JP Morgan Chase 2010 Annual Report Download - page 237

JPMorgan Chase & Co./2010 Annual Report 237
Credit card loans
The credit card portfolio segment includes credit card loans origi-
nated and purchased by the Firm, including those acquired in the
Washington Mutual transaction. Delinquency rates are the pri-
mary credit quality indicator for credit card loans as they provide
an early warning that borrowers may be experiencing difficulties
(30-days past due), as well as information on those borrowers
that have been delinquent for a longer period of time (90-days
past due). In addition to delinquency rates, the geographic distri-
bution of the loans provides insight as to the credit quality of the
portfolio based on the regional economy.
The borrower’s credit score is another general indicator of credit
quality. Because the borrower’s credit score tends to be a lagging
indicator of credit quality, the Firm does not use credit scores as a
primary indicator of credit quality. However, the distribution of such
scores provides a general indicator of credit quality trends within
the portfolio. Refreshed FICO score information for a random sam-
ple of the credit card portfolio is indicated in the table below, as
FICO is considered to be the industry benchmark for credit scores.
The Firm generally originates new card accounts to prime con-
sumer borrowers. However, certain cardholders’ refreshed FICO
scores may change over time, depending on the performance of
the cardholder and changes in credit score technology.
The table below sets forth information about the Firm’s Credit Card loans.
As of or for the year ended December 31,
(in millions, except ratios)
Chase, excluding
Washington Mutual portfolio(e)
Washington Mutual
portfolio(e) Total credit card
2010 2009 2010 2009
(f)
2010 2009(f)
Net charge
-
offs
$
11,191
$
6,466
$
2,846
$
3,168
$
14,037
$
9,634
% of net charge-offs to retained loans
8.73%
9.76%
17.73%
15.26%
9.73%
11.07%
Loan delinquency(a)(b)
Current and less than 30 days past due and still accruing
$
117,248
$ 55,374
$
12,670
$ 17,316
$
129,918
$ 72,690
30 – 89 days past due and still accruing
2,092
1,638
459
974
2,551
2,612
90 or more days past due and still accruing
2,449
2,118
604
1,363
3,053
3,481
Nonaccrual loans
2
3
—
—
2
3
Total retained loans
$
121,791
$ 59,133
$
13,733
$ 19,653
$
135,524
$ 78,786
Loan delinquency ratios
% of 30 plus days past due to total retained loans
3.73%
6.35%
7.74%
11.89%
4.14%
7.73%
% of 90 plus days past due to total retained loans
2.01
3.58
4.
40
6.94
2.25
4.42
Credit card loans by geographic region
California
$
15,454
$
7,115
$
2,650
$
3,873
$
18,104
$
10,988
New York
9,540
4,527
1,032
1,458
10,572
5,985
Texas
9,217
4,154
1,006
1,421
10
,223
5,575
Florida
6,724
3,439
1,165
1,735
7,889
5,174
Illinois
7,077
3,166
542
771
7,619
3,937
Ohio
5,035
2,506
401
562
5,436
3,068
New Jersey
5,070
2,337
494
707
5,564
3,044
Michigan
3,956
1,977
273
397
4,229
2,374
Virginia
3,020
1,386
295
417
3,315
1,803
Pennsylvania
4,521
2,243
424
598
4,945
2,841
Washington
2,053
911
438
596
2,491
1,507
Georgia
2,834
1,477
398
562
3,232
2,039
All other
47,290
23,895
4,615
6,556
51,905
30,451
Total retained loans
(c)
$
121,791
$
59,133
$
13,733
$
19,653
$
135,524
$
78,786
Percentage of portfolio based on carrying value
with estimated refreshed FICO scores(d)
Equal to or greater than 660
80.6%
72.6%
56.4%
49.2%
77.9%
66.7%
Less than 660
19.4
27.4
43.6
50.8
22.1
33.3
(a) Results reflect the impact of purchase accounting adjustments related to the Washington Mutual transaction and the consolidation of the WMMT in the second quarter
of 2009.
(b) The Firm's policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance. Under guidance issued by the
FFIEC, credit card loans are charged off by the end of the month in which the account becomes 180 days past due or within 60 days from receiving notification about a
specified event (e.g., bankruptcy of the borrower), whichever is earlier.
(c) Effective January 1, 2010, the Firm adopted accounting guidance related to VIEs. Upon adoption of the guidance, the Firm consolidated its Firm-sponsored credit card
securitization trusts. For further information, see Note 16 on pages 244–259 of this Annual Report.
(d) Refreshed FICO scores are estimated based on a statistically significant random sample of credit card accounts in the credit card portfolio for the period shown. The
Firm obtains refreshed FICO scores on a quarterly basis.
(e) Includes billed finance charges and fees net of an allowance for uncollectible amounts.
(f) Includes $1.0 billion of loans at December 31, 2009, held by the WMMT, which were consolidated onto the Firm's Consolidated Balance Sheets at fair value during the
second quarter of 2009. Such loans had been fully repaid or charged off as of December 31, 2010. For further discussion, see Note 16 on pages 244–259 of this An-
nual Report.