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. 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 History

4. 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 History

5. 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 History

6. 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 Macroeconomic view

7. 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 Macroeconomic view

8. 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 Past performance

9. 52 week range: 32.92 – 39.91 Past performance

10. JPM outperformed in last 3 months Past performance

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

12. 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 Business line review

13. 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 Business line review

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

15. 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 Business line review

16. 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. Business line review

17. 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 Business line review

18. 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 Business line review

19. 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 Business line review

20. 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 Business line review

21. 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) Business line review

22. Comparable companies Financial analysis JPMBACCIndustry Market Cap135.94B186.47B247.13B918B Employees160,968175,742287,000 Revenue (ttm)50.27B54.17B82.08B Net income (ttm)7.43B16.95B20.91B EPS (ttm)2.084.154.41 PE (ttm)18.6711.1811.0912.8 PEG (5 year expected)1.331.191.22 PS (ttm) 2.71 3.42 3.01

23. Model assumptions  Calculated 2005 using previous 3 quarters and estimating for 4 th 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 Financial analysis

24. Sensitivity Analysis EPS:F2005F2006F2007F2008F2009F2010 Diluted earnings per share2.563.104.25 4.77 5.00 5.25 Financial analysis Source of P/E P/EF2005F2006F2007F2008F2009F2010 Citigroup11.09 $ 28.40 $ 34.38 $ 47.16 $ 52.91 $ 55.45 $ 58.22 Bank of America11.18 $ 28.64 $ 34.66 $ 47.54 $ 53.34 $ 55.90 $ 58.70 Industry12.8 $ 32.78 $ 39.68 $ 54.43 $ 61.07 $ 64.00 $ 67.20 Sector14.24 $ 36.47 $ 44.15 $ 60.55 $ 67.94 $ 71.20 $ 74.76 16 $ 40.98 $ 49.60 $ 68.04 $ 76.34 $ 80.00 $ 84.00 JP Morgan18.67 $ 47.82 $ 57.88 $ 79.39 $ 89.07 $ 93.35 $ 98.02

25. 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 Recommendation

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