JPM Risk reporting

The Firm continues to monitor its exposure to Russia which was approximately $350 million as of December 31, 2023. This amount excludes certain deposits placed on behalf of clients at the Depository Insurance Agency of Russia. ##############Top 20 country exposures (excluding the U.S.)(a)########## December 31, (in billions)############2023############2022(f) ####Deposits with banks(b)####Lending(c)####Trading and investing(d)####Other(e)####Total exposure####Total exposure Germany##$##69.8##$##12.1##$##2.1##$##0.8##$##84.8##$##93.2 United Kingdom####36.4####25.5####13.5####1.7####77.1####70.1 Japan####29.4####2.4####3.9####0.3####36.0####55.8 Australia####9.7####6.9####1.7####—####18.3####25.7 Brazil####5.2####5.3####6.2####—####16.7####17.8 Canada####2.3####11.4####2.0####0.3####16.0####14.4 China####3.5####5.5####5.0####—####14.0####13.7 Switzerland####5.2####3.6####1.2####0.9####10.9####15.3 France####0.6####10.9####(2.2)####0.8####10.1####18.1 Singapore####1.9####3.8####3.8####0.3####9.8####9.9 India####1.2####3.8####4.3####0.4####9.7####9.0 Mexico####1.1####3.7####3.4####—####8.2####5.4 Belgium####5.6####2.1####0.3####—####8.0####9.2 South Korea####0.8####3.2####3.5####0.3####7.8####10.0 Saudi Arabia####0.6####5.2####1.9####—####7.7####7.9 Spain####0.3####5.2####0.8####—####6.3####3.4 Italy####0.1####5.9####(0.2)####0.2####6.0####5.8 Netherlands####0.1####6.4####(1.2)####0.3####5.6####7.1 Malaysia####3.5####0.2####0.4####0.1####4.2####5.3 Luxembourg####0.9####2.2####0.9####—####4.0####4.2


JPM Risk reporting

(a)Country exposures presented in the table reflect 88% of total Firmwide non-U.S. exposure, where exposure is attributed to an individual country based on the Firm’s internal country risk management approach, at both December 31, 2023 and 2022.


JPM Risk reporting

(b)Predominantly represents cash placed with central banks.


JPM Risk reporting

(c)Includes loans and accrued interest receivable, lending-related commitments (net of eligible collateral and the allowance for credit losses). Excludes intra-day and operating exposures, such as those from settlement and clearing activities.


JPM Risk reporting

(d)Includes market-making positions and hedging, investment securities, and counterparty exposure on derivative and securities financings net of eligible collateral. Market-making positions and hedging includes exposure from single reference entity (“single-name”), index and other multiple reference entity transactions for which one or more of the underlying reference entities is in a country listed in the above table.


JPM Risk reporting

(e)Includes clearing house guarantee funds and physical commodities.


JPM Risk reporting

(f)The country rankings presented in the table as of December 31, 2022, are based on the country rankings of the corresponding exposures at December 31, 2023, not actual rankings of such exposures at December 31, 2022.


JPM CLIMATE RISK MANAGEMENT

Climate risk is the risk associated with the impacts of climate change on the Firm’s clients, customers, operations and business strategy. Climate change is viewed as a driver of risk that may impact existing types of risks managed by the Firm. Climate risk is categorized into physical risk and transition risk.


JPM CLIMATE RISK MANAGEMENT

Physical risk refers to economic costs and financial loss associated with a changing climate. Acute physical risk drivers include the increased frequency or severity of climate and weather events, such as floods, wildfires and tropical cyclones. Chronic physical risk drivers include more gradual shifts in the climate, such as sea level rise, persistent changes in precipitation levels and increases in average ambient temperatures.


JPM CLIMATE RISK MANAGEMENT

Transition risk refers to the financial and economic implications associated with a societal adjustment to a low-carbon economy. Transition risk drivers include possible changes in public policy, adoption of new technologies and shifts in consumer preferences. Transition risks may also be influenced by changes in the physical climate.


JPM Organization and management

The Firm has a Climate Risk Management function that is responsible for establishing and maintaining the Firmwide framework and strategy for managing climate risks that may impact the Firm. The Climate Risk Management function engages across the Firm to help integrate climate risk considerations into existing risk management frameworks, as appropriate.


JPM Organization and management

Other responsibilities of Climate Risk Management include: •Setting policies, standards, procedures and processes to support identification, escalation, monitoring and management of climate risk across the Firm •Developing metrics, scenarios and stress testing mechanisms designed to assess the range of potential climate-related financial and economic impacts to the Firm •Establishing a Firmwide climate risk data strategy and the supporting climate risk technology infrastructure


JPM Organization and management

The LOBs and Corporate are responsible for the identification, assessment and management of climate risks present in their business activities and for adherence to applicable climate-related laws, rules and regulations.


JPM Governance and oversight

The Firm’s approach to managing climate risk is consistent with the Firm’s risk governance structure. The LOBs and Corporate are responsible for integrating climate risk management into existing governance frameworks, or creating new governance frameworks, as appropriate.


JPM Governance and oversight

The LOBs, Corporate and Climate Risk Management are responsible for providing the Board Risk Committee with information on significant climate risks and climate-related initiatives, as appropriate.


JPM OPERATIONAL RISK MANAGEMENT

Operational risk is the risk of an adverse outcome resulting from inadequate or failed internal processes or systems; human factors; or external events impacting the Firm’s processes or systems. Operational Risk includes compliance, conduct, legal, and estimations and model risk. Operational risk is inherent in the Firm’s activities and can manifest itself in various ways, including fraudulent acts, business disruptions (including those caused by extraordinary events beyond the Firm's control), cyber attacks, inappropriate employee behavior, failure to comply with applicable laws, rules and regulations or failure of vendors or other third party providers to perform in accordance with their agreements. Operational Risk Management attempts to manage operational risk at appropriate levels in light of the Firm’s financial position, the characteristics of its businesses, and the markets and regulatory environments in which it operates.


JPM Operational Risk Management Framework

The Firm’s Compliance, Conduct, and Operational Risk (“CCOR”) Management Framework is designed to enable the Firm to govern, identify, measure, monitor and test, manage and report on the Firm’s operational risk.


JPM Operational Risk Governance

The LOBs and Corporate are responsible for the management of operational risk. The Control Management Organization, which consists of control managers within each LOB and Corporate, is responsible for the day-to-day execution of the CCOR Framework.


JPM Operational Risk Governance

The Firm’s Global Chief Compliance Officer (“CCO”) and FRE for Operational Risk and Qualitative Risk Appetite is responsible for defining the CCOR Management Framework and establishing the minimum standards for its execution. The LOB and Corporate aligned CCOR Lead Officers report to the Global CCO and FRE for Operational Risk and Qualitative Risk Appetite and are independent of the respective businesses or functions they oversee. The CCOR Management Framework is included in the Risk Governance and Oversight Policy that is reviewed and approved by the Board Risk Committee periodically.


JPM Operational Risk Identification

The Firm utilizes a structured risk and control self-assessment process that is executed by the LOBs and Corporate. As part of this process, the LOBs and Corporate evaluate the effectiveness of their respective control environment to assess circumstances in which controls have failed, and to determine where remediation efforts may be required. The Firm’s Operational Risk and Compliance organization (“Operational Risk and Compliance”) provides oversight of and challenge to these evaluations and may also perform independent assessments of significant operational risk events and areas of concentrated or emerging risk.


JPM Operational Risk Measurement

Operational Risk and Compliance performs an independent assessment of the operational risks inherent within the LOBs and Corporate, which includes evaluating the effectiveness of the control environments and reporting the results to senior management.


JPM Operational Risk Measurement

In addition, Operational Risk and Compliance assesses operational risks through quantitative means, including operational risk-based capital and estimation of operational risk losses under both baseline and stressed conditions.


JPM Operational Risk Measurement

The primary component of the operational risk-based capital estimate is the Loss Distribution Approach (“LDA”) statistical model, which simulates the projected frequency and severity of operational risk losses based on historical data. The LDA model is used to estimate an aggregate operational risk loss over a one-year time horizon, at a 99.9% confidence level. The LDA model incorporates actual internal operational risk losses in the quarter following the period in which those losses were realized, and the calculation generally continues to reflect such losses even after the issues or business activities giving rise to the losses have been remediated or reduced.


JPM Operational Risk Measurement

As required under the Basel III capital framework, the Firm’s operational risk capital methodology, which uses the Advanced Measurement Approach (“AMA”), incorporates internal and external losses as well as management’s view of tail risk captured through operational risk scenario analysis, and evaluation of key business environment and internal control metrics. The Firm does not reflect the impact of insurance in its AMA estimate of operational risk capital.


JPM Operational Risk Measurement

The Firm considers the impact of stressed economic conditions on operational risk losses and develops a forward looking view of material operational risk events that may occur in a stressed environment. The Firm’s operational risk stress testing framework is utilized in calculating results for the Firm’s CCAR and other stress testing processes.


JPM Operational Risk Measurement

Refer to Capital Risk Management on pages 91-101 for information related to operational risk RWA, and CCAR.


