JPMorgan Chase & Company
As it name suggests, JPMorgan Chase is the product of many combinations involving some of the most storied names in American banking. In a 10-year stretch beginning in 1991, four of the biggest and oldest New York financial institutions -- Chase Manhattan Bank (founded by Aaron Burr), Chemical Bank and Manufacturer Hanover Bank were joined with J.P. Morgan and Company, the venerable investment bank. Then in 2004, the combined company merged with Bank One Corp., in a $58 billion deal that remains the largest of its kind.
That deal brought JPMorgan within a whisker of catching Citigroup as the world's largest financial institution, and combined Bank One's vast branch retail network with JPMorgan's investment banking franchise. It also brought James Dimon, a former rising star at Citigroup who became chief executive of Bank One after being forced out by Citigroup's chairman, Sanford I. Weill, his former mentor. Mr. Dimon became chief executive of the combined company, and its chairman in 2006.
While the company was formed by acquisitions, Mr. Dimon proved to be notably cautious about further big deals. And while losses from mortgage-related securities drove profits down at the end of 2007, JPMorgan in early 2008 appeared to have avoided the worst of the battering damaging its competitors. The company was in a good position to move quickly when Bear Stearns came face to face with bankruptcy in March 2008. Known as a tough negotiator, Mr. Dimon struck a bargain that had Wall Street gasping when it was announced on March 16, buying Bear Stearns for a mere $2 a share -- a tenth of its closing price -- together with a Federal Reserve loan for $30 billion secured by Bear Stearns's shaky portfolio.
With the advent of the credit crisis in September, Washington Mutual, a giant savings and loan that had been hobbled by bad mortgages, teetered on the brink of collapse. Federal regulators called a familiar number: James Dimon's. The head of the Federal Deposit Insurance Corporation told him the F.D.I.C. was about to seize WaMu — and then sell it to JPMorgan. JPMorgan paid $1.9 billion to the F.D.I.C. to acquire all of WaMu's assets, branches and deposits. With WaMu, JPMorgan has $905 billion in deposits and 5,400 branches nationwide, rivaling Bank of America in size and reach. But the bank was also responsible for absorbing $31 billion in losses tied to WaMu's troubled loans. WaMu shareholders and certain bondholders were wiped out, but a taxpayer funded WaMu bailout was avoided.
JPMorgan Chase reported a $2.1 billion profit in the first quarter of 2009, besting analysts' average forecasts. Revenue increased to $25 billion, up 45 percent from $16.9 billion in the period last year. Still, the results reflected continued turmoil in sectors like credit card services and private equity, businesses that reported losses or steep drops in revenue, reflecting the lingering effects of the recession on consumer spending and the credit markets.
Mr. Dimon is adamant that his company will pay back $25 billion in government bailout funds as soon as regulators allow. "Folks, it has become a scarlet letter," said Mr. Dimon, referring to the taxpayer infusion the bank received in October 2008. "We could pay it back tomorrow," he said. "We have the money."
And JPMorgan Chase did just that on June 17 when it became one of 10 banks to repay about $68 billion in bailout funds. JPMorgan's share was $25 billion; the bank allowed to do repay the money after it had passed a stress test given by government regulators.
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