JP Morgan Chase 2010 Annual Report Download - page 226

Notes to consolidated financial statements
226 JPMorgan Chase & Co./2010 Annual Report
Wholesale impaired loans and loan modifications
Wholesale impaired loans include loans that have been placed on nonaccrual status and/or that have been modified in a TDR. All impaired
loans are evaluated for an asset-specific allowance as described in Note 15 on pages 239–243 of this Annual Report.
The table below set forth information about the Firm’s wholesale impaired loans.
December 31,
Commercial
and industrial Real estate
Financial
institutions
Government
agencies Other
Total
retained loans
(in millions) 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009
Impaired loans
With an allowance $ 1,512 $ 2,171 $ 2,510 $ 2,998 $ 127 $ 579 $ 22 $ 4 $ 697 $ 595 $ 4,868 $ 6,347
Without an allowance(a) 157 89 445 363 8 149 — — 8 12 618 613
Total impaired loans $ 1,669 $ 2,260 $ 2,955
$ 3,361 $ 135 $ 728 $ 22 $ 4 $ 705 $ 607 $ 5,486 $ 6,960
Allowance for loan losses related to
impaired loans(b) $ 435 $ 454 $ 825 $ 1,212 $ 61 $ 165 $ 14 $ 1 $ 239 $ 214 $ 1,574 $ 2,046
Unpaid principal balance of impaired
loans(c) 2,453 3,042 3,487
3,649 244 918 30 4 1,046 760 7,260
8,373
(a) When the discounted cash flows, collateral value or market price equals or exceeds the recorded investment in the loan, then the loan does not require an allowance.
This typically occurs when the impaired loans have been partially charged-off and/or there have been interest payments received and applied to the loan balance.
(b) The allowance for impaired loans is included in JPMorgan Chase’s asset-specific allowance for loan losses.
(c) Represents the contractual amount of principal owed at December 31, 2010 and 2009. The unpaid principal balance differs from the impaired loan balances due to
various factors, including charge-offs; interest payments received and applied to the carrying value; net deferred loan fees or costs; and discount or premiums on pur-
chased loans.
The following table presents the Firm’s average impaired loans for the years ended 2010, 2009 and 2008.
For the year ended
December 31, Impaired loans (average)
(in millions)
2010
2009 2008
Commercial and industrial
$
1,655
$ 1,767 $ 337
Real estate
3,101
2,420 389
Financial institutions
304
685 49
Government agencies
5
4 1
Other
884
468 120
Total
(a)
$ 5,949 $ 5,344 $ 896
(a) The related interest income on accruing impaired loans, largely in real estate, was $21 million, $15 million and zero for the
years ended December 31, 2010, 2009 and 2008. The interest income recognized on a cash basis was not material for the
years 2010, 2009 and 2008.
The following table provides information about the Firm’s wholesale loans modified in troubled debt restructurings. These TDR loans are
included as impaired loans in the above tables.
December 31,
Commercial
and industrial Real estate
Financial
institutions
Government
agencies Other
Total
retained loans
(in millions)
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
Loans modified in troubled debt
restructurings(a) $ 212 $ 253 $ 907 $ 856 $ 1 $ — $ 22 $ — $ 1 $ — $ 1,143 $1,109
TDRs on nonaccrual status
163
222
8
31
269
1
—
22
—
1
—
1,018
491
Additional
commitments to lend
to borrowers whose loans have
been modified in TDRs 1 33 — 6 — — — — — — 1 39
(a) These modifications generally provided interest rate concessions to the borrower or deferral of principal repayments.