JPM Operational Risk Monitoring and testing

The results of risk assessments performed by Operational Risk and Compliance are used in connection with their independent monitoring and testing compliance of the LOBs and Corporate with laws, rules and regulations. Through monitoring and testing, Operational Risk and Compliance independently identify areas of heightened operational risk and tests the effectiveness of controls within the LOBs and Corporate.


JPM Management of Operational Risk

The operational risk areas or issues identified through monitoring and testing are escalated to the LOBs and Corporate to be remediated through action plans, as needed, to mitigate operational risk. Operational Risk and Compliance may advise the LOBs and Corporate in the development and implementation of action plans.


JPM Operational Risk Reporting

All employees of the Firm are expected to escalate risks appropriately. Risks identified by Operational Risk and Compliance are escalated to the appropriate LOB and Corporate Control Committees, as needed. Operational Risk and Compliance has established standards designed to ensure that consistent operational risk reporting and operational risk reports are produced on a Firmwide basis as well as by the LOBs and Corporate. Reporting includes the evaluation of key risk and performance indicators against established thresholds as well as the assessment of different types of operational risk against stated risk appetite. The standards establish escalation protocols to senior management and to the Board of Directors.


JPM Insurance

One of the ways in which operational risk may be mitigated is through insurance maintained by the Firm. The Firm purchases insurance from commercial insurers and maintains a wholly-owned captive insurer, Park Assurance Company. Insurance may also be required by third parties with whom the Firm does business.


JPM Subcategories and examples of operational risks

Operational risk can manifest itself in various ways. Operational risk subcategories include Compliance risk, Conduct risk, Legal risk, and Estimations and Model risk. Refer to pages 151, 152, 153 and 154, respectively for more information on Compliance, Conduct, Legal, and Estimations and Model risk. Details on other select examples of operational risks such as business and technology resiliency, payment fraud and third-party outsourcing, as well as cybersecurity, are provided below.


JPM War in Ukraine and Sanctions

In response to the war in Ukraine, numerous financial and economic sanctions have been imposed on Russia and Russia-associated entities and individuals by various governments around the world, including the authorities in the U.S., U.K. and EU. These sanctions are complex and continue to evolve. The Firm continues to face increased operational and other risks associated with addressing these complex compliance-related matters. To manage this increased risk, the Firm has implemented controls reasonably designed to mitigate the risk of non-compliance and to prevent dealing with sanctioned persons or in property subject to sanctions, as well as to block or restrict payments as required by the applicable regulations.


JPM Business and technology resiliency risk

Disruptions can occur due to forces beyond the Firm’s control such as the spread of infectious diseases or pandemics, severe weather, natural disasters, the effects of climate change, power or telecommunications loss, failure of a third party to provide expected services, cyberattacks, civil or political unrest or terrorism. The Firmwide Business Resiliency Program is designed to enable the Firm to prepare for, adapt to, withstand and recover from business disruptions including occurrence of extraordinary events beyond its control that may impact critical business functions and supporting assets including staff, technology, facilities and third parties. The program includes governance, awareness training, planning and testing of recovery strategies, as well as strategic and tactical initiatives to identify, assess, and manage business resiliency risks. The program is required to be managed in accordance with the Firm’s overall approach to Operational Risk Management, including alignment with technology, cybersecurity, data, physical security, crisis management, real estate and outsourcing programs.


JPM Payment fraud risk

Payment fraud risk is the risk of external and internal parties unlawfully obtaining personal monetary benefit through misdirected or otherwise improper payment. The Firm employs various controls for managing payment fraud risk as well as providing employee and client education and awareness trainings.


JPM Third-party outsourcing risk

The Firm‘s Third-Party Oversight (“TPO”) and Inter-affiliates Oversight (“IAO”) frameworks assist the LOBs and Corporate in selecting, documenting, onboarding, monitoring and managing their supplier relationships including services provided by affiliates. The objectives of the TPO framework are to hold suppliers and other third parties to an appropriate standard of operational performance and to mitigate key risks, including data loss and business disruptions. The Corporate Third-Party Oversight group is responsible for Firmwide training, monitoring, reporting and standards with respect to third-party outsourcing risks.


JPM Cybersecurity risk

Cybersecurity risk is the risk of harm or loss resulting from misuse or abuse of technology or the unauthorized disclosure of data.


JPM Overview

Cybersecurity risk is an important and continuously evolving focus for the Firm. Significant resources are devoted to protecting and enhancing the security of computer systems, software, networks, storage devices, and other technology. The Firm’s security efforts are designed to protect against, among other things, cybersecurity attacks that can result in unauthorized access to confidential information, the destruction of data, disruptions to or degradations of service, the sabotaging of systems or other damage.


JPM Overview

The Firm has experienced, and expects that it will continue to experience, a higher volume and complexity of cyber attacks against the backdrop of heightened geopolitical tensions. The Firm has implemented measures and controls reasonably designed to address this evolving environment, including enhanced threat monitoring. In addition, the Firm continues to review and enhance its capabilities to address associated risks, such as those relating to the management of administrative access to systems.


JPM Overview

Third parties with which the Firm does business, that facilitate the Firm’s business activities (e.g., vendors, supply chain, exchanges, clearing houses, central depositories, and financial intermediaries) or that the Firm has acquired are also sources of cybersecurity risk to the Firm. Third party incidents such as system breakdowns or failures, misconduct by the employees of such parties, or cyber attacks, including ransomware and supply-chain compromises, could have a material adverse effect on the Firm, including in circumstances in which an affected third party is unable to deliver a product or service to the Firm or where the incident delivers compromised software to the Firm or results in lost or compromised information of the Firm or its clients or customers.


JPM Overview

Clients and customers are also sources of cybersecurity risk to the Firm and its information assets, particularly when their activities and systems are beyond the Firm’s own security and control systems. The Firm engages in periodic discussions with its clients, customers and other external parties concerning cybersecurity risks including opportunities to improve cybersecurity.


JPM Overview

Risks from cybersecurity threats, including any previous cybersecurity events, have not materially affected the Firm or its business strategy, results of operations or financial condition. Notwithstanding the comprehensive approach that the Firm takes to address cybersecurity risk, the Firm may not be successful in preventing or mitigating a future cybersecurity incident that could have a material adverse effect on the Firm or its business strategy, results of operations or financial condition.


JPM Organization and management

The Global Chief Information Security Officer (“CISO”) reports to the Global Chief Information Officer, and is a member of key cybersecurity governance forums. The CISO leads the Global Cybersecurity and Technology Controls organization, which is responsible for identifying technology and cybersecurity risks and for implementing and maintaining controls to manage cybersecurity threats. The CISO is responsible for the Firm’s Information Security Program, which is designed to prevent, detect and respond to cyber attacks in order to help safeguard the confidentiality, integrity and availability of the Firm's infrastructure, resources and information. The program includes managing the Firm’s global cybersecurity operations centers, providing training, conducting cybersecurity event simulation exercises, implementing the Firm’s policies and standards relating to technology risk and cybersecurity management, and enhancing, as needed, the Firm’s cybersecurity capabilities.


JPM Organization and management

The Firm’s Information Security Program includes the following functions:


JPM Organization and management

Cyber Operations, which is responsible for implementing and maintaining controls designed to detect and defend the Firm against cyber attacks, and includes a dedicated function for incident response and ongoing monitoring for cybersecurity threats and vulnerabilities, including those among the Firm’s third-party suppliers.


JPM Organization and management

Technology Governance, Risk & Controls, which is responsible for operationalizing technology risk and control frameworks, analyzing regulatory developments that may impact the Firm, and developing control catalogs and assessments of controls, as well as overseeing governance and reporting of technology and cybersecurity risk.


JPM Organization and management

Security Awareness, which provides awareness and training that reinforces information risk and security management practices and compliance with the Firm's policies, standards and practices. The training is mandatory for all employees globally on a periodic basis, and it is supplemented by Firmwide testing initiatives, including periodic phishing tests. The Firm also provides specialized security training to employees in specific roles, such as application developers. The Firm’s Global Privacy Program requires all employees to take periodic training on data privacy that focuses on confidentiality and security, as well as responding to unauthorized access to or use of information.


JPM Organization and management

Technology Resiliency, which establishes control requirements for planning and testing the prioritized recovery of technology services in the event of degradation or outage, including incident response planning, data backup and retention, and recovery readiness in support of the Firmwide Business Resiliency Program and operational risk management practices.


JPM Management’s discussion and analysis

The Firm has a cybersecurity incident response plan designed to enable the Firm to respond to attempted cybersecurity incidents, coordinate as appropriate with law enforcement and other government agencies, notify clients and customers, as applicable, and recover from such incidents. In addition, the Firm actively partners with appropriate government and law enforcement agencies and peer industry forums, participating in discussions and simulations to assist in understanding the full spectrum of cybersecurity risks and in enhancing defenses and improving resiliency in the Firm’s operating environment.


