JP Morgan Chase Co. Ticker: JPM

1. JP Morgan Chase Co.Ticker: JPM

2. JP Morgan’s Businesses • JP Morgan Operates in Six Divisions • Investment Banking • Provides advisory risk management services • Retail Financing Services • Provides Home Finance, Consumer and Small Business Banking and Insurance • Card Services • Provides general purpose credit cards in the United States • Commercial Banking • Provides infrastructure for corporations, municipalities, financial institutions and not-for-profit entities • Treasury and Securities Services • Provide cash management service • Asset and Wealth Management • Provides investment management to retail and institutional investors, financial intermediaries, high-net-worth families and individuals globally

3. JP Morgan’s Businesses (Cont’d) • The Group serves more than 90 million customers nationwide in addition to corporate, institutional, and government clients. • As of December 31, 2007, it operated through over 3,000 branches and serviced more than 9,000 ATM’s in 17 states. • Based on its size and the businesses it services, the bank’s primary competitors are Bank of America Corporation (BAC), Citigroup Inc. (‘C’), and Merrill Lynch Company, Inc. (MER)

4. Financial Indicators • Key Statistics • P/E (ttm): 13.25 • EPS (ttm): 3.71 • Profit Margin (ttm): 21.95% • Average Volume: 39,661,400 • 52-Week High: $53.25 • 52-Week Low: $36.01 • Dividend Yield: 3.2% • Annual Yield: $1.52 • Annual Revenue: $104B • Institutional Ownership: 71.3%

5. Revenue & EPS Annual Revenue Annual Earnings Per Share

6. Why JP Morgan?--Statistical Rationale • Investment Rationale/Risk • Statistical Rationale • S&P Recommendation is a 5-star, “Strong Buy”, and likewise places JPM’s qualitative risk assessment at “Low”, citing strong fundamentals and solid credit quality. This means that the total return is expected to outperform the total return of the S&P benchmark by a wide margin. • JP Morgan’s large consumer base and capital ratio of 8.3% will give it flexibility to move toward higher growth products and markets. • JP Morgan’s Balance Sheet is quite strong, particularly relative to its peers • Its reserve ratios totaled 2.2% of loans, which also place JPM near the top of its competitors. • Expected double-digit growth in average earning assets, as JPM should gain a larger market share in most of its businesses due to the exit of weaker parties. • Net interest income should grow into double digits, reflecting a more favorable interest rate environment. • This opinion, given by S&P analysts, is only strengthened by Wednesday’s rate cuts, which will help the bank’s profitability in its core operations

7. Why JP Morgan (Cont’d) • Quantitative cont’d: • Historically low P/E levels help, though this is not specific to JP Morgan, rather the sub-industry as a whole. • In analyst opinion, stock price to reach $53.00 over next year. Despite our desire for long-term gains, this should not be overlooked. • Dividend payments have historically been regular, generally at $.38/share

8. Why JP Morgan - Broader Concepts • Broader Rationale: • JPM’s large consumer base and its diversity in its geographic presence and product offerings provide significant protection from a local or regional downturn. • Balance sheet! JPM’s balance sheet is remarkably strong. Its level of capital provides outstanding reserves against future exposure to the next version of the sub-prime fiasco. • Jamie Dimon • CEO Jamie Dimon has proven his outstanding leadership over the past few years. He has built his executive leadership and solid foundational balance sheet specifically to exploit a crisis such as the current one. Additionally, he now has the reputation as the world banking leader, and will get the benefit of the doubt in the future as a result. • What’s more, now that he has acquired Bear Stearns (and subsequently is firing mass employees from the former firm), he has the opportunity to choose from the best and brightest that Bear had to offer.

9. Why JP Morgan - Broader Concepts cont’d • Bear Stearns acquisition • Since its recent acquisition , JP Morgan has raised the price of Bear Stearns’ stock to $10 from $2. A successful completion of this acquisition would give JPM a leading market share in the global prime brokerage business. In addition, it would strengthen JPM’s equities execution capabilities and market share. • With the massive support that JPM has been given by the Fed, which protects roughly $30 billion of Bear Stearn’s weakest assets, one can safely say that the purchase price is inexpensive and adds value to the JP Morgan franchise.

10. Risks and Hesitation • Stay away from the financial sector entirely, for clear reasons. • Risks • Simply put, sub-prime exposure and recessionary fears. • We can anticipate further pressure in JPM’s market sensitive business in 2008, as the environment remains challenging as a whole. • Revenue is expected to decline 3.5% in 2008, largely due to securities write-downs. • JPM still has significant exposure to leveraged loans and Alt-A securities, and while we still expect further write-downs in the coming quarter, though they will be at lower levels than in Q1 of 2008. • While we cannot be sure of the exact exposure, Sandler O’Neill stated, “J.P. Morgan’s credit quality metrics remain resilient and sub-prime mortgage exposure seems ‘manageable’ with $20 million in net charge-offs on a $9 billion portfolio.”

11. Risk

12. Peer Analysis

13. Industr y Comparisons -S&P Compustat