Jamie Dimon’s Shareholder Letter

Jamie Dimon just released this year’s shareholder letter. Here’s the whole thing and below is a story from Dow Jones:

J.P. Morgan Chase & Co. (JPM) could earn between $22 billion and $24 billion a year in a “normal” business environment, Chief Executive Jamie Dimon told shareholders in his annual letter.

The forecast represents the possibility the nation’s second biggest bank by assets, behind Bank of America Corp. (BAC), could grow earnings by more than 40% from 2010’s profit, which was a record $17 billion. The forecast would be double 2009 earnings.

Dimon didn’t give a time frame when the more “normal” earnings could be booked.

Dimon’s long letter to holders reiterated much of what he’s said publicly recently, including his plethora of concerns about regulations and their costs, warning that if reforms aren’t implemented carefully they could hurt the banking industry in the U.S.

And only weeks after the bank boosted its quarterly dividend as a result of passing the Federal Reserve’s stress tests, Dimon said “if it were up to me personally, I would reinvest all the capital into our company and not pay any dividend–but this is not what most shareholders want.”

He wrote that the bank’s first priority is to invest in organic growth. His second priority for capital would be to find acquisitions, both large and small. His third priority would be share buybacks.

Dimon’s letter also touted the bank’s survival through the crisis, saying it has gained market share and is positioned for future growth.

“Looking at these results in the context of the last three difficult years, what particularly pleases me is how exceptionally our company performed, not in absolute financial terms but in human terms,” he wrote.

“I remain, perhaps naively, optimistic,” he added.

JPM currently has 3.91 billion shares so Dimon’s forecast translates to an earnings-per-share range of $5.63 to $6.14. The stock closed yesterday at $47.40 which is roughly eight times Dimon’s “normal” environment estimate.

(By the way, Dimon’s $20.8 million pay package is in the news today. You’ll see plenty of phony outrage. Let’s remember that this works out to about half-a-penny per share.)

Posted by on April 8th, 2011 at 8:47 am


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