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Chase Bank

In: Business and Management

Submitted By dmarzilli1
Words 1526
Pages 7
HISTORY:
JP Morgan Chase & Co is one of the oldest, largest and best known financial institutions in the world. It is a result of a combination of several large US banking companies and over 1200 predecessors. It dates back to 1799. Chase bank is a subsidiary of JpMorgan Chase & Co that specializes in?. The Chase brand is used for credit card services in the United States and Canada, the bank's retail banking activities in the United States, and commercial banking. It is a national bank that constitutes the consumer and commercial banking subsidiary of financial services firm JPMorgan Chase.
The history of Chase Bank dates back to September 1st, 1799 when the Manhattan Company was founded by Aaron Burr as a water carrier company. Burr’s goal was to bring clean water to New York City and put a stop to the monopoly that the Bank of New York and the federal bank had on the state. Alexander Hamilton started Bank of New York in 1784. The Mannhattan Company received its charter in an unusual way, through Burrs’ political connections in New York. Being a former congress man and vice president as well as other prominent positions, he sponsored abill through the New York assembly that established the water company which in turn allowed the creation of a bank. A clause in the bill allowed the company to invest surplus capital in any lawful enterprise. The Bank of Mannhattan started paying dividends in June 1800. The water carrier/bank was off and running. In 1804 Burr was successful in his task. He killed Hamilton in a duel. In 1853 the Manhattan Company became one of the original 52 members of the New York Clearing House Association. The Manhattan Company turned Chase National Bank was founded in 1877 by John Thompson and named after former United States Treasury Secretary Samuel P. Chase who had no relation to the bank. Chase is primarily a wholesale bank dealing with large corporations and other prominent financial institutions. In the 1920’s Chase National Bank acquired a number of smaller banks, one of them being Mechanics and Metals National Bank. The most equitable acquisition came in 1930 when they acquired Equitable Trust Company of New York, whose largest stockholder was John D Rockefeller Jr. This acquisition made Chase National Bank the largest bank in the world. The bank, having close ties to Rockefeller, became a crucial first tenant of Rockefeller Center. Chase has a special relationship with the oil industry, they have financed it. They have long lasting connections with the board of directors of Standard Oil and ExxonMobil, both Rockefeller holdings. John D Rockefeller and the Rockefeller family are the largest shareholders of Chase National Bank. In 1955 the bank merged with Chase National Bank to form Chase Manhattan. Led by David Rockefeller during the 1970s and the 1980s, Chase Manhattan emerged as one of the largest and most prestigious banking. In 1996 the bank was acquired by Chemical Bank but remained with the prominent Chase name. At the time it was the largest bank holding company in the US. In 1999 it acquired San Francisco-based Hambrecht & Quist for $1.35 billion and in April 2000 aquired UK-based Robert Fleming & Co. for 7.7 billion. In December of 2000 the bank acquired J.P. Morgan & Co. to become JPMorgan Chase & Co, the second largest bank in the US.
. Within six months of the company's creation, and long before it had laid a single section of water pipe, the company opened a bank, the Bank of the Manhattan Company. Still in existence, it is today J.P.Morgan Chase, the second largest bank in the United States.
RATIOS:
Ratio Chase Dec 2010 Chase Dec 2009 % Change 2010 t0 2009 Industry Average
Return on Assets 0.82% 0.57% 21% 9%
Return on Equity 10.32% 7.41% 30% 15%
Profit Margin 15.04% 10.08% 24% 5%
Debt 55.63% 59.29% -7% 40%
Equity Multiplier 12.2 12.28 0
Asset Utilization 5.4 5.7 .3 (In Millions)
The ROA of Chase is .082%, an increase of 67%. The return on assets (ROA) percentage shows how profitable a company's assets are in generating revenue. Way below the industry average. The ROE is 10.32%. Return on equity (ROE) measures the rate of return on the ownership interest (shareholders' equity) of the common stock owners. It measures a firm's efficiency at generating profits from every unit of shareholders' equity. An increase of 71% from 2009. Profit margin is 15.04%. A low profit margin indicates a low margin of safety: higher risk that a decline in sales will erase profits and result in a net loss, or a negative margin. A increase of 67% as of 2009. The debt ratio is 55.63%> An decrease of 7% as of 2009, well above industry average. The higher the ratio, the greater risk will be associated with the firm's operation. In addition, high debt to assets ratio may indicate low borrowing capacity of a firm, which in turn will lower the firm's financial flexibility. . The debt/asset ratio shows the proportion of a company's assets which are financed through debt. If the ratio is less than 0.5, most of the company's assets are financed through equity. If the ratio is greater than 0.5, most of the company's assets are financed through debt. Companies with high debt/asset ratios are said to be "highly leveraged," not highly liquid. The equity multiplier is 12.28 in 2010. It is about the same as last year. The asset utilization ratio is 5.4, which is down 7% from 2009. Asset turnover is a financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue or sales income to the company. The companys stock is currently trading on the New York Stock Exchange. It is currently trading at 30.27 per share. It is currently down $1 from yesterday. This is equivalent to a an 3.18% decrease. In comparison to the Dow Jones, which is at 26.33. This is down $ 0.63 from yesterday which is decrease of 2.13%. The stock seems to be doing slightly better than the Dow Jones.
BALANCE SHEET/INCOME STATEMENT:
Balance Sheet (In Millions)
Total Assets……………………………………………………………2,117,605.
Total Debt……………………………………1,178,038.
Common Equity……………………………..168,306.
Total Equity…………………………………….176106.

