JPMorgan to Record $1.1 bln TARP Repayment Charge

JPMorgan (JPM) has just announced in a regulatory filing that it expects to post a $1.1 billion charge in its q2 results after returning $25 billion in TARP funds to the U.S. government.

SEC Filing: On June 17, 2009, JPMorgan Chase & Co. (“JPMorgan Chase”) redeemed all of the outstanding shares of JPMorgan Chase’s Fixed Rate Cumulative Perpetual Preferred Stock, Series K, par value $1 and liquidation preference $10,000 per share (the “Series K Preferred Stock”), that were issued to the United States Department of the Treasury (the “U. S. Treasury”) pursuant to the Troubled Asset Relief Program (TARP), and repaid the U.S. Treasury the full $25,000,000,000 principal amount as a result thereof. In addition to this principal amount, JPMorgan Chase has paid the U.S. Treasury an aggregate of $795,138,889 in dividends on the Series K Preferred Stock, including dividends that had accrued through the redemption date. In connection with the redemption of all the outstanding shares of Series K Preferred Stock, on June 17, 2009, JPMorgan Chase also notified the U.S. Treasury of its intent to repurchase the 10-year warrant issued to the U.S. Treasury in connection with the Series K Preferred Stock.

As a result of the redemption of the Series K Preferred Stock, JPMorgan Chase will incur a one-time, non-cash negative adjustment of approximately $1.1 billion in the calculation of earnings per share (i.e., a reduction in net income applicable to common stockholders), reflecting the accelerated amortization of issuance discount on such Series K Preferred Stock. The effect of this negative adjustment is expected to reduce reported diluted earnings per common share for the second quarter of 2009 by approximately $0.27 per share.

JP also said it has paid nearly $800 million in dividends on the preferred stock it issued to the government in the fall.

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