JPM Governance and oversight

The governance structure for the Global Cybersecurity and Technology Controls organization is designed to appropriately identify, escalate and mitigate cybersecurity risks. Cybersecurity risk management and its governance and oversight are integrated into the Firm’s operational risk management framework, including through the escalation of key risk and control issues to management and the development of risk mitigation plans for heightened risk and control issues. IRM independently assesses and challenges the activities and risk management practices of the Global Cybersecurity and Technology Controls organization related to the identification, assessment, measurement and mitigation of cybersecurity risk. As needed, the Firm engages third-party assessors or auditing firms with industry-recognized expertise on cybersecurity matters to review specific aspects of the Firm’s cybersecurity risk management framework, processes and controls.


JPM Governance and oversight

The governance and oversight for cybersecurity risk management includes governance forums that inform management of key areas of concern regarding the prevention, detection, mitigation and remediation of cybersecurity risks.


JPM Governance and oversight

The Cybersecurity and Technology Controls Operating Committee (“CTOC”) is the principal management committee that oversees the Firm’s assessment and management of cybersecurity risk, including oversight of the implementation and maintenance of appropriate controls in support of the Firm’s Information Security Program. The membership of the CTOC includes senior representatives from the Global Cybersecurity and Technology Controls organization and relevant corporate functions, including IRM and Internal Audit. CTOC members have extensive experience and qualifications in various technology and information security disciplines, including relevant experience at the Firm, at other financial services companies or in other highly-regulated industries.


JPM Governance and oversight

The CTOC escalates key operational risk and control issues, as appropriate, to the Global Technology Operating Committee (“GTOC”) or its business control committee or to the appropriate LOB and Corporate Control Committees. The GTOC is responsible for the governance of the Firmwide Global Technology organization, including oversight of Firmwide technology strategies, the delivery of technology and technology operations, the effective use of information technology resources, and monitoring and resolving key operational risk and control matters arising in the Global Technology organization.


JPM Governance and oversight

As part of its oversight of management’s implementation and maintenance of the Firm’s risk management framework, the Firm’s Board of Directors receives periodic updates from the CIO, the CISO and senior members of the CTOC concerning cybersecurity matters. These updates generally include information regarding cybersecurity and technology developments, the Firm’s Information Security Program and recommended changes to that program, cybersecurity policies and practices, and ongoing initiatives to improve information security, as well as any significant cybersecurity incidents and the Firm's efforts to address those incidents. The Audit Committee and the Risk Committee assist the Board in this oversight.


JPM COMPLIANCE RISK MANAGEMENT

Compliance risk, a subcategory of operational risk, is the risk of failing to comply with laws, rules, regulations or codes of conduct and standards of self-regulatory organizations.


JPM Overview

Each of the LOBs and Corporate hold primary ownership of and accountability for managing their compliance risk. The Firm’s Operational Risk and Compliance Organization (“Operational Risk and Compliance”), which is independent of the LOBs and Corporate, provides independent review, monitoring and oversight of business operations with a focus on compliance with the laws, rules, and regulations applicable to the delivery of the Firm’s products and services to clients and customers.


JPM Overview

These compliance risks relate to a wide variety of laws, rules and regulations across the LOBs and Corporate, and jurisdictions, and include risks related to financial products and services, relationships and interactions with clients and customers, and employee activities. For example, compliance risks include those associated with anti-money laundering compliance, trading activities, market conduct, and complying with the laws, rules, and regulations related to the offering of products and services across jurisdictional borders. Compliance risk is also inherent in the Firm’s fiduciary activities, including the failure to exercise the applicable standard of care to act in the best interest of fiduciary clients and customers or to treat fiduciary clients and customers fairly.


JPM Overview

Other functions provide oversight of significant regulatory obligations that are specific to their respective areas of responsibility.


JPM Overview

Operational Risk and Compliance implements policies and standards designed to govern, identify, measure, monitor and test, manage, and report on compliance risk.


JPM Governance and oversight

Operational Risk and Compliance is led by the Firm’s Global CCO and FRE for Operational Risk and Qualitative Risk Appetite.


JPM Governance and oversight

The Firm maintains oversight and coordination of its compliance risk through the CCOR Management Framework. The Firm’s Global CCO and FRE for Operational Risk and Qualitative Risk Appetite also provides regular updates to the Board Risk Committee and the Audit Committee on significant compliance risk issues, as appropriate.


JPM Code of Conduct

The Firm has a Code of Conduct (the “Code”) that sets forth the Firm’s expectation that employees will conduct themselves with integrity, at all times. The Code provides the principles that help govern employee conduct with clients, customers, suppliers, vendors, shareholders, regulators, other employees, as well as with the markets and communities in which the Firm operates. The Code requires employees to promptly report any potential or actual violation of the Code, any Firm policy, or any law or regulation applicable to the Firm’s business. It also requires employees to report any illegal or unethical conduct, or conduct that violates the underlying principles of the Code, by any of the Firm’s employees, consultants, clients, customers, suppliers, contract or temporary workers, or business partners or agents. Training is assigned to newly hired employees upon joining the Firm, and to current employees periodically thereafter. Employees are required to affirm their compliance with the Code annually.


JPM Code of Conduct

Employees can report any potential or actual violations of the Code through the Firm’s Conduct Hotline (the “Hotline”) by phone or the internet. The Hotline is anonymous, where permitted by law, and is available at all times globally, with translation services and is administered by an outside service provider. The Code prohibits retaliation against anyone who raises an issue or concern in good faith or assists with an inquiry or investigation. Periodically, the Audit Committee receives reports on the Code of Conduct program.


JPM CONDUCT RISK MANAGEMENT

Conduct risk, a subcategory of operational risk, is the risk that any action or misconduct by an employee could lead to unfair client or customer outcomes, impact the integrity of the markets in which the Firm operates, harm employees or the Firm, or compromise the Firm’s reputation.


JPM Overview

Each LOB and Corporate is accountable for identifying and managing its conduct risk to provide appropriate engagement, ownership and sustainability of a culture consistent with the Firm’s Business Principles. The Business Principles serve as a guide for how employees are expected to conduct themselves. With the Business Principles serving as a guide, the Firm’s Code sets out the Firm’s expectations for each employee and provides information and resources to help employees conduct business ethically and in compliance with applicable laws, rules and regulations everywhere the Firm operates. Refer to Compliance Risk Management on page 151 for further discussion of the Code.


JPM Governance and oversight

The Firm maintains oversight and coordination of its conduct risk through the CCOR Management Framework.


JPM Governance and oversight

The Firm has a senior forum that provides oversight of the Firm’s conduct initiatives to develop a more holistic view of conduct risks and to connect key programs across the Firm in order to identify opportunities and emerging areas of focus. This forum is responsible for setting overall program direction for strategic enhancements to the Firm's employee conduct framework and reviewing the consolidated Firmwide Conduct Risk Appetite Assessment.


JPM Governance and oversight

Conduct risk management encompasses various aspects of people management practices throughout the employee life cycle, including recruiting, onboarding, training and development, performance management, promotion and compensation processes. Each LOB, Treasury and CIO, and each designated corporate function completes an assessment of conduct risk periodically, reviews metrics and issues which may involve conduct risk, and provides conduct education as appropriate.


JPM LEGAL RISK MANAGEMENT

Legal risk, a subcategory of operational risk, is the risk of loss primarily caused by the actual or alleged failure to meet legal obligations that arise from the rule of law in jurisdictions in which the Firm operates, agreements with clients and customers, and products and services offered by the Firm.


JPM Overview

The global Legal function (“Legal”) provides legal services and advice to the Firm. Legal is responsible for managing the Firm’s exposure to legal risk by: •managing actual and potential litigation and enforcement matters, including internal reviews and investigations related to such matters •advising on products and services, including contract negotiation and documentation •advising on offering and marketing documents and new business initiatives •managing dispute resolution •interpreting existing laws, rules and regulations, and advising on changes to them •advising on advocacy in connection with contemplated and proposed laws, rules and regulations, and •providing legal advice to the LOBs, Corporate and the Board.


JPM Overview

Legal selects, engages and manages outside counsel for the Firm on all matters in which outside counsel is engaged. In addition, Legal advises the Firm’s Conflicts Office which reviews the Firm’s wholesale transactions that may have the potential to create conflicts of interest for the Firm.


JPM Governance and oversight

The Firm’s General Counsel reports to the CEO and is a member of the Operating Committee, the Firmwide Risk Committee and the Firmwide Control Committee. The Firm’s General Counsel and other members of Legal report on significant legal matters to the Firm’s Board of Directors and to the Audit Committee.


JPM Governance and oversight

Legal serves on and advises various committees and advises the Firm’s LOBs and Corporate on potential reputation risk issues.


JPM ESTIMATIONS AND MODEL RISK MANAGEMENT

Estimations and Model risk, a subcategory of operational risk, is the potential for adverse consequences from decisions based on incorrect or misused estimation outputs.


