JP Morgan Chase 2014 Annual Report Download - page 86

Management’s discussion and analysis
84 JPMorgan Chase & Co./2014 Annual Report
Mortgage Banking
Selected Financial statement data
As of or for the year ended
December 31,
(in millions, except ratios) 2014 2013 2012
Revenue
Mortgage fees and related
income $ 3,560 $ 5,195 $ 8,680
All other income 37 283 475
Noninterest revenue 3,597 5,478 9,155
Net interest income 4,229 4,758 5,016
Total net revenue 7,826 10,236 14,171
Provision for credit losses (217) (2,681) (490)
Noninterest expense 5,284 7,602 9,121
Income before income tax
expense 2,759 5,315 5,540
Net income $ 1,668 $ 3,211 $ 3,468
Return on common equity 9% 16% 19%
Overhead ratio 68 74 64
Equity (period-end and
average) $ 18,000 $ 19,500 $ 17,500
2014 compared with 2013
Mortgage Banking net income was $1.7 billion, a decrease
of $1.5 billion, or 48%, from the prior year, driven by a
lower benefit from the provision for credit losses and lower
net revenue, partially offset by lower noninterest expense.
Net revenue was $7.8 billion, a decrease of $2.4 billion, or
24%, compared with the prior year. Net interest income
was $4.2 billion, a decrease of $529 million, or 11%,
driven by spread compression and lower loan balances due
to portfolio runoff and lower warehouse balances.
Noninterest revenue was $3.6 billion, a decrease of $1.9
billion, or 34%, driven by lower mortgage fees and related
income.
The provision for credit losses was a benefit of $217
million, compared with a benefit of $2.7 billion in the prior
year. The current year reflected a $700 million reduction in
the allowance for loan losses, reflecting continued
improvement in home prices and delinquencies. The prior
year included a $3.8 billion reduction in the allowance for
loan losses. Net charge-offs were $483 million, compared
with $1.1 billion in the prior year.
Noninterest expense was $5.3 billion, a decrease of $2.3
billion, or 30%, from the prior year, due to lower expense in
production and servicing reflecting lower headcount-related
expense, the absence of non-MBS related legal expense and
lower expense on foreclosure-related matters.
2013 compared with 2012
Mortgage Banking net income was $3.2 billion, a decrease
of $257 million, or 7%, compared with the prior year,
driven by lower net revenue, predominantly offset by a
higher benefit from the provision for credit losses and lower
noninterest expense.
Net revenue was $10.2 billion, a decrease of $3.9 billion, or
28%, compared with the prior year. Net interest income
was $4.8 billion, a decrease of $258 million, or 5%, driven
by lower loan balances due to net portfolio runoff.
Noninterest revenue was $5.5 billion, a decrease of $3.7
billion, driven by lower mortgage fees and related income.
The provision for credit losses was a benefit of $2.7 billion,
compared with a benefit of $490 million in the prior year.
The current year reflected a $3.8 billion reduction in the
allowance for loan losses due to continued improvement in
home prices and delinquencies. The prior year included a
$3.9 billion reduction in the allowance for loan losses.
Noninterest expense was $7.6 billion, a decrease of $1.5
billion, or 17%, from the prior year, due to lower servicing
expense, partially offset by higher non-MBS related legal
expense in Mortgage Production.