan • 1864- Junius Spencer Morgan gained control of George Peabody’s London bank and renamed it J.S. Morgan & Co. • 1862- His son, J. Pierpont Morgan started his own firm in New York • 1890- Following J.S. Morgan’s death, his son united the two banks under J.P. Morgan & Co. • 1933- Glass-Steagall Act forced the company to split into the commercial bank (J.P. Morgan) and the securities company (Morgan Stanley) * Courtesy of Hoover’s Online

5. History JPMorgan Chase • 2001- Chase Manhattan acquired JPMorgan & Co. to form JPMorgan Chase & Co. • In 2004, JPMorgan Chase & Co. acquired Bank One • Bank One CEO Jamie Dimon becomes president, COO, and designated successor of current JPMorgan Chase CEO William B. Harrison * Courtesy of Hoover’s Online

6. Macroeconomic view Macroeconomic view • Margin compression- a flattening yield curve eats away at the interest rate spread that banks profit on • Change in bankruptcy laws- led to a spike in bankruptcy before changes took effect • Excess cash has led to companies increasing dividends, buying back shares, and increasing M&A activity

7. Macroeconomic view Industry glance • Mergers and mega-mergers; top 10 U.S. banks control two-thirds of the lending market and deposits • Large mergers formed extremely big banks (more than $1 trillion in assets) • Smaller banks competing on service focus • Although online customer access is critical, many customers still prefer human interaction • Firms prefer less costly internet and debit transactions over in-branch visits and check and credit card transactions

8. Past performance RCMP Portfolio History • Purchased on Oct. 6, 1999 as Bank One for 700 shares • Cost of position- $24,237.45 • Market value- $35,897.40 (+48.11%) • Currently own 924 shares

9. Past performance 52 week range: 32.92 – 39.91

10. Past performance JPM outperformed in last 3 months

11. Business line review Business groups • Investment Banking • Retail Financial Services • Card Services • Commercial Banking • Treasury & Securities Services • Asset & Wealth Management

12. Business line review JPMorgan Chase brands • Investment Bank • Treasury & Security Services • Asset & Wealth Management • Investment management • Private Bank • Private Client Services • Commercial Banking • Card Services • Retail Financial Services • Shifting focus to a re-energized Chase brand name • Utilize the trustworthiness of the Chase name and the momentum of the Bank One name

13. Business line review Benefits of the merger • Cost savings of $400 million • Headcount decreased by 6,500 (4%) • On target of total expense reduction of $3 billion by 2007 • Increased number of distribution channels • Coordinated branding and marketing • Efficiencies of scale • Broader product and service offering *as of July 1, 2004

14. Business line review Investment Bank • Platform includes corporate strategy and structure advising, equity and debt capital raising, risk management, research, proprietary investing and trading

15. Business line review Retail Financial Services • Serves individuals and small businesses with products such as checking and savings accounts, mortgage and home equity loans, small business loans, credit cards, investments, and insurance • 2,500 bank branches • 225 mortgage offices

16. Business line review Card Services • Over 94 million cards issued with over $282 billion in 2004 charge volume • Over 850 credit card partnerships with well-known brands such as AARP, Amazon.com, United Airlines, etc.

17. Business line review Commercial Banking • More than 25,000 clients including corporations, municipalities, financial institutions, and non-profit organizations • $50 billion in average loans • $66 billion in average deposits

18. Business line review Treasury & Securities Services • Provides transaction, investment, and information services to support CFOs, treasurers, issuers, and institutional investors • Three business lines- Treasury Services, Investor Services, and Institutional Trust Services

19. Business line review Asset & Wealth Management • Provide investment and wealth management services to financial advisors and their clients • Four key business segments- Institutional, Retail, Private Bank, and Private Client Services

20. Business line review Corporate • Private Equity- invest in leveraged buyouts, growth equity, and venture capital for the firm • Treasury- manage structural interest rate risk and investment portfolio of the firm • Corporate staff support- provide centralized support services

21. Business line review Things to watch for in 2005/2006 • Approximately $2 billion in cost savings at the end of 2005 • Reduction in private equity exposure • Jamie Dimon takes over as CEO in January 2006 • Increased cost-cutting measurements (i.e. shift of back-office duties of investment bank to India)

22. Financial analysis Comparable companies

23. Financial analysis Model assumptions • Calculated 2005 using previous 3 quarters and estimating for 4th quarter by using management outlook and quarter-over-quarter growth rates • Provision for credit losses as a % of loan balance • Conservative net interest income growth rates (8% -> 5%) • Slowing growth rates of Total Non-Interest Expenses to capture benefits of merger

24. Financial analysis Sensitivity Analysis

25. Recommendation Considerations • Positive • Benefits of merger beginning to take effect • Company focused on cutting costs to compensate for low margin business • Negative • Company feeling the pressure of flattened yield curve • Portfolio has heavy weighting in banking industry • Cyclical business, depends heavily on health of economy

26. Recommendation for JPM • Hold 924 shares of JP Morgan Chase • Merger benefits being realized • Strong business outlook for non-interest revenue businesses • Company focused on reducing costs