The Firm uses models and other analytical and judgment-based estimations across various businesses and functions. The estimation methods are of varying levels of sophistication and are used for many purposes, such as the valuation of positions and measurement of risk, assessing regulatory capital requirements, conducting stress testing, evaluating the allowance for credit losses and making business decisions. A dedicated independent function, Model Risk Governance and Review (“MRGR”), defines and governs the Firm’s policies relating to the management of model risk and risks associated with certain analytical and judgment-based estimations, such as those used in risk management, budget forecasting and capital planning and analysis.


The governance of analytical and judgment-based estimations within MRGR’s scope follows a consistent approach which is used for models, as described in detail below.


Model risks are owned by the users of the models within the LOBs and Corporate based on the specific purposes of such models. Users and developers of models are responsible for developing, implementing and testing their models, as well as referring models to MRGR for review and approval. Once models have been approved, model users and developers are responsible for maintaining a robust operating environment, and must monitor and evaluate the performance of the models on an ongoing basis. Model users and developers may seek to enhance models in response to changes in the relevant portfolios and in product and market developments, as well as to capture improvements in available modeling techniques and systems capabilities.


Models are tiered based on an internal standard according to their complexity, the exposure associated with the model and the Firm’s reliance on the model. This tiering is subject to the approval of MRGR. In its review of a model, MRGR considers whether the model is suitable for the specific purposes for which it will be used. When reviewing a model, MRGR analyzes and challenges the model methodology and the reasonableness of model assumptions, and may perform or require additional testing, including back-testing of model outcomes. Model reviews are approved by the appropriate level of management within MRGR based on the relevant model tier.


Under the Firm’s Estimations and Model Risk Management Policy, MRGR reviews and approves new models, as well as material changes to existing models, prior to their use. In certain circumstances, exceptions may be granted to the Firm’s policy to allow a model to be used prior to review or approval. MRGR may also require the user to take appropriate actions to mitigate the model risk if it is to be used in the interim. These actions will depend on the model and may include, for example, limitation of trading activity.


While models are inherently imprecise, the degree of imprecision or uncertainty can be heightened by the market or economic environment. This is particularly true when the current and forecasted environments are significantly different from the historical environments upon which the models were developed. This increased uncertainty may necessitate a greater degree of judgment and analytics to inform any adjustments that the Firm may make to model outputs than would otherwise be the case. In addition, the Firm may experience increased uncertainty in its estimates if assets acquired differ from those used to develop the models.


Refer to Critical Accounting Estimates Used by the Firm on pages 155–158 and Note 2 for a summary of model-based valuations and other valuation techniques.


JPM CRITICAL ACCOUNTING ESTIMATES USED BY THE FIRM

JPMorgan Chase’s accounting policies and use of estimates are integral to understanding its reported results. The Firm’s most complex accounting estimates require management’s judgment to ascertain the appropriate carrying value of assets and liabilities. The Firm has established policies and control procedures intended to ensure that estimation methods, including any judgments made as part of such methods, are well-controlled, independently reviewed and applied consistently from period to period. The methods used and judgments made reflect, among other factors, the nature of the assets or liabilities and the related business and risk management strategies, which may vary across the Firm’s businesses and portfolios. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. The Firm believes its estimates for determining the carrying value of its assets and liabilities are appropriate. The following is a brief description of the Firm’s critical accounting estimates involving significant judgments.


JPM Allowance for credit losses

The Firm’s allowance for credit losses represents management’s estimate of expected credit losses over the remaining expected life of the Firm’s financial assets measured at amortized cost and certain off-balance sheet lending-related commitments. The allowance for credit losses generally comprises: •The allowance for loan losses, which covers the Firm’s retained loan portfolios (scored and risk-rated), •The allowance for lending-related commitments and •The allowance for credit losses on investment securities.


JPM Allowance for credit losses

The allowance for credit losses involves significant judgment on a number of matters including development and weighting of macroeconomic forecasts, incorporation of historical loss experience, assessment of risk characteristics, assignment of risk ratings, valuation of collateral, and the determination of remaining expected life. Refer to Note 10 and Note 13 for further information on these judgments as well as the Firm’s policies and methodologies used to determine the Firm’s allowance for credit losses.


JPM Allowance for credit losses

One of the most significant judgments involved in estimating the Firm’s allowance for credit losses relates to the macroeconomic forecasts used to estimate credit losses over the eight-quarter forecast period within the Firm’s methodology. The eight-quarter forecast incorporates hundreds of macroeconomic variables (“MEVs”) that are relevant for exposures across the Firm, with modeled credit losses being driven primarily by a subset of less than twenty variables. The specific variables that have the greatest effect on the modeled losses of each portfolio vary by portfolio and geography. •Key MEVs for the consumer portfolio include regional U.S. unemployment rates and U.S. HPI. •Key MEVs for the wholesale portfolio include U.S. unemployment, U.S. real GDP, U.S. equity prices, U.S. interest rates, U.S. corporate credit spreads, oil prices, U.S. commercial real estate prices and U.S. HPI.


JPM Allowance for credit losses

Changes in the Firm’s assumptions and forecasts of economic conditions could significantly affect its estimate of expected credit losses in the portfolio at the balance sheet date or lead to significant changes in the estimate from one reporting period to the next.


JPM Allowance for credit losses

As a result of the First Republic acquisition, the Firm recorded an allowance for credit losses for the loans acquired and lending-related commitments assumed as of May 1, 2023. Given the differences in risk rating methodologies for the First Republic portfolio, and the ongoing integration of products and systems, the allowance for credit losses for the acquired wholesale portfolio was measured based on other facilities underwritten by the Firm with similar risk characteristics and not based on modeled estimates. As such, the First Republic wholesale portfolio is excluded from the modeled estimates sensitivity analysis below. The allowance for credit losses for predominantly all of the consumer portfolio was measured using the Firm’s modeled approach, as the consumer portfolio is predominantly residential real estate that has more commonly defined risk characteristics including loan to value ratio and credit score, and therefore is reflected in the sensitivity analysis below. Refer to Note 34 for additional information on the First Republic acquisition.


JPM Allowance for credit losses

It is difficult to estimate how potential changes in any one factor or input might affect the overall allowance for credit losses because management considers a wide variety of factors and inputs in estimating the allowance for credit losses. Changes in the factors and inputs considered may not occur at the same rate and may not be consistent across all geographies or product types, and changes in factors and inputs may be directionally inconsistent, such that improvement in one factor or input may offset deterioration in others.


JPM Allowance for credit losses

To consider the impact of a hypothetical alternate macroeconomic forecast, the Firm compared the modeled credit losses determined using its central and relative adverse macroeconomic scenarios, which are two of the five scenarios considered in estimating the allowances for loan losses and lending-related commitments. The central and relative adverse scenarios each included a full suite of MEVs, but differed in the levels, paths and peaks/troughs of those variables over the eight-quarter forecast period.


JPM Allowance for credit losses

For example, compared to the Firm’s central scenario shown on page 131 and in Note 13, the Firm’s relative adverse scenario assumes an elevated U.S. unemployment rate, averaging approximately 2.1% higher over the eight-quarter forecast, with a peak difference of approximately 2.7% in the fourth quarter of 2024; lower U.S. real GDP with a slower recovery, remaining nearly 3.3% lower at the end of the eight-quarter forecast, with a peak difference of


approximately 3.9% in the fourth quarter of 2024; and lower HPI with a peak difference of approximately 17.9% in the third quarter of 2025.


This analysis is not intended to estimate expected future changes in the allowance for credit losses, for a number of reasons, including: •The allowance as of December 31, 2023, reflects credit losses beyond those estimated under the central scenario due to the weight placed on the adverse scenarios. •The impacts of changes in many MEVs are both interrelated and nonlinear, so the results of this analysis cannot be simply extrapolated for more severe changes in macroeconomic variables. •Expectations of future changes in portfolio composition and borrower behavior can significantly affect the allowance for credit losses.


To demonstrate the sensitivity of credit loss estimates to macroeconomic forecasts as of December 31, 2023, the Firm compared the modeled estimates under its relative adverse scenario to its central scenario. Without considering offsetting or correlated effects in other qualitative components of the Firm’s allowance for credit losses, the comparison between these two scenarios for the exposures below reflect the following differences: •An increase of approximately $850 million for residential real estate loans and lending-related commitments •An increase of approximately $3.1 billion for credit card loans •An increase of approximately $3.9 billion for wholesale loans and lending-related commitments


This analysis relates only to the modeled credit loss estimates and is not intended to estimate changes in the overall allowance for credit losses as it does not reflect any potential changes in other adjustments to the quantitative calculation, which would also be influenced by the judgment management applies to the modeled lifetime loss estimates to reflect the uncertainty and imprecision of these modeled lifetime loss estimates based on then-current circumstances and conditions.


Recognizing that forecasts of macroeconomic conditions are inherently uncertain, the Firm believes that its process to consider the available information and associated risks and uncertainties is appropriately governed and that its estimates of expected credit losses were reasonable and appropriate for the period ended December 31, 2023.


