JP Morgan Chase 2014 Annual Report Download - page 90

Management’s discussion and analysis
88 JPMorgan Chase & Co./2014 Annual Report
Credit data and quality statistics
As of or for the year ended
December 31,
(in millions, except ratios) 2014 2013 2012
Net charge-offs/
(recoveries), excluding PCI
loans:(a)(b)
Home equity $ 473 $ 966 $ 2,385
Prime mortgage, including
option ARMs 22 41 454
Subprime mortgage (27) 90 486
Other 910 16
Total net charge-offs/
(recoveries), excluding
PCI loans $ 477 $ 1,107 $ 3,341
Net charge-off/(recovery)
rate, excluding PCI loans:(b)
Home equity 0.87% 1.55% 3.28%
Prime mortgage, including
option ARMs 0.04 0.09 1.07
Subprime mortgage (0.43) 1.17 5.43
Other 1.76 1.70 2.37
Total net charge-off/
(recovery) rate, excluding
PCI loans 0.41 0.96 2.68
Net charge-off/(recovery)
rate – reported:(a)(b)
Home equity 0.65% 1.17% 2.52%
Prime mortgage, including
option ARMs 0.03 0.05 0.58
Subprime mortgage (0.27) 0.74 3.54
Other 1.76 1.70 2.37
Total net charge-off/
(recovery) rate – reported 0.29 0.64 1.79
30+ day delinquency rate,
excluding PCI loans(c) 2.67% 3.66% 5.03%
Allowance for loan losses,
excluding PCI loans $ 2,168 $ 2,568 $ 4,868
Allowance for PCI loans(a) 3,325 4,158 5,711
Allowance for loan losses $ 5,493 $ 6,726 $ 10,579
Nonperforming assets(d) 5,786 6,919 8,439
Allowance for loan losses to
period-end loans retained 3.24% 4.00% 5.97%
Allowance for loan losses to
period-end loans retained,
excluding PCI loans 1.76 2.23 4.14
(a) Net charge-offs and the net charge-off rates excluded $533 million and
$53 million of write-offs in the PCI portfolio for the years ended
December 31, 2014 and 2013, respectively. These write-offs decreased
the allowance for loan losses for PCI loans. For further information on PCI
write-offs, see Allowance for Credit Losses on pages 128–130.
(b) Net charge-offs and net charge-off rates for the year ended December 31,
2012, included $744 million of charge-offs related to regulatory
guidance. Excluding these charges-offs, net charge-offs for the year ended
December 31, 2012, would have been $1.8 billion, $410 million and
$416 million for the home equity, prime mortgage, including option
ARMs, and subprime mortgage portfolios, respectively. Net charge-off
rates for the same period, excluding these charge-offs and PCI loans,
would have been 2.41%, 0.97% and 4.65% for the home equity, prime
mortgage, including option ARMs, and subprime mortgage portfolios,
respectively.
(c) The 30+ day delinquency rate for PCI loans was 13.33% 15.31% and
20.14% at December 31, 2014, 2013 and 2012, respectively.
(d) Excludes PCI loans. The Firm is recognizing interest income on each pool
of PCI loans as they are all performing.
Mortgage servicing-related matters
The financial crisis resulted in unprecedented levels of
delinquencies and defaults of 1-4 family residential real
estate loans. Such loans required varying degrees of loss
mitigation activities. Foreclosure is usually a last resort, and
accordingly, the Firm has made, and continues to make,
significant efforts to help borrowers remain in their homes.
The Firm has entered into various Consent Orders and
settlements with federal and state governmental agencies
and private parties related to mortgage servicing,
origination, and residential mortgage-backed securities
activities. The requirements of these Consent Orders and
settlements vary, but in the aggregate, include cash
compensatory payments (in addition to fines) and/or
“borrower relief,” which may include principal reduction,
refinancing, short sale assistance, and other specified types
of borrower relief. Other obligations required under certain
Consent Orders and settlements, as well as under new
regulatory requirements, include enhanced mortgage
servicing and foreclosure standards and processes. The
Firm has satisfied or is committed to satisfying these
obligations within the mandated timeframes.
The mortgage servicing Consent Orders and settlements are
subject to ongoing oversight by the Mortgage Compliance
Committee of the Firm’s Board of Directors. In addition,
certain of the Consent Orders and settlements are the
subject of ongoing reporting to various regulators and
independent overseers.
The Firm’s compliance with the Global Settlement and the
RMBS Settlement are detailed in periodic reports published
by the independent overseers.