JP Morgan Chase 2009 Annual Report Download - page 122

Management’s discussion and analysis
JPMorgan Chase & Co./2009 Annual Report
120
The consumer credit portfolio is geographically diverse. The
greatest concentration of loans is in California, which represents
18% of total on-balance sheet consumer loans and 24% of total
residential real estate loans at December 2009, compared to
19% and 25%, respectively, at December 2008. Of the total on-
balance sheet consumer loan portfolio, $149.4 billion, or 43%,
are concentrated in California, New York, Arizona, Florida and
Michigan at December 2009 compared to $171.1 billion, or 43%,
at December 2008.
Declining home prices have had a significant impact on the esti-
mated collateral value underlying the Firm’s residential real estate
loan portfolio. In general, the delinquency rate for loans with high
current estimated combined LTV ratios is greater than the delin-
quency rate for loans in which the borrower has equity in the
collateral. While a large portion of the loans with current esti-
mated combined LTV ratios greater than 100% continue to pay
and are current, the continued willingness and ability of these
borrowers to pay is currently uncertain. Nonperforming loans in
the residential real estate portfolio totaled $9.6 billion, of which
64% was greater than 150 days past due at December 31, 2009.
Of the nonperforming loans that were greater than 150 days past
due at December 31, 2009, approximately 36% of the unpaid
principal balance of these loans has been charged-down to
estimated collateral value.
Consumer 30+ day delinquency information
30+ day delinquent loans 30+ day delinquency rate
December 31, (in millions, except ratios) 2009 2008 2009 2008
Consumer loans – excluding purchased credit-impaired loans(a)
Home equity – senior lien $ 833 $ 585 3.04% 1.96%
Home equity – junior lien 2,515 2,563 3.40 3.03
Prime mortgage 5,532(b) 3,180(b) 8.21(d) 4.39(d)
Subprime mortgage 4,232 3,760 33.79 24.53
Option ARMs 438 68 5.13 0.75
Auto loans 750 963 1.63 2.26
Credit card – reported 6,093 5,653 7.73 5.40
All other loans 1,306(c) 708(c) 3.91 1.99
Total consumer loans – excluding purchased credit-impaired
loans – reported $ 21,699 $ 17,480 6.23% 4.44%
Credit card – securitized 4,174 3,811 4.93 4.45
Total consumer loans – excluding purchased credit-impaired
loans – managed $ 25,873 $ 21,291 5.98% 4.44%
Memo: Credit card – managed $ 10,267 $ 9,464 6.28% 4.97%
(a) The delinquency rate for purchased credit-impaired loans, which is based on the unpaid principal balance, was 27.79% and 17.89% at December 31, 2009 and 2008,
respectively.
(b) Excludes 30+ day delinquent mortgage loans that are insured by U.S. government agencies of $9.7 billion and $3.5 billion at December 31, 2009 and 2008, respec-
tively. These amounts are excluded, as reimbursement is proceeding normally.
(c) Excludes 30+ day delinquent loans that are 30 days or more past due and still accruing, which are insured by U.S. government agencies under the Federal Family
Education Loan Program, of $942 million and $824 million at December 31, 2009 and 2008, respectively. These amounts are excluded as reimbursement is proceeding
normally.
(d) The denominator for the calculation of the 30+ day delinquency rate includes: (1) residential real estate loans reported in the Corporate/Private Equity segment; and (2)
mortgage loans insured by U.S. government agencies. The 30+ day delinquency rate excluding these loan balances was 11.24% and 5.14% at December 31, 2009 and
2008, respectively.
Consumer 30+ day delinquencies have increased to 6.23% of the consumer loan portfolio at December 31, 2009, in comparison to 4.44% at
December 31, 2008, driven predominately by an increase in residential real estate delinquencies which increased $3.4 billion. Late stage
delinquencies (150+ days delinquent) increased significantly reflecting the impacts of trial loan modifications and foreclosure moratorium
backlogs. Losses related to these loans continue to be recognized in accordance with the Firm's normal charge-off practices; as such, these
loans are reflected at their estimated collateral value. Early stage delinquencies (30 - 89 days delinquent) in the residential real estate portfo-
lios have remained relatively flat year over year.