JPM Fair value

JPMorgan Chase carries a portion of its assets and liabilities at fair value. The majority of such assets and liabilities are measured at fair value on a recurring basis, including derivatives, structured note products and certain securities financing agreements. Certain assets and liabilities are measured at fair value on a nonrecurring basis, including certain mortgage, home equity and other loans, where the carrying value is based on the fair value of the underlying collateral.


JPM Assets measured at fair value

The following table includes the Firm’s assets measured at fair value and the portion of such assets that are classified within level 3 of the fair value hierarchy. Refer to Note 2 for further information. December 31, 2023 (in millions, except ratios)####Total assets at fair value####Total level 3 assets## Federal funds sold and securities purchased under resale agreements##$##259,813##$##—## Securities borrowed####70,086####—## Trading assets:########## Trading-debt and equity instruments####485,701####2,373## Derivative receivables(a)####54,864####8,924## Total trading assets####540,565####11,297## AFS securities####201,704####—## Loans####38,851####3,079## MSRs####8,522####8,522## Other####11,322####758## Total assets measured at fair value on a recurring basis####1,130,863####23,656## Total assets measured at fair value on a nonrecurring basis####3,141####2,490## Total assets measured at fair value##$##1,134,004##$##26,146## Total Firm assets##$##3,875,393###### Level 3 assets at fair value as a percentage of total Firm assets(a)########1##% Level 3 assets at fair value as a percentage of total Firm assets at fair value(a)########2##%


JPM Assets measured at fair value

(a)For purposes of the table above, the derivative receivables total reflects the impact of netting adjustments; however, the $8.9 billion of derivative receivables classified as level 3 does not reflect the netting adjustment as such netting is not relevant to a presentation based on the transparency of inputs to the valuation of an asset. The level 3 balances would be reduced if netting were applied, including the netting benefit associated with cash collateral.


JPM Valuation

Details of the Firm’s processes for determining fair value are set out in Note 2. Estimating fair value requires the application of judgment. The type and level of judgment required is largely dependent on the amount of observable market information available to the Firm. For instruments valued using internally developed valuation models and other valuation techniques that use significant unobservable inputs and are therefore classified within level 3 of the fair value hierarchy, judgments used to estimate fair value are more significant than those required when estimating the fair value of instruments classified within levels 1 and 2.


JPM Valuation

In arriving at an estimate of fair value for an instrument within level 3, management must first determine the appropriate valuation model or other valuation technique to use. Second, the lack of observability of certain significant inputs requires management to assess relevant empirical data in deriving valuation inputs including, for example, transaction details, yield curves, interest rates, prepayment speeds, default rates, volatilities, correlations, prices (such as commodity, equity or debt prices), valuations of comparable instruments, foreign exchange rates and credit curves. Refer to Note 2 for a further discussion of the valuation of level 3 instruments, including unobservable inputs used.


JPM Valuation

For instruments classified in levels 2 and 3, management judgment must be applied to assess the appropriate level of valuation adjustments to reflect counterparty credit quality, the Firm’s creditworthiness, market funding rates, liquidity considerations, unobservable parameters, and for portfolios that meet specified criteria, the size of the net open risk position. The judgments made are typically affected by the type of product and its specific contractual terms, and the level of liquidity for the product or within the market as a whole. In periods of heightened market volatility and uncertainty judgments are further affected by the wider variation of reasonable valuation estimates, particularly for positions that are less liquid. Refer to Note 2 for a further discussion of valuation adjustments applied by the Firm.


JPM Valuation

Imprecision in estimating unobservable market inputs or other factors can affect the amount of gain or loss recorded for a particular position. Furthermore, while the Firm believes its valuation methods are appropriate and consistent with those of other market participants, the methods and assumptions used reflect management judgment and may vary across the Firm’s businesses and portfolios.


JPM Valuation

The Firm uses various methodologies and assumptions in the determination of fair value. The use of methodologies or assumptions different than those used by the Firm could result in a different estimate of fair value at the reporting date. Refer to Note 2 for a detailed discussion of the Firm’s valuation process and hierarchy, and its determination of fair value for individual financial instruments.


JPM Goodwill impairment

Under U.S. GAAP, goodwill must be allocated to reporting units and tested for impairment at least annually. The Firm’s process and methodology used to conduct goodwill impairment testing is described in Note 15.


JPM Goodwill impairment

Management applies significant judgment when testing goodwill for impairment. The goodwill associated with each business combination is allocated to the related reporting units for goodwill impairment testing.


JPM Goodwill impairment

For the year ended December 31, 2023, the Firm reviewed current economic conditions, estimated market cost of equity, as well as actual business results and projections of business performance. Based on such reviews, the Firm has concluded that goodwill was not impaired as of December 31, 2023. For each of the reporting units, fair value exceeded carrying value by at least 9% and there was no indication of a significant risk of goodwill impairment based on current projections and valuations.


JPM Goodwill impairment

The projections for the Firm’s reporting units are consistent with management’s current business outlook assumptions in the short term, and the Firm’s best estimates of long-term growth and return on equity in the longer term. Where possible, the Firm uses third-party and peer data to benchmark its assumptions and estimates.


JPM Goodwill impairment

Refer to Note 15 for additional information on goodwill, including the goodwill impairment assessment as of December 31, 2023.


JPM Credit card rewards liability

JPMorgan Chase offers credit cards with various rewards programs which allow cardholders to earn rewards points based on their account activity and the terms and conditions of the rewards program. Generally, there are no limits on the points that an eligible cardholder can earn, nor do the points expire, and the points can be redeemed for a variety of rewards, including cash (predominantly in the form of account credits), gift cards and travel. The Firm maintains a rewards liability which represents the estimated cost of rewards points earned and expected to be redeemed by cardholders. The liability is accrued as the cardholder earns the benefit and is reduced when the cardholder redeems points. This liability was $13.2 billion and $11.3 billion at December 31, 2023 and 2022, respectively, and is recorded in accounts payable and other liabilities on the Consolidated balance sheets. The increase in the liability was predominantly driven by continued growth in rewards points earned on higher spend and promotional offers outpacing redemptions throughout 2023, and, to a lesser extent, adjustments to certain reward program terms in the second quarter of 2023.


JPM Credit card rewards liability

The rewards liability is sensitive to redemption rate (“RR”) and cost per point (“CPP”) assumptions. The RR assumption is used to estimate the number of points earned by customers that will be redeemed over the life of the account. The CPP assumption is used to estimate the cost of future point redemptions. These assumptions are evaluated periodically considering historical actuals, cardholder


redemption behavior and management judgment. Updates to these assumptions will impact the rewards liability. As of December 31, 2023, a combined increase of 25 basis points in RR and 1 basis point in CPP would increase the rewards liability by approximately $376 million.


JPM Income taxes

JPMorgan Chase is subject to the income tax laws of the various jurisdictions in which it operates, including U.S. federal, state and local, and non-U.S. jurisdictions. These laws are often complex and may be subject to different interpretations. To determine the financial statement impact of accounting for income taxes, including the provision for income tax expense and unrecognized tax benefits, JPMorgan Chase must make assumptions and judgments about how to interpret and apply these complex tax laws to numerous transactions and business events, as well as make judgments regarding the timing of when certain items may affect taxable income in the U.S. and non-U.S. tax jurisdictions.


JPM Income taxes

JPMorgan Chase’s interpretations of tax laws around the world are subject to review and examination by the various taxing authorities in the jurisdictions where the Firm operates, and disputes may occur regarding its view on a tax position. These disputes over interpretations with the various taxing authorities may be settled by audit, administrative appeals or adjudication in the court systems of the tax jurisdictions in which the Firm operates. JPMorgan Chase regularly reviews whether it may be assessed additional income taxes as a result of the resolution of these matters, and the Firm records additional unrecognized tax benefits, as appropriate. In addition, the Firm may revise its estimate of income taxes due to changes in income tax laws, legal interpretations, and business strategies. It is possible that revisions in the Firm’s estimate of income taxes may materially affect the Firm’s results of operations in any reporting period.


JPM Income taxes

Deferred taxes arise from differences between assets and liabilities measured for financial reporting versus income tax return purposes. Deferred tax assets are recognized if, in management’s judgment, their realizability is determined to be more likely than not. Deferred taxes are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized within the provision for income taxes in the period enacted.


JPM Income taxes

The Firm has also recognized deferred tax assets in connection with certain tax attributes, including net operating loss (“NOL”) carryforwards and foreign tax credit (“FTC”) carryforwards. The Firm performs regular reviews to ascertain whether its deferred tax assets are realizable. These reviews include management’s estimates and assumptions regarding future taxable income, including foreign source income, and may incorporate various tax planning strategies, including strategies that may be available to utilize NOLs and FTCs before they expire. In connection with these reviews, if it is determined that a


JPM Income taxes

deferred tax asset is not realizable, a valuation allowance is established. The valuation allowance may be reversed in a subsequent reporting period if the Firm determines that, based on revised estimates of future taxable income or changes in tax planning strategies, it is more likely than not that all or part of the deferred tax asset will become realizable. As of December 31, 2023, management has determined it is more likely than not that the Firm will realize its deferred tax assets, net of the existing valuation allowance.


