JP Morgan Chase 2010 Annual Report Download - page 137

JPMorgan Chase & Co./2010 Annual Report 137
Credit Card
Credit card receivables (which include receivables in Firm-sponsored
credit card securitization trusts that were not reported on the Con-
solidated Balance Sheets prior to January 1, 2010) were $137.7
billion at December 31, 2010, a decrease of $25.7 billion from De-
cember 31, 2009, due to the decline in lower-yielding promotional
balances and runoff of the Washington Mutual portfolio.
The 30-day delinquency rate decreased to 4.07% at December 31,
2010, from 6.28% at December 31, 2009, while the net charge-off
rate increased to 9.73% for 2010, from 9.33% in 2009 due primarily
to the decline in outstanding loans. The delinquency trend is showing
improvement, especially within early stage delinquencies. Charge-offs
were elevated in 2010 but showed improvement in the second half of
the year as a result of lower delinquent loans and higher repayment
rates. The credit card portfolio continues to reflect a well-seasoned,
largely rewards-based portfolio that has good U.S. geographic diversi-
fication. The greatest geographic concentration of credit card loans
is in California which represented 13% of total loans at December
2010, compared with 14% at December 2009. Loan concentration
for the top five states of California, New York, Texas, Florida and
Illinois consisted of $55.1 billion in receivables, or 40% of the
portfolio, at December 2010, compared with $65.9 billion, or 40%,
at December 2009.
Credit card receivables, excluding the Washington Mutual portfolio,
were $123.9 billion at December 31, 2010, compared with $143.8
billion at December 31, 2009. The 30-day delinquency rate, exclud-
ing the Washington Mutual portfolio, was 3.66% at December 31,
2010, down from 5.52% at December 31, 2009, while the net
charge-off rate increased to 8.72% in 2010 from 8.45% in 2009
due largely to the decrease in outstanding loans.
Credit card receivables in the Washington Mutual portfolio were
$13.7 billion at December 31, 2010, compared with $19.7 billion at
December 31, 2009. The Washington Mutual portfolio’s 30-day
delinquency rate was 7.74% at December 31, 2010, down from
12.72% at December 31, 2009; the 2009 delinquency rate excludes
the impact of the consolidation of the Washington Mutual Master
Trust (“WMMT”) in the second quarter of 2009. The net charge-off
rate in 2010 was 18.73%, compared with 18.79% in 2009, exclud-
ing the impact of the purchase accounting adjustments related to the
consolidation of the WMMT in the second quarter of 2009.
Modifications of credit card loans
For additional information about credit card loan modification
activities, including credit card loan modifications accounted for
as troubled debt restructurings, see Note 14 on pages 220–238
of this Annual Report.
JPMorgan Chase may offer one of a number of loan modifica-
tion programs to borrowers who are experiencing financial
difficulty. The Firm has short-term programs for borrowers who
may be in need of temporary relief, and long-term programs for
borrowers who are experiencing a more fundamental level of
financial difficulties. Most of the Firm’s modified credit card
loans have been modified under the Firm’s long-term programs.
Modifications under the Firm’s long-term programs involve
placing the customer on a fixed payment plan not exceeding 60
months. Modifications under all of these programs typically
include reducing the interest rate on the card. Also, in all cases,
the Firm cancels the customer’s available line of credit on the
credit card. Substantially all of these modifications, both short-
term and long-term, are considered to be TDRs. Based on the
Firm’s historical experience, the Firm expects that a significant
portion of the borrowers will not ultimately comply with the
modified payment terms.
Top 5 States Credit Card - Managed
(at December 31, 2010)
California
TexasTexas
New York
60.0%
13.3%
7.5%
Florida
7.8%
5.8%
5.6%
IllinoisIllinois
All other
California
TexasTexas
New York
59.7%
13.7%
7.4%
Florida
7.7%
6.1%
5.4%
IllinoisIllinois
All other
Top 5 States Credit Card - Managed
(at December 31, 2009)