2 0 0 9 1 6 , A P R I L R E S U L T S F I N A N C I A L 1Q09
1Q09 Financial highlights � Net income of $2.1B; EPS of $0.40 � Generated record firmwide revenue of $26.9B and pretax, pre-provision profit of $13.5B (on a managed basis 1 ): � Record revenue and net income in the Investment Bank � WaMu integration on track, driving Retail Banking growth in deposits by 62% and in checking accounts by 126% � Fortress balance sheet strengthened further: � $87.2B of tangible common equity 2 , 7.2% of risk-weighted assets � Tier 1 Capital of $137.2B, 11.3% Tier 1 Capital ratio (9.2% excluding TARP capital) � Added $4.2B to credit reserves, bringing total to $28.0B; firmwide loan loss coverage 3 ratio of 4.53% R E S U L T S F I N A N C I A L 1 S ee notes 2 and 3 on page 21 2 S ee note 1 on page 21 3 Excludes the impact of purchased credit-impaired loans acquired as part of the WaMu transaction 1
1Q09 Managed results 1 $ in millions $ in millions $ O/ (U) 1Q09 4Q08 1Q08 Result s excl. Merger-relat ed it ems 2 Revenue (FTE) 1 $27,062 $7,740 $9,164 Credit Cost s 1 10,060 1,477 4,955 Expense 13,136 2,129 4,205 Merger-relat ed it ems 2 (aft er-t ax) (234) (1,298) (234) Report ed Net Income $2,141 $1,439 ($232) Report ed EPS $0.40 $0.34 ($0.27) 3 5% 1% 8% ROE R E S U L T S ROE Net of GW 3 7% 1% 12% ROTCE 3,4 8% 1% 13% 1 Managed basis presents revenue and credit costs without the effect of credit card securitizations. Revenue is on a fully taxable- F I N A N C I A L equivalent (FTE) basis. All references to credit costs refer to managed provision for credit losses. See notes 2 and 3 on slide 21 2 Merger-related items relate to the Bear S tearns and WaMu transactions 3 Actual numbers for all periods, not over/ under 4 S ee note 1 on slide 21 2
Investment Bank $ in millions $ in millions � Record net income of $1.6B on record revenue of $8.3B $ O/ (U) � IB fees of $1.4B up 14% YoY reflect ing strong debt underwriting 1Q09 4Q08 1Q08 Revenue $8,341 $8,643 $5,330 � Record Fixed Income Markets revenue of $4.9B reflecting: Invest ment Banking Fees 1,380 7 174 � Record results in credit trading, emerging markets and Fixed Income Market s 4,889 6,560 4,423 rates and very strong result s in currencies Equit y Market s 1,773 1,867 797 � Net markdowns of $711mm on legacy leveraged lending Credit Port folio 299 209 (64) commitments; includes substantial markdowns related Credit Cost s 1,210 445 592 to the auto industry � Net mortgage-related markdowns of $214mm Expense 4,774 2,033 2,221 Net Income $1,606 $3,970 $1,693 � Gain of $422mm due to widening of the firm’ s credit 1 spread on certain structured liabilities Key St at ist ics Overhead Rat io 57% NM 85% � Record Equity Markets revenue of $1.8B reflect ing: Comp/ Revenue 40% NM 41% � S trong trading result s and strong client revenue, Avg Loans ($B) $82.4 $89.5 $93.7 particularly in Prime S ervices Allowance for Loan Losses ($B) $4.7 $3.4 $1.9 � Gain of $216mm due to widening of the firm’ s credit NPLs ($B) $1.8 $1.2 $0.3 spread on certain structured liabilities 2 Net Charge-off Rat e 0.21% 0.47% 0.07% R E S U L T S � Credit Portfolio revenue of $299mm down 18% YoY 2 ALL / Avg Loans 6.68% 4.71% 2.55% 3 � Credit cost s of $1.2B include NCOs of $36mm and reflect a ROE 20% (28)% (2)% 4 weakening credit environment $336 $327 $122 VAR � Loan loss coverage ratio of 6.68% in 1Q09 up from 4.71% EOP Equit y ($B) $33.0 $33.0 $22.0 F I N A N C I A L in 4Q08 and 2.55% in 1Q08 1 Actual numbers for all periods, not over/ under 2 Loans held-for-sale and loans at fair value were excluded when calculating the loan � Expense up 87% YoY, primarily reflecting higher loss coverage ratio and net charge-off rate performance-based compensation expense on record 3 Calculated based on average equity. 1Q09 average equity was $33.0B 4 Average Trading and Credit Portfolio VAR revenue and the impact of the Bear S tearns merger 3
