JP Morgan Chase 2008 Annual Report Download - page 63

JPMorgan Chase & Co./ 2008 Annual Report 61
Year ended December 31,
(in billions) 2008 2007 2006
Total consumer lending portfolio
End-of-period loans owned
Home equity $ 142.9 $ 94.8 $ 85.7
Prime mortgage 87.0 34.0 46.5
Subprime mortgage 22.1 15.5 13.2
Option ARMs 40.6 ——
Student loans 15.9 11.0 10.3
Auto loans 42.6 42.3 41.0
Other 1.3 2.1 2.8
Total end-of-period loans $ 352.4 $ 199.7 $ 199.5
Average loans owned
Home equity $ 107.0 $ 90.4 $ 78.3
Prime mortgage 50.4 30.4 43.3
Subprime mortgage 17.0 12.7 15.4
Option ARMs 10.3 ——
Student loans 13.6 10.5 8.3
Auto loans 43.8 41.1 42.7
Other 1.1 2.3 2.4
Total average loans owned(b) $ 243.2 $ 187.4 $ 190.4
(a) Purchased credit-impaired loans represent loans acquired in the Washington Mutual
transaction that are accounted for under SOP 03-3.
(b) Total average loans owned includes loans held-for-sale of $2.8 billion, $10.6 billion and
$16.1 billion for the years ended December 31, 2008, 2007 and 2006, respectively.
Credit data and quality statistics
(in millions, except ratios) 2008 2007 2006
Net charge-offs excluding
purchased credit-impaired(a)
Home equity $ 2,391 $ 564 $ 143
Prime mortgage 526 33 9
Subprime mortgage 933 157 47
Option ARMs ———
Auto loans 568 354 238
Other 113 79 25
Total net charge-offs $ 4,531 1,187 462
Net charge-off rate excluding
purchased credit-impaired(a)
Home equity 2.39% 0.62% 0.18%
Prime mortgage 1.18 0.13 0.03
Subprime mortgage 6.10 1.55 0.34
Option ARMs ———
Auto loans 1.30 0.86 0.56
Other 0.93 0.88 0.31
Total net charge-off rate
excluding purchased
credit-impaired(b) 2.08 0.67 0.27
Net charge-off rate – reported
Home equity 2.23% 0.62% 0.18%
Prime mortgage 1.05 0.13 0.03
Subprime mortgage 5.49 1.55 0.34
Option ARMs ———
Auto loans 1.30 0.86 0.56
Other 0.93 0.88 0.31
Total net charge-off rate(b) 1.89 0.67 0.27
30+ day delinquency rate excluding
purchased credit-impaired(c)(d)(e) 4.21% 3.10% 1.80%
Nonperforming assets(f)(g)(h) $ 8,653 $ 3,084 $ 1,658
Allowance for loan losses to
ending loans 2.36% 1.24% 0.64%
Allowance for loan losses to
ending loans excluding purchased
credit-impaired loans(a) 3.16 1.24 0.64
(a) Excludes the impact of purchased credit-impaired loans accounted for under SOP
03-3 that were acquired as part of the Washington Mutual transaction. Under SOP
03-3, these loans were accounted for at fair value on the acquisition date, which
includes the impact of estimated credit losses over the remaining lives of the loans.
Accordingly, no charge-offs and no allowance for loan losses has been recorded for
these loans.
(b) Average loans included loans held-for-sale of $2.8 billion, $10.6 billion and $16.1
billion for the years ended December 31, 2008, 2007 and 2006, respectively. These
amounts were excluded when calculating the net charge-off rate.
(c) Excluded loans eligible for repurchase as well as loans repurchased from GNMA
pools that are insured by U.S. government agencies of $3.2 billion, $1.2 billion and
$960 million, at December 31, 2008, 2007 and 2006, respectively. These amounts
were excluded, as reimbursement is proceeding normally.
(d) Excluded loans that are 30 days past due and still accruing, which are insured by
U.S. government agencies under the Federal Family Education Loan Program of
$824 million, $663 million and $464 million at December 31, 2008, 2007 and
2006, respectively. These amounts are excluded as reimbursement is proceeding
normally.
(e) Excludes purchased credit-impaired loans. The 30+ day delinquency rate for these
loans was 17.89% at December 31, 2008. There were no purchased credit-impaired
loans at December 31, 2007 and 2006.
(f) Nonperforming assets excluded (1) loans eligible for repurchase as well as loans
repurchased from GNMA pools that are insured by U.S. government agencies of
$3.3 billion, $1.5 billion and $1.2 billion at December 31, 2008, 2007 and 2006,
respectively, and (2) student loans that are 90 days past due and still accruing,
which are insured by U.S. government agencies under the Federal Family Education
Loan Program of $437 million, $417 million and $387 million at December 31,
2008, 2007 and 2006, respectively. These amounts for GNMA and student loans are
excluded, as reimbursement is proceeding normally.
(g) During the second quarter of 2008, the policy for classifying subprime mortgage
and home equity loans as nonperforming was changed to conform to all other
home lending products. Amounts for 2007 have been revised to reflect this change.
Amounts for 2006 have not been revised as the impact was not material.
(h) Excludes purchased credit-impaired loans accounted for under SOP 03-3 that were
acquired as part of the Washington Mutual transaction. These loans are accounted
for on a pool basis, and the pools are considered to be performing under SOP 03-3.