Income Staement (In Millions)
Sales………………………………………………………………………..…115,475.
Net Income…………………….17,370

TARP PROGRAM 2008: The Troubled Asset Relief Program (TARP) was a program where the US government would purchase assets and equity from financial institutions to strengthen its financial sector during the subprime mortgage crisis. This was to encourage banks to expand lending during a credit squeeze. JPMorgan Chase received an initial bailout of 25 billion. The program was to help promote market stability, according to the government. At the time of the program, financial institutions stated that lending was not a priority. Although it did help JPMorgan Chase seem more stable in comparison to the market, it did not seem profitable to the bank. They were told that they would not be able to recoop loses that were incurred by these troubled asstes bought by the government. They were told that once these assets started trading again, their price would stabilize and actally increase significantly. Once the banks realzed that TARP would give the US government leverage over them, they were eager to get out of the arraingement. The companies didn’t like the restrictions, especially what they can pay their top 25 most highly compensated workers. Due to paybacks, the 700 Billion bailout has turned out to be less than 450 billion The Us government attempt to overhaul the industry was met by hesitation by banks not actually needing the TARP funds . Now another unforeseen problem occurs. Allowing lenders to pull out early before an industry has a chance to stabilize. GENERAL INFORMATION
Chase is a national bank that gained its charter in 1799. Now with 3000 locations throughout the US makes Chase available to customers in every state in the US. It also operates in over 100 countries. It is led by a very strong and competent management team, oversaw by James Dimon CEO. The Board of Directors consists of a diverse group of prominent CEO’s, CFO’s and analyists from very prominent companies. These companies include Boeing, NBC Universal, Exxon Mobil, Johnson & Johnson, as well as the Federal Reseve.
COMMENTS:
I would keep my money at this bank as I do. It is the second largest financial institution in the US led by a team of very well experienced leaders. Even though the debt ratio shows the company above industry risk, I would still confide in this bank due to its ROE and ROA. Due to its extensive relations with prominent figures since its initial charter I believe the solvency of the bank is concrete for a long time. It is one of the leaders of its industrt with a market cap of 126. 6billion
BIBLIOGRAPHY:
1. MSN.com/money
2. Yahoo Finance.com
3. NY Times June 9th 2009 by Eric Dash
4. JPMorgan Chase.com

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