JP Morgan Chase 2010 Annual Report Download - page 185

JPMorgan Chase & Co./2010 Annual Report 185
The following table provides the impact of credit adjustments on
earnings in the respective periods, excluding the effect of any
hedging activity.
Year ended December 31,
(in millions) 2010 2009 2008
Credit adjustments:
Derivative CVA
(a)
$ (665) $ 5,869 $ (7,561 )
Derivative DVA 41 (548)
(c)
789
Structured note DVA
(b)
468 (1,748)
(c)
1,211
(a) Derivatives CVA, gross of hedges, includes results managed by credit portfo-
lio and other lines of business within IB.
(b) Structured notes are measured at fair value based on the Firm’s election
under the fair value option. For further information on these elections, see
Note 4 on pages 187–189 of this Annual Report.
(c) The 2009 prior period has been revised.
Additional disclosures about the fair value of financial
instruments (including financial instruments not carried at
fair value)
U.S. GAAP requires disclosure of the estimated fair value of certain
financial instruments, and the methods and significant assump-
tions used to estimate their fair value. Financial instruments within
the scope of these disclosure requirements are included in the
following table. However, certain financial instruments and all
nonfinancial instruments are excluded from the scope of these
disclosure requirements. Accordingly, the fair value disclosures
provided in the following table include only a partial estimate of
the fair value of JPMorgan Chase’s assets and liabilities. For exam-
ple, the Firm has developed long-term relationships with its cus-
tomers through its deposit base and credit card accounts,
commonly referred to as core deposit intangibles and credit card
relationships. In the opinion of management, these items, in the
aggregate, add significant value to JPMorgan Chase, but their fair
value is not disclosed in this Note.
Financial instruments for which carrying value approximates fair value
Certain financial instruments that are not carried at fair value on
the Consolidated Balance Sheets are carried at amounts that
approximate fair value, due to their short-term nature and gen-
erally negligible credit risk. These instruments include cash and
due from banks; deposits with banks; federal funds sold; securi-
ties purchased under resale agreements and securities borrowed
with short-dated maturities; short-term receivables and accrued
interest receivable; commercial paper; federal funds purchased;
securities loaned and sold under repurchase agreements with
short-dated maturities; other borrowed funds (excluding ad-
vances from the Federal Home Loan Banks (“FHLBs”)); accounts
payable; and accrued liabilities. In addition, U.S. GAAP requires
that the fair value for deposit liabilities with no stated maturity
(i.e., demand, savings and certain money market deposits) be
equal to their carrying value; recognition of the inherent funding
value of these instruments is not permitted.