JP Morgan Chase 2010 Annual Report Download - page 78

Management’s discussion and analysis
JPMorgan Chase & Co./2010 Annual Report
78
Selected metrics
As of or for the year ended
December 31, (in billions) 2010 2009 2008
Loans excluding PCI loans
(a)
End-of-period loans owned:
Home equity
$
88.4
$ 101.4 $
114.3
Prime mortgage
4
1.7
47.5 58.7
Subprime mortgage
11.3
12.5 15.3
Option ARMs
8.1
8.5 9.0
Other
0.8
0.7 0.9
Total end
-
of
-
period loans owned
$
150.3
$ 170.6 $ 198.2
Average loans owned:
Home equity $ 94.8 $ 108.3 $ 99.9
Prime mortgage
44.9
53.4 40.7
Subprime mortgage
12.7 13.9 15.3
Option ARMs
8.5 8.9 2.3
Other
1.0
0.8 0.9
Total average loans owned
$
161.9
$ 185.3 $ 159.1
PCI loans(a)
End-of-period loans owned:
Home equity
$
24.5
$ 26.5 $ 28.6
Prime mortgage
17.3
19.7 21.8
Subprime mortgage
5.4
6.0 6.8
Option ARMs
25.6
29.0 31.6
Total end
-
of
-
period loans owned
$
72.8
$ 81.2 $ 88.8
Average loans owned:
Home equity
$
25.5
$ 27.6 $ 7.1
Prime mortgage
18.5
20.8 5.4
Subprime mortgage
5.7
6.3 1.7
Option ARMs
27.2
30.5 8.0
Total average loans owned
$
76.9
$ 85.2 $ 22.2
Total Real Estate Portfolios
End-of-period loans owned:
Home equity
$
112.9
$ 127.9
$ 142.9
Prime mortgage
59.
0
67.2 80.5
Subprime mortgage
16.7
18.5 22.1
Option ARMs
33.7
37.5 40.6
Other
0.8
0.7 0.9
Total end
-
of
-
period loans owned
$
223.1
$ 251.8 $ 287.0
Average loans owned:
Home equity
$
120.3
$ 135.9 $ 107.0
Prime mortgage
63
.4
74.2 46.1
Subprime mortgage
18.4
20.2 17.0
Option ARMs
35.7
39.4 10.3
Other
1.0
0.8 0.9
Total average loans owned
$
238.8
$ 270.5 $ 181.3
Average assets
$
227.0
$ 263.6 $ 179.3
Home equity origination volume
1.2
2.4 16.3
(a) PCI loans represent loans acquired in the Washington Mutual transaction for
which a deterioration in credit quality occurred between the origination date and
JPMorgan Chase’s acquisition date. These loans were initially recorded at fair
value and accrete interest income over the estimated lives of the loans as long
as cash flows are reasonably estimable, even if the underlying loans are
contractually past due.
Credit data and quality statistics
As of or for the year ended
December 31, (in millions, except ratios) 2010 2009
2008
Net charge-offs excluding PCI loans
(a)
:
Home equity
$
3,444
$
4,682
$
2,391
Prime mortgage
1,475
1,872
521
Subprime mortgage
1,374
1,648
933
Option ARMs
98
63
—
Other
59
78
49
Total net charge
-
offs
$
6,450
$ 8,343 $
3,894
Net charge
-
off rate excluding
PCI
loans(a):
Home equity
3.63
%
4.32
%
2.39
%
Prime mortgage
3.29
3.51
1.28
Subprime mortgage
10.82
11.86
6.10
Option ARMs
1.15
0.71
—
Other
5.90
9.75
5.44
Total net charge
-
off rate
excluding PCI loans 3.98 4.50
2.45
Net charge-off rate – reported:
Home equity
2.86
%
3.45
%
2.23
%
Prime mortgage
2.33
2.52
1.13
Subprime mortgage
7.47
8.16
5.49
Option ARMs
0.27
0.16
—
Other
5.90
9.75
5.44
Total net charge
-
off rate
–
reported 2.70 3.08
2.15
30+ day delinquency rate excluding
PCI loans(b) 6.45
%
7.73
%
4.97
%
Allowance for loan losses
$14,659
$ 12,752
$ 7,510
Nonperforming assets
(c)
8,424
10,347
7,787
Allowance for loan losses to ending
loans retained 6.57
%
5.06
%
2.62
%
Allowance for loan losses to ending
loans retained excluding PCI loans(a) 6.47
6.55
3.79
(a) Excludes the impact of PCI loans that were acquired as part of the
Washington Mutual transaction. These loans were accounted for at fair
value on the acquisition date, which incorporated management’s estimate,
as of that date, of credit losses over the remaining life of the portfolio. An
allowance for loan losses of $4.9 billion and $1.6 billion was recorded for
these loans at December 31, 2010 and 2009, respectively, which has also
been excluded from the applicable ratios. No allowance for loan losses was
recorded for these loans at December 31, 2008. To date, no charge-offs
have been recorded for these loans.
(b) The delinquency rate for PCI loans was 28.20%, 27.62% and 17.89% at
December 31, 2010, 2009 and 2008, respectively.
(c) Excludes PCI loans that were acquired as part of the Washington Mutual
transaction, which are accounted for on a pool basis. Since each pool is
accounted for as a single asset with a single composite interest rate and
an aggregate expectation of cash flows, the past-due status of the pools,
or that of the individual loans within the pools, is not meaningful.
Because the Firm is recognizing interest income on each pool of loans,
they are all considered to be performing.