IB league tables League table results League table results Thomson Reuters � Continue to rank #1 in two capital raising league tables for 1Q09 YTD per Thomson 2008 1 1Q09 Reuters Rank Share Rank Share � Global Debt, Equity & Equity-related Global M&A Announced 2 #2 42.9% #2 26.5% � Global Equity & Equity-related US M&A Announced 3 #3 66.1% #2 33.6% � Ranked #1 in Global Fees for 1Q09 with 8.3% Global Debt, Equity & Equity-related #1 10.5% #1 9.5% market share per Dealogic US Debt , Equity & Equit y-relat ed #1 15.2% #2 15.0% Global Equity & Equity-related 4 #1 12.8% #1 9.5% US Equit y & Equit y-relat ed #1 21.2% #1 11.0% Global Debt 5 #1 10.4% #1 9.4% Global Long-term Debt 5 #2 8.9% #3 8.8% Long-t erm Debt 5 US #1 14.1% #2 15.0% Global Loan Syndications #6 6.3% #1 11.0% R E S U L T S US Loan Syndicat ions #3 16.5% #1 26.9% 1 S ource: 2008 data is pro forma for Bear S tearns 2 Global M&A for 2008 for Thomson Reut ers includes transactions withdrawn since 12/ 31/ 08 3 US M&A for Thomson Reut ers represent s any US involvement; 2008 includes t ransactions wit hdrawn since 12/ 31/ 08 4 Global Equity & Equity-related includes rights offerings F I N A N C I A L 5 Debt & Long-term Debt includes ABS, MBS and taxable municipal securities Note: Rankings as of 04/ 06/ 09; 2008 represents Full Year 4
IB key risk exposures Leveraged lending � Markdowns of $711mm, net of hedges, on the remaining legacy commitments � $11.5B of legacy commitments with gross markdowns of $6.0B, or 52% ; market value at 3/ 31/ 09 of $5.5B � $12.6B of legacy commitments at 12/ 31/ 08 � ($1.1B) reduction, or 9% of exposure � $11.5B of legacy commitments at 3/ 31/ 09 classified as held-for-sale � Valuations are deal specific and result in a wide range of pricing levels; markdowns represent best indication of prices at 3/ 31/ 09 R E S U L T S F I N A N C I A L 5
IB key risk exposures Mortgage-related $ in billions $ in billions Exposure as of Exposure Exposure as of 12/ 31/ 2008 reduction 03/ 31/ 2009 Prime $1.8 ($0.3) $1.5 Alt-A 4.3 ($0.3) 4.0 Subprime 0.9 (0.2) 0.7 Subtotal Residential $7.0 ($0.8) $6.2 Commercial 7.7 (1.2) 6.5 Mortgage Exposure $14.7 ($2.0) $12.7 � 1Q09 reductions of 14% on mortgage-related exposures � $214mm of net markdowns, largely driven by commercial � Prime / Alt-A exposure of $5.5B, difficult to hedge effectively � Prime - securities of $1.4B and $0.1B of loans R E S U L T S � Alt-A - securities of $1.3B and $2.7B of first lien mortgages � S ubprime exposure of $0.7B, actively hedged F I N A N C I A L � Commercial exposure of $6.5B, actively hedged � S ecurities of $2.4B, of which 46% are AAA-rated; 20% / 80% fixed vs. floating-rate securities � $4.1B of loans, primarily senior 6
Retail Financial Services— Drivers � Average deposits up 62% Retail Banking - $ in billions YoY and 2% QoQ, while Retail Banking - $ in billions deposit NII is up 69% YoY and down 3% QoQ 1Q09 4Q08 1Q08 � Branch production statistics: Key St at ist ics Average Deposit s $345.8 $339.8 $214.1 � Checking accounts up 126% YoY and 2% or ~485K Deposit Margin 2.85% 2.94% 2.64% QoQ Checking Acct s (mm) 25.0 24.5 11.1 � Credit card sales up 50% # of Branches 5,186 5,474 3,146 YoY and down 12% QoQ # of ATMs 14,159 14,568 9,237 � Mortgage originations up 32% YoY and 87% QoQ Invest ment Sales ($mm) $4,398 $3,956 $4,084 � Investment sales up 8% YoY and 11% or ~$442mm QoQ Consumer Lending - $ in billions � Total originations of $45.9B Consumer Lending - $ in billions � Mortgage loan originations down 20% YoY and up 1Q09 4Q08 1Q08 34% QoQ Credit Met rics: 3.12% 2.32% 1.57% Net Charge-off Rat e (excl. credit -impaired) — Increase QoQ reflects strong refinancing Allowance t o EOP Loans (excl. credit - 3.79% 3.16% 2.10% demand impaired) — For 1Q09, greater than 90% of mortgage Key St at ist ics originations fall under agency and government Home Equit y Originat ions $0.9 $1.7 $6.7 R E S U L T S 1 $141.8 $142.8 $95.0 Avg Home Equit y Loans Owned programs Mort gage Loan Originat ions $37.7 $28.1 $47.1 � Auto originations down 22% YoY and up 100% QoQ 1,2 $148.3 $149.8 $51.3 Avg Mort gage Loans Owned 3rd Part y Mort gage Loans Svc'd $1,149 $1,173 $627 � 3rd party mortgage loans serviced up 83% YoY and F I N A N C I A L Aut o Originat ions $5.6 $2.8 $7.2 down 2% QoQ Avg Aut o Loans $42.5 $42.9 $43.2 1 Includes purchased credit-impaired loans acquired as part of the WaMu transaction 2 Does not include held-for-sale loans 7
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