JPM Income taxes

The Firm adjusts its unrecognized tax benefits as necessary when new information becomes available, including changes in tax law and regulations, and interactions with taxing authorities. Uncertain tax positions that meet the more-likely-than-not recognition threshold are measured to determine the amount of benefit to recognize. An uncertain tax position is measured at the largest amount of benefit that management believes is more likely than not to be realized upon settlement. It is possible that the reassessment of JPMorgan Chase’s unrecognized tax benefits may have a material impact on its effective income tax rate in the period in which the reassessment occurs. Although the Firm believes that its estimates are reasonable, the final tax amount could be different from the amounts reflected in the Firm’s income tax provisions and accruals. To the extent that the final outcome of these amounts is different than the amounts recorded, such differences will generally impact the Firm’s provision for income taxes in the period in which such a determination is made.


JPM Income taxes

The Firm’s provision for income taxes is composed of current and deferred taxes. The current and deferred tax provisions are calculated based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed during the subsequent year. Adjustments based on filed returns are generally recorded in the period when the tax returns are filed and the global tax implications are known, which could impact the Firm’s effective tax rate.


JPM Income taxes

Refer to Note 25 for additional information on income taxes.


JPM Litigation reserves

Refer to Note 30 for a description of the significant estimates and judgments associated with establishing litigation reserves.


JPM ACCOUNTING AND REPORTING DEVELOPMENTS

####Financial Accounting Standards Board (“FASB”) Standards Adopted since January 1, 2021## Standard##Summary of guidance####Effects on financial statements Reference Rate Reform   Issued March 2020 and updated January 2021 and December 2022##•Provides optional expedients and exceptions to current accounting guidance when financial instruments, hedge accounting relationships, and other transactions are amended due to reference rate reform.####•Issued and effective March 12, 2020. The January 7, 2021 and December 21, 2022 updates were effective when issued. ####FASB Standards Adopted since January 1, 2023## Standard####Summary of guidance##Effects on financial statements Derivatives and Hedging: Fair Value Hedging – Portfolio Layer Method   Issued March 2022##•Expands the ability to hedge a portfolio of fixed-rate assets to allow more types of assets to be included in the portfolio, and to allow more of the portfolio to be hedged.  •Clarifies the types of derivatives that can be used as hedges, and the balance sheet presentation and disclosure requirements for the hedge accounting adjustments. •Allows a one-time reclassification from HTM to AFS upon adoption.####•Adopted prospectively on January 1, 2023.  •Refer to Note 1 for further information. Financial Instruments – Credit Losses: Troubled Debt Restructurings and Vintage Disclosures   Issued March 2022##•Eliminates existing accounting and disclosure requirements for Troubled Debt Restructurings, including the requirement to measure the allowance using a discounted cash flow methodology. •Requires disclosure of loan modifications for borrowers experiencing financial difficulty involving principal forgiveness, interest rate reduction, other-than-insignificant payment delay, term extension or a combination of these modifications. •Requires disclosure of current period loan charge-off information by origination year. •May be adopted prospectively, or by using a modified retrospective method wherein the effect of adoption is reflected as an adjustment to retained earnings at the effective date.####•Adopted under the modified retrospective method on January 1, 2023. •Refer to Note 1 for further information.


####FASB Standards Issued but not yet Adopted as of December 31, 2023## Standard##Summary of guidance####Effects on financial statements Investments - Equity Method and Joint Ventures: Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method   Issued March 2023##•Expands the ability to elect proportional amortization for more types of tax-oriented investments (beyond low income housing tax credit investments) on a program-by-program basis. •May be adopted using a full retrospective method, or a modified retrospective method wherein the effect of adoption is reflected as an adjustment to retained earnings at the effective date.####•Adopted under the modified retrospective method on January 1, 2024, which resulted in a decrease to retained earnings of approximately $200 million. Segment Reporting: Improvements to Reportable Segment Disclosures   Issued November 2023##•Requires disclosure of significant segment expenses that are readily provided to the chief operating decision maker (“CODM”) and included in segment profit or loss. •Requires disclosure of the composition and aggregate amount of other segment items, which represent the difference between profit or loss and segment revenues less significant segment expenses. •Requires disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported segment measures in assessing segment performance and deciding how to allocate resources.####•Required effective date: Annual financial statements for the year ending December 31, 2024 and interim financial statements for the year ending December 31, 2025.(a) •The Firm is currently assessing the potential impact on its segment disclosures. Income Taxes: Improvements to Income Tax Disclosures   Issued December 2023##•Requires disclosure of income taxes paid disaggregated by 1) federal, state, and foreign taxes and 2) individual jurisdiction on the basis of a quantitative threshold of equal to or greater than 5 percent of total income taxes paid (net of refunds received). •Requires disclosure of the effective tax rate reconciliation by specific categories, at a minimum, with accompanying qualitative disclosures, and separate disclosure of reconciling items based on quantitative thresholds.  •Requires categories within the effective tax rate reconciliation to be further disaggregated if quantitative thresholds are met.####•Required effective date: Annual financial statements for the year ending December 31, 2025.(a) •The guidance can be applied on a prospective basis with the option to apply the standard retrospectively. •The Firm is evaluating the potential impact on the Consolidated Financial Statements disclosures, as well as the Firm’s planned date of adoption.


(a) Early adoption is permitted.


JPM FORWARD-LOOKING STATEMENTS

From time to time, the Firm has made and will make forward-looking statements. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “anticipate,” “target,” “expect,” “estimate,” “intend,” “plan,” “goal,” “believe,” or other words of similar meaning. Forward-looking statements provide JPMorgan Chase’s current expectations or forecasts of future events, circumstances, results or aspirations. JPMorgan Chase’s disclosures in this 2023 Form 10-K contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Firm also may make forward-looking statements in its other documents filed or furnished with the SEC. In addition, the Firm’s senior management may make forward-looking statements orally to investors, analysts, representatives of the media and others.


JPM FORWARD-LOOKING STATEMENTS

All forward-looking statements are, by their nature, subject to risks and uncertainties, many of which are beyond the Firm’s control. JPMorgan Chase’s actual future results may differ materially from those set forth in its forward-looking statements. While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ from those in the forward-looking statements: •Local, regional and global business, economic and political conditions and geopolitical events, including geopolitical tensions and hostilities; •Changes in laws, rules and regulatory requirements, including capital and liquidity requirements affecting the Firm’s businesses, and the ability of the Firm to address those requirements; •Heightened regulatory and governmental oversight and scrutiny of JPMorgan Chase’s business practices, including dealings with retail customers; •Changes in trade, monetary and fiscal policies and laws; •Changes in the level of inflation; •Changes in income tax laws, rules, and regulations; •Changes in FDIC assessments; •Securities and capital markets behavior, including changes in market liquidity and volatility; •Changes in investor sentiment or consumer spending or savings behavior; •Ability of the Firm to manage effectively its capital and liquidity; •Changes in credit ratings assigned to the Firm or its subsidiaries; •Damage to the Firm’s reputation; •Ability of the Firm to appropriately address social, environmental and sustainability concerns that may arise, including from its business activities; •Ability of the Firm to deal effectively with an economic slowdown or other economic or market disruption,


JPM including, but not limited to, in the interest rate environment;

•Technology changes instituted by the Firm, its counterparties or competitors; •The effectiveness of the Firm’s control agenda; •Ability of the Firm to develop or discontinue products and services, and the extent to which products or services previously sold by the Firm require the Firm to incur liabilities or absorb losses not contemplated at their initiation or origination; •Acceptance of the Firm’s new and existing products and services by the marketplace and the ability of the Firm to innovate and to increase market share; •Ability of the Firm to attract and retain qualified and diverse employees; •Ability of the Firm to control expenses; •Competitive pressures; •Changes in the credit quality of the Firm’s clients, customers and counterparties; •Adequacy of the Firm’s risk management framework, disclosure controls and procedures and internal control over financial reporting; •Adverse judicial or regulatory proceedings; •Ability of the Firm to determine accurate values of certain assets and liabilities; •Occurrence of natural or man-made disasters or calamities, including health emergencies, the spread of infectious diseases, epidemics or pandemics, an outbreak or escalation of hostilities or other geopolitical instabilities, the effects of climate change or extraordinary events beyond the Firm’s control, and the Firm’s ability to deal effectively with disruptions caused by the foregoing; •Ability of the Firm to maintain the security of its financial, accounting, technology, data processing and other operational systems and facilities; •Ability of the Firm to withstand disruptions that may be caused by any failure of its operational systems or those of third parties; •Ability of the Firm to effectively defend itself against cyber attacks and other attempts by unauthorized parties to access information of the Firm or its customers or to disrupt the Firm’s systems; and •The other risks and uncertainties detailed in Part I, Item 1A: Risk Factors in JPMorgan Chase’s 2023 Form 10-K.


Any forward-looking statements made by or on behalf of the Firm speak only as of the date they are made, and JPMorgan Chase does not undertake to update any forward-looking statements. The reader should, however, consult any further disclosures of a forward-looking nature the Firm may make in any subsequent Annual Reports on Form 10-Ks, Quarterly Reports on Form 10-Qs, or Current Reports on Form 8-K.


