JP Morgan Chase 2010 Annual Report Download - page 122

Management’s discussion and analysis
122 JPMorgan Chase & Co./2010 Annual Report
Below are summaries of the top 25 industry exposures as of December 31, 2010 and 2009. For additional information on industry concentrations,
see Note 5 on pages 189–190 of this Annual Report.
Wholesale credit exposure – selected industry exposures
Liquid securities
and other
30 days or
cash colla
t
eral
As of or for the year ended
Noninvestment grade
more past due
Ye
ar
-
to
-
date
Credit
held against
December 31, 2010
(in millions)
Credit
exposure(c)
Investment
grade Noncriticized
Criticized
performing
Criticized
nonperforming
and accruing
loans
net charge-offs/
(recoveries)
derivative
hedges(d)
derivative
receivables
Top 25 industries
(a)
Banks and finance companies $ 65,867 $ 54,839 $ 10,428 $ 467 $ 133 $ 26 $ 69 $ (3,456) $ (9,216)
Real estate 64,351 34,440 20,569 6,404 2,938 399 862 (76)
(57)
Healthcare 41,093 33,752 7,019 291 31 85 4 (768)
(161)
State and municipal governments 35,808 34,641 912 231 24 34 3 (186)
(233)
Asset managers 29,364 25,533 3,401 427 3 7 — — (2,948)
Consumer products 27,508 16,747 10,379 371 11 217 1 (752)
(2)
Oil and gas 26,459 18,465 7,850 143 1 24 — (87)
(50)
Utilities 25,911 20,951 4,101 498 361 3 49 (355)
(230)
Retail and consumer services 20,882 12,021 8,316 338 207 8 23 (623)
(3)
Technology 14,348 9,355 4,534 399 60 47 50 (158)
—
Machinery and equipment
manufacturing 13,311 7,690 5,372 244 5 8 2 (74) (2)
Building materials/construction 12,808 6,557 5,065 1,129 57 9 6 (308)
—
Chemicals/plastics 12,312 8,375 3,656 274 7 — 2 (70)
—
Metals/mining 11,426 5,260 5,748 362 56 7 35 (296)
—
Business services 11,247 6,351 4,735 115 46 11 15 (5)
—
Central government 11,173 10,677 496 — — — — (6,897)
(42)
Media 10,967 5,808 3,945 672 542 2 92 (212)
(3)
Insurance 10,918 7,908 2,690 320 — — (1) (805)
(567)
Telecom services 10,709 7,582 2,295 821 11 3 (8) (820)
—
Holding companies 10,504 8,375 2,091 38 — 33 5 — (362)
Transportation 9,652 6,630 2,739 245 38 — (16) (132)
—
Securities firms and exchanges 9,415 7,678 1,700 37 — — 5 (38)
(2,358)
Automotive 9,011 3,915 4,822 269 5 — 52 (758)
—
Agriculture/paper manufacturing 7,368 4,510 2,614 242 2 8 7 (44)
(2)
Aerospace 5,732 4,903 732 97 — — — (321)
—
All other
(b)
140,926 122,594 14,924 2,402 1,006 921 470 (5,867) (250)
Subtotal 649,070 485,557 141,133 16,836 5,544 1,852 1,727 (23,108)
(16,486)
Loans held
-
for
-
sale and loans at
fair value 5,123
Receivables from customers 32,541
Interest in purchased receivables 391
Total $ 687,125 $ 485,557 $ 141,133 $ 16,836 $ 5,544 $ 1,852 $ 1,727 $ (23,108)
$ (16,486)
Presented below is a discussion of several industries to which the Firm
has significant exposure, as well as industries the Firm continues to
monitor because of actual or potential credit concerns. For additional
information, refer to the tables above and on the preceding page.
• Banks and finance companies: Exposure to this industry
increased by 22% or $11.8 billion, and criticized exposure de-
creased 71%, compared with 2009. This portfolio experienced
improvement in credit quality as a result of growth in invest-
ment-grade lending, as well as upgrades in risk ratings to fi-
nancial counterparties.
• Real estate: Real estate loans decreased by 6% or $3.6
billion from 2009, including a 19% decline in the criticized
portion of the portfolio, mainly as a result of repayments and
loans sales. While this sector continued to be challenged
throughout 2010, the portfolio experienced stabilization to-
ward the end of the year. The ratio of nonaccrual loans to total
loans increased due to a downgrade of a loan to nonaccrual in
the fourth quarter of 2010. Excluding this downgrade, the ratio
would have improved in line with the broader real estate port-
folio. For further discussion on commercial real estate loans,
see Note 14 on pages 220–238 of this Annual Report.
• State and municipal governments: Exposure to this seg-
ment increased by $1.1 billion or 3% in 2010 to $35.8 billion.
Lending-related commitments comprise approximately 70% of
exposure to this sector, mainly bond liquidity and standby let-
ter of credit commitments. Credit quality of the portfolio re-
mains high as 97% of the portfolio was rated investment
grade, up from 93% in 2009. Criticized exposure was less than
1% of this industry’s exposure. The Firm continues to actively
monitor and manage this exposure in light of the challenging
environment faced by state and municipal governments. For
further discussion of commitments for bond liquidity and
standby letters of credit, see Note 30 on pages 275–280 of
this Annual Report.