JP Morgan Chase 2009 Annual Report Download - page 255

Glossary of terms
JPMorgan Chase & Co./2009 Annual Report 253
Principal transactions: Realized and unrealized gains and losses
from trading activities (including physical commodities inventories
that are accounted for at the lower of cost or fair value) and
changes in fair value associated with financial instruments held by
the Investment Bank for which the fair value option was elected.
Principal transactions revenue also include private equity gains and
losses.
Purchased credit-impaired loans: Acquired loans deemed to be
credit-impaired under the FASB guidance for purchased credit-
impaired loans. The guidance allows purchasers to aggregate
credit-impaired loans acquired in the same fiscal quarter into one or
more pools, provided that the loans have common risk characteris-
tics (e.g., FICO score, geographic location). A pool is then ac-
counted for as a single asset with a single composite interest rate
and an aggregate expectation of cash flows. Wholesale loans were
determined to be credit-impaired if they meet the definition of an
impaired loan under U.S. GAAP at the acquisition date. Consumer
loans are determined to be purchased credit-impaired based on
specific risk characteristics of the loan, including product type, loan-
to-value ratios, FICO scores, and past due status.
Receivables from customers: Primarily represents margin loans
to prime and retail brokerage customers which are included in
accrued interest and accounts receivable on the Consolidated
Balance Sheets for the wholesale lines of business.
Reported basis: Financial statements prepared under U.S. GAAP.
The reported basis includes the impact of credit card securitizations
but excludes the impact of taxable-equivalent adjustments.
Seed capital: Initial JPMorgan capital invested in products, such
as mutual funds, with the intention of ensuring the fund is of
sufficient size to represent a viable offering to clients, enabling
pricing of its shares, and allowing the manager to develop a com-
mercially attractive track record. After these goals are achieved, the
intent is to remove the Firm’s capital from the investment.
Stress testing: A scenario that measures market risk under
unlikely but plausible events in abnormal markets.
Unaudited: Financial statements and information that have not
been subjected to auditing procedures sufficient to permit an
independent certified public accountant to express an opinion.
U.S. GAAP: Accounting principles generally accepted in the United
States of America.
U.S. government and federal agency obligations: Obliga-
tions of the U.S. government or an instrumentality of the U.S.
government whose obligations are fully and explicitly guaranteed
as to the timely payment of principal and interest by the full faith
and credit of the U.S. government.
U.S. government-sponsored enterprise obligations: Obliga-
tions of agencies originally established or chartered by the U.S.
government to serve public purposes as specified by the U.S. Con-
gress; these obligations are not explicitly guaranteed as to the
timely payment of principal and interest by the full faith and credit
of the U.S. government.
Value-at-risk (“VaR”): A measure of the dollar amount of poten-
tial loss from adverse market moves in an ordinary market envi-
ronment.