JPM Management’s report on internal control over financial reporting

Management of JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”) is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Firm’s principal executive and principal financial officers, or persons performing similar functions, and effected by JPMorgan Chase’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).


JPMorgan Chase’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records, that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Firm’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the Firm are being made only in accordance with authorizations of JPMorgan Chase’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Firm’s assets that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management has completed an assessment of the effectiveness of the Firm’s internal control over financial reporting as of December 31, 2023. In making the assessment, management used the “Internal Control — Integrated Framework” (“COSO 2013”) promulgated by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).


Based upon the assessment performed, management concluded that as of December 31, 2023, JPMorgan Chase’s internal control over financial reporting was effective based upon the COSO 2013 framework. Additionally, based upon management’s assessment, the Firm determined that there were no material weaknesses in its internal control over financial reporting as of December 31, 2023.


The effectiveness of the Firm’s internal control over financial reporting as of December 31, 2023, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.


JPM Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of JPMorgan Chase & Co.:


Opinions on the Financial Statements and Internal Control over Financial Reporting


We have audited the accompanying consolidated balance sheets of JPMorgan Chase & Co. and its subsidiaries (the “Firm”) as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Firm’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).


In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Firm as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Firm maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.


JPM Basis for Opinions

The Firm’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s report on internal control over financial reporting. Our responsibility is to express opinions on the Firm’s consolidated financial statements and on the Firm’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Firm in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


JPM Basis for Opinions

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about


JPM Basis for Opinions

whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.


JPM Basis for Opinions

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.


JPM Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


JPM Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.


JPM Critical Audit Matters

Allowance for Loan Losses – Portfolio-based component of Wholesale Loan and Credit Card Loan Portfolios


JPM Critical Audit Matters

As described in Note 13 to the consolidated financial statements, the allowance for loan losses for the portfolio-based component of the wholesale and credit card loan portfolios was $20.2 billion on total portfolio-based retained loans of $881.3 billion at December 31, 2023. The Firm’s allowance for loan losses represents management’s estimate of expected credit losses over the remaining expected life of the Firm's loan portfolios and considers expected future changes in macroeconomic conditions. The portfolio-based component of the Firm’s allowance for loan losses for the wholesale and credit card retained loan portfolios begins with a quantitative calculation of expected credit losses over the expected life of the loan by applying credit loss factors to the estimated exposure at default. The credit loss factors applied are determined based on the weighted average of five internally developed macroeconomic scenarios that take into consideration the Firm's economic outlook as derived through forecast macroeconomic variables, the most significant of which are U.S. unemployment and U.S. real gross domestic product. This quantitative calculation is further adjusted to take into consideration model imprecision, emerging risk assessments, trends and other subjective factors that are not yet otherwise reflected in the credit loss estimate.


JPM Critical Audit Matters

The principal considerations for our determination that performing procedures relating to the allowance for loan losses for the portfolio-based component of the wholesale and credit card loan portfolios is a critical audit matter are (i) the significant judgment and estimation by management in the forecast of macroeconomic variables, specifically U.S. unemployment and U.S. real gross domestic product, as the Firm’s forecasts of economic conditions significantly affect its estimate of expected credit losses at the balance sheet date, (ii) the significant judgment and estimation by management in determining the quantitative calculation utilized in their credit loss estimates and the adjustments to take into consideration model imprecision, emerging risk assessments, trends and other subjective factors that are not yet otherwise reflected in the credit loss estimate, which both in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and in


JPM Critical Audit Matters

evaluating audit evidence obtained relating to the credit loss estimates and the appropriateness of the adjustments to the credit loss estimates, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.


JPM Critical Audit Matters

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the Firm’s allowance for loan losses, including controls over model validation and generation of macroeconomic scenarios. These procedures also included, among others, testing management’s process for estimating the allowance for loan losses, which involved (i) evaluating the appropriateness of the models and methodologies used in quantitative calculations; (ii) evaluating the reasonableness of forecasts of U.S. unemployment and U.S. real gross domestic product; (iii) testing the completeness and accuracy of data used in the estimate; and (iv) evaluating the reasonableness of management’s adjustments to the quantitative output for the impacts of model imprecision, emerging risk assessments, trends and other subjective factors that are not yet otherwise reflected in the credit loss estimate. These procedures also included the use of professionals with specialized skill and knowledge to assist in evaluating the appropriateness of certain models, methodologies and macroeconomic variables.


JPM Fair Value of Certain Level 3 Financial Instruments

As described in Notes 2 and 3 to the consolidated financial statements, the Firm carries $1.1 trillion of its assets and $541.4 billion of its liabilities at fair value on a recurring basis. Included in these balances are $11.3 billion of trading assets and $42.2 billion of liabilities measured at fair value on a recurring basis, collectively financial instruments, which are classified as level 3 as they contain one or more inputs to valuation which are unobservable and significant to their fair value measurement. The Firm utilized internally developed valuation models and unobservable inputs to estimate fair value of the level 3 financial instruments. The unobservable inputs used by management to estimate the fair value of certain of these financial instruments include interest rate volatility, interest rate spread volatility, Bermudan switch value, and correlation relating to interest rates, interest rate-to-foreign exchange, equity prices, equity-to-foreign exchange, equity-to-interest rate and credit.


The principal considerations for our determination that performing procedures relating to the fair value of certain level 3 financial instruments is a critical audit matter are (i) the significant judgment and estimation by management in determining the inputs to estimate fair value, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating audit evidence obtained related to the fair value of these financial instruments, and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.


Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the Firm’s determination of the fair value, including controls over models, inputs, and data. These procedures also included, among others, the involvement of professionals with specialized skill and knowledge to assist in developing an independent estimate of fair value for a sample of these financial instruments and comparing management’s estimate to the independently developed estimate of fair value. Developing the independent estimate involved testing the completeness and accuracy of data provided by management, developing independent inputs and, as appropriate, evaluating and utilizing management’s aforementioned unobservable inputs.


JPM February 16, 2024

We have served as the Firm’s auditor since 1965.


JPM JPMorgan Chase & Co./2023 Form 10-K 165

JPMorgan Chase & Co.


JPM Consolidated statements of income

Year ended December 31, (in millions, except per share data)####2023####2022####2021 Revenue############ Investment banking fees##$##6,519##$##6,686##$##13,216 Principal transactions####24,460####19,912####16,304 Lending- and deposit-related fees####7,413####7,098####7,032 Asset management fees####15,220####14,096####14,405 Commissions and other fees####6,836####6,581####6,624 Investment securities losses####(3,180)####(2,380)####(345) Mortgage fees and related income####1,176####1,250####2,170 Card income####4,784####4,420####5,102 Other income####5,609####4,322####4,830 Noninterest revenue####68,837####61,985####69,338 Interest income####170,588####92,807####57,864 Interest expense####81,321####26,097####5,553 Net interest income####89,267####66,710####52,311 Total net revenue####158,104####128,695####121,649 Provision for credit losses####9,320####6,389####(9,256) Noninterest expense############ Compensation expense####46,465####41,636####38,567 Occupancy expense####4,590####4,696####4,516 Technology, communications and equipment expense####9,246####9,358####9,941 Professional and outside services####10,235####10,174####9,814 Marketing####4,591####3,911####3,036 Other expense####12,045####6,365####5,469 Total noninterest expense####87,172####76,140####71,343 Income before income tax expense####61,612####46,166####59,562 Income tax expense####12,060####8,490####11,228 Net income##$##49,552##$##37,676##$##48,334 Net income applicable to common stockholders##$##47,760##$##35,892##$##46,503 Net income per common share data############ Basic earnings per share##$##16.25##$##12.10##$##15.39 Diluted earnings per share####16.23####12.09####15.36 Weighted-average basic shares####2,938.6####2,965.8####3,021.5 Weighted-average diluted shares####2,943.1####2,970.0####3,026.6


JPM Consolidated statements of income

The Notes to Consolidated Financial Statements are an integral part of these statements.


JPM 166 JPMorgan Chase & Co./2023 Form 10-K

JPMorgan Chase & Co.


JPM Consolidated statements of comprehensive income

Year ended December 31, (in millions)####2023####2022####2021 Net income##$##49,552##$##37,676##$##48,334 Other comprehensive income/(loss), after–tax############ Unrealized gains/(losses) on investment securities####5,381####(11,764)####(5,540) Translation adjustments, net of hedges####329####(611)####(461) Fair value hedges####(101)####98####(19) Cash flow hedges####1,724####(5,360)####(2,679) Defined benefit pension and OPEB plans####373####(1,241)####922 DVA on fair value option elected liabilities####(808)####1,621####(293) Total other comprehensive income/(loss), after–tax####6,898####(17,257)####(8,070) Comprehensive income##$##56,450##$##20,419##$##40,264


JPM JPMorgan Chase & Co./2023 Form 10-K 167

JPMorgan Chase & Co.


