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NEW YORK — JPMorgan Chase & Co. said Friday it expects to record a $1.1 billion charge against its second-quarter earnings from its early repayment of $25 billion in taxpayer money the bank received under a federal bailout program.
New York-based JPMorgan disclosed in a Securities and Exchange Commission filing that it expects the noncash charge to shave 27 cents per share from its second-quarter earnings.
Analysts surveyed by Thomson Reuters expect JPMorgan to post a profit of 37 cents per share, on average, for the quarter ended June 30. Analysts' estimates typically exclude one-time items like the charge that JPMorgan disclosed Friday.
JPMorgan said it has paid more than $795.1 million in dividends on preferred stock it issued to the government under the Troubled Asset Relief Program, in addition to repaying the $25 billion principal.
JPMorgan is among 10 big banks that repaid more than $68 billion to the program on Wednesday. JPMorgan's $25 billion was the largest repayment among those 10 banks, followed by the $10 billion each from Goldman Sachs Group Inc. and Morgan Stanley.
Goldman Sachs said its repayment will reduce second-quarter earnings by about 77 cents per share, while Morgan Stanley expects a second-quarter charge of $892 million.
The government's shares carried a 5 percent annual dividend rate that was to increase to 9 percent after five years. The rate increase was aimed at providing an incentive for the banks to return the money, but the repayments made Wednesday came sooner than many anticipated.
On Wednesday, Moody's Investors Service said the $68 billion in TARP repayments were not in the interest of the banks' creditors in the short run.
The ratings agency said "the repayments have the immediate effect of lowering capital levels and of shrinking liquidity positions at a time when economic and financial market conditions remain highly unsettled."
JPMorgan also advised he government Wednesday that it plans to repurchase 10-year warrants issued as part of the government's investment in the bank. The warrants granted the government the right to buy shares at a fixed price over the next 10 years. Banks repaying TARP now have the right to purchase the warrants the Treasury holds at fair market value.
Shares of JPMorgan on Friday rose 83 cents, or about 2.4 percent, to $35.
