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JPMorgan EPS Hit by Accounting Change

JPMorgan Chase reduced earnings per share reported over a five-year span ending last year by several cents each, due to an accounting change.

JPMorgan Chase

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reduced earnings per share reported over a five-year span ending last year by several cents each, due to accounting rule changes for treatment of unvested stock-based compensation awards.

The Financial Accounting Standards Board rule change requires companies to include restricted shares in its calculation for how many shares were outstanding for each year. A larger share total reduces the earnings per share figure. The change did not affect JPMorgan's actual net income, financial position or regulatory capital for any of the years, according to the filing.

JPMorgan said diluted earnings per share for 2008 decreased by 2 cents from what was reported to $1.35 a share, according to a

Securities and Exchange Commission

filing Friday. Earnings from continuing operations were lowered by 3 cents to 81 cents a share.

Earnings for year-end 2007 were lowered by 5 cents to $4.33 a share; by 4 cents to $4 a share for 2006; by 3 cents to $2.35 a share in 2005; and 3 cents to $1.52 a share in 2004, the filing said.

The changes reflect the adoption on Jan. 1 of a FASB Staff Position "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities," according to the filing.

The rule "clarifies that unvested stock-based compensation awards containing nonforfeitable rights to dividends or dividend equivalents, are considered participating securities and therefore are included in the two-class method calculation of EPS," JPMorgan Chase says in the filing.

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"Under the two-class method, all earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights to receive dividend," it added.

Shares were slipping fractionally on Friday. Shares of other large banks including

Bank of America

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Wells Fargo

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were falling as well.


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stock was up 1.4%.