JPM Consolidated balance sheets

December 31, (in millions, except share data)####2023####2022 Assets######## Cash and due from banks##$##29,066##$##27,697 Deposits with banks####595,085####539,537 Federal funds sold and securities purchased under resale agreements (included $259,813 and $311,883 at fair value)####276,152####315,592 Securities borrowed (included $70,086 and $70,041 at fair value)####200,436####185,369 Trading assets (included assets pledged of $128,994 and $93,687)####540,607####453,799 Available-for-sale securities (amortized cost of $205,456 and $216,188; included assets pledged of $9,219 and $9,158)####201,704####205,857 Held-to-maturity securities####369,848####425,305 Investment securities, net of allowance for credit losses####571,552####631,162 Loans (included $38,851 and $42,079 at fair value)####1,323,706####1,135,647 Allowance for loan losses####(22,420)####(19,726) Loans, net of allowance for loan losses####1,301,286####1,115,921 Accrued interest and accounts receivable####107,363####125,189 Premises and equipment####30,157####27,734 Goodwill, MSRs and other intangible assets####64,381####60,859 Other assets (included $12,306 and $14,921 at fair value and assets pledged of $6,764 and $7,998)####159,308####182,884 Total assets(a)##$##3,875,393##$##3,665,743 Liabilities######## Deposits (included $78,384 and $28,620 at fair value)##$##2,400,688##$##2,340,179 Federal funds purchased and securities loaned or sold under repurchase agreements (included $169,003 and $151,999 at fair value)####216,535####202,613 Short-term borrowings (included $20,042 and $15,792 at fair value)####44,712####44,027 Trading liabilities####180,428####177,976 Accounts payable and other liabilities (included $5,637 and $7,038 at fair value)####290,307####300,141 Beneficial interests issued by consolidated VIEs (included $1 and $5 at fair value)####23,020####12,610 Long-term debt (included $87,924 and $72,281 at fair value)####391,825####295,865 Total liabilities(a)####3,547,515####3,373,411 Commitments and contingencies (refer to Notes 28, 29 and 30)######## Stockholders’ equity######## Preferred stock ($1 par value; authorized 200,000,000 shares: issued 2,740,375 and 2,740,375 shares)####27,404####27,404 Common stock ($1 par value; authorized 9,000,000,000 shares; issued 4,104,933,895 shares)####4,105####4,105 Additional paid-in capital####90,128####89,044 Retained earnings####332,901####296,456 Accumulated other comprehensive losses####(10,443)####(17,341) Treasury stock, at cost (1,228,275,301 and 1,170,676,094 shares)####(116,217)####(107,336) Total stockholders’ equity####327,878####292,332 Total liabilities and stockholders’ equity##$##3,875,393##$##3,665,743


JPM Consolidated balance sheets

(a)The following table presents information on assets and liabilities related to VIEs that are consolidated by the Firm at December 31, 2023 and 2022. The assets of the consolidated VIEs are used to settle the liabilities of those entities. The holders of the beneficial interests do not have recourse to the general credit of JPMorgan Chase. The assets and liabilities in the table below include third-party assets and liabilities of consolidated VIEs and exclude intercompany balances that eliminate in consolidation. Refer to Note 14 for a further discussion. December 31, (in millions)####2023####2022 Assets######## Trading assets##$##2,170##$##2,151 Loans####37,611####34,411 All other assets####591####550 Total assets##$##40,372##$##37,112 Liabilities######## Beneficial interests issued by consolidated VIEs##$##23,020##$##12,610 All other liabilities####263####279 Total liabilities##$##23,283##$##12,889


JPM Consolidated balance sheets


JPM 168 JPMorgan Chase & Co./2023 Form 10-K

JPMorgan Chase & Co.


JPM Consolidated statements of changes in stockholders’ equity

Year ended December 31, (in millions, except per share data)####2023####2022####2021 Preferred stock############ Balance at January 1##$##27,404##$##34,838##$##30,063 Issuance####—####—####7,350 Redemption####—####(7,434)####(2,575) Balance at December 31####27,404####27,404####34,838 Common stock############ Balance at January 1 and December 31####4,105####4,105####4,105 Additional paid-in capital############ Balance at January 1####89,044####88,415####88,394 Shares issued and commitments to issue common stock for employee share-based compensation awards, and related tax effects####1,084####629####152 Other####—####—####(131) Balance at December 31####90,128####89,044####88,415 Retained earnings############ Balance at January 1####296,456####272,268####236,990 Cumulative effect of change in accounting principles####449####—####— Net income####49,552####37,676####48,334 Dividends declared:############ Preferred stock####(1,501)####(1,595)####(1,600) Common stock ($4.10, $4.00 and $3.80 per share for 2023, 2022 and 2021, respectively)####(12,055)####(11,893)####(11,456) Balance at December 31####332,901####296,456####272,268 Accumulated other comprehensive income/(loss)############ Balance at January 1####(17,341)####(84)####7,986 Other comprehensive income/(loss), after-tax####6,898####(17,257)####(8,070) Balance at December 31####(10,443)####(17,341)####(84) Treasury stock, at cost############ Balance at January 1####(107,336)####(105,415)####(88,184) Repurchase####(9,980)####(3,122)####(18,448) Reissuance####1,099####1,201####1,217 Balance at December 31####(116,217)####(107,336)####(105,415) Total stockholders’ equity##$##327,878##$##292,332##$##294,127


Effective January 1, 2023, the Firm adopted the Financial Instruments – Credit Losses: Troubled Debt Restructurings and Derivatives and Hedging: Fair Value Hedging – Portfolio Layer Method accounting guidance. Refer to Note 1 for further information.


JPM JPMorgan Chase & Co./2023 Form 10-K 169

JPMorgan Chase & Co.


JPM Consolidated statements of cash flows

Year ended December 31, (in millions)####2023####2022####2021 Operating activities############ Net income##$##49,552##$##37,676##$##48,334 Adjustments to reconcile net income to net cash provided by operating activities:############ Provision for credit losses####9,320####6,389####(9,256) Depreciation and amortization####7,512####7,051####7,932 Deferred tax (benefit)/expense####(4,534)####(2,738)####3,748 Bargain purchase gain associated with the First Republic acquisition####(2,775)####—####— Other####4,301####5,174####3,274 Originations and purchases of loans held-for-sale####(115,245)####(149,167)####(347,864) Proceeds from sales, securitizations and paydowns of loans held-for-sale####116,430####167,709####336,413 Net change in:############ Trading assets####(74,091)####(31,449)####85,710 Securities borrowed####(14,902)####20,203####(45,635) Accrued interest and accounts receivable####19,928####(22,970)####(12,401) Other assets####32,970####(2,882)####(11,745) Trading liabilities####5,315####11,170####(23,190) Accounts payable and other liabilities####(25,388)####58,614####43,162 Other operating adjustments####4,581####2,339####(398) Net cash provided by operating activities####12,974####107,119####78,084 Investing activities############ Net change in:############ Federal funds sold and securities purchased under resale agreements####39,740####(54,278)####34,473 Held-to-maturity securities:############ Proceeds from paydowns and maturities####53,056####48,626####50,897 Purchases####(4,141)####(33,676)####(111,756) Available-for-sale securities:############ Proceeds from paydowns and maturities####53,744####39,159####50,075 Proceeds from sales####108,434####84,616####162,748 Purchases####(115,499)####(126,258)####(248,785) Proceeds from sales and securitizations of loans held-for-investment####47,312####44,892####35,845 Other changes in loans, net####(88,343)####(128,968)####(91,797) Net cash used in First Republic Acquisition####(9,920)####—####— All other investing activities, net####(16,740)####(11,932)####(11,044) Net cash provided by/(used in) investing activities####67,643####(137,819)####(129,344) Financing activities############ Net change in:############ Deposits####(32,196)####(136,895)####293,764 Federal funds purchased and securities loaned or sold under repurchase agreements####13,801####8,455####(20,799) Short-term borrowings####(1,934)####(8,984)####7,773 Beneficial interests issued by consolidated VIEs####9,029####2,205####(4,254) Proceeds from long-term borrowings####75,417####78,442####82,409 Payments of long-term borrowings####(64,880)####(45,556)####(54,932) Proceeds from issuance of preferred stock####—####—####7,350 Redemption of preferred stock####—####(7,434)####(2,575) Treasury stock repurchased####(9,824)####(3,162)####(18,408) Dividends paid####(13,463)####(13,562)####(12,858) All other financing activities, net####(1,521)####234####(1,477) Net cash provided by/(used in) financing activities####(25,571)####(126,257)####275,993 Effect of exchange rate changes on cash and due from banks and deposits with banks####1,871####(16,643)####(11,508) Net increase/(decrease) in cash and due from banks and deposits with banks####56,917####(173,600)####213,225 Cash and due from banks and deposits with banks at the beginning of the period####567,234####740,834####527,609 Cash and due from banks and deposits with banks at the end of the period##$##624,151##$##567,234##$##740,834 Cash interest paid##$##77,114##$##23,143##$##5,142 Cash income taxes paid, net####9,908####4,355####18,737