JP Morgan Chase 2010 Annual Report Download - page 300

Glossary of Terms
JPMorgan Chase & Co./2010 Annual Report
300
ACH: Automated Clearing House.
Advised lines of credit: An authorization which specifies the
maximum amount of a credit facility the Firm has made available to
an obligor on a revolving but non-binding basis. The borrower
receives written or oral advice of this facility. The Firm may cancel
this facility at any time.
Allowance for loan losses to total loans: Represents period-
end Allowance for loan losses divided by retained loans.
Assets under management: Represent assets actively man-
aged by AM on behalf of Private Banking, Institutional and Retail
clients. Includes “Committed capital not Called,” on which AM
earns fees. Excludes assets managed by American Century Com-
panies, Inc., in which the Firm has a 41% ownership interest as
of December 31, 2010.
Assets under supervision: Represent assets under management
as well as custody, brokerage, administration and deposit accounts.
Average managed assets: Refers to total assets on the Firm’s
Consolidated Balance Sheets plus credit card receivables that have
been securitized and removed from the Firm’s Consolidated Bal-
ance Sheets, for periods ended prior to the January 1, 2010, adop-
tion of new accounting guidance requiring the consolidation of the
Firm-sponsored credit card securitization trusts.
Bear Stearns merger: Effective May 30, 2008, JPMorgan Chase
merged with The Bear Stearns Companies Inc. (“Bear Stearns”),
and Bear Stearns became a wholly-owned subsidiary of JPMorgan
Chase. The final total purchase price to complete the merger was
$1.5 billion. For additional information, see Note 2 on pages 166–
170 of this Annual Report.
Beneficial interest issued by consolidated VIEs: Represents
the interest of third-party holders of debt/equity securities, or other
obligations, issued by VIEs that JPMorgan Chase consolidates. The
underlying obligations of the VIEs consist of short-term borrowings,
commercial paper and long-term debt. The related assets consist of
trading assets, available-for-sale securities, loans and other assets.
Benefit obligation: Refers to the projected benefit obligation for
pension plans and the accumulated postretirement benefit obliga-
tion for OPEB plans.
CAGR: Compound annual growth rate.
Corporate/Private Equity: Includes Private Equity, Treasury and
Chief Investment Office, and Corporate Other, which includes other
centrally managed expense and discontinued operations.
Credit card securitizations: For periods ended prior to the
January 1, 2010, adoption of new guidance relating to the account-
ing for the transfer of financial assets and the consolidation of VIEs,
CS’ results were presented on a “managed” basis that assumed
that credit card loans that had been securitized and sold in accor-
dance with U.S. GAAP remained on the Consolidated Balance
Sheets and that earnings on the securitized loans were classified in
the same manner as the earnings on retained loans recorded on the
Consolidated Balance Sheets. “Managed” results excluded the
impact of credit card securitizations on total net revenue, the provi-
sion for credit losses, net charge-offs and loans. Securitization did
not change reported net income; however, it did affect the classifi-
cation of items on the Consolidated Statements of Income and
Consolidated Balance Sheets.
Credit derivatives: Contractual agreements that provide protec-
tion against a credit event on one or more referenced credits. The
nature of a credit event is established by the protection buyer and
protection seller at the inception of a transaction, and such events
include bankruptcy, insolvency or failure to meet payment obliga-
tions when due. The buyer of the credit derivative pays a periodic
fee in return for a payment by the protection seller upon the occur-
rence, if any, of a credit event.
Credit cycle: A period of time over which credit quality improves,
deteriorates and then improves again. The duration of a credit cycle
can vary from a couple of years to several years.
Deposit margin: Represents net interest income expressed as a
percentage of average deposits.
Discontinued operations: A component of an entity that is
classified as held-for-sale or that has been disposed of from ongo-
ing operations in its entirety or piecemeal, and for which the entity
will not have any significant, continuing involvement. A discontin-
ued operation may be a separate major business segment, a com-
ponent of a major business segment or a geographical area of
operations of the entity that can be separately distinguished opera-
tionally and for financial reporting purposes.
FASB: Financial Accounting Standards Board.
FDIC: Federal Deposit Insurance Corporation.
FICO: Fair Isaac Corporation.
Forward points: Represents the interest rate differential between
two currencies, which is either added to or subtracted from the
current exchange rate (i.e., “spot rate”) to determine the forward
exchange rate.
FRBB: Federal Reserve Bank of Boston.
Headcount-related expense: Includes salary and benefits (ex-
cluding performance-based incentives), and other noncompensation
costs related to employees.
Interchange income: A fee that is paid to a credit card issuer in
the clearing and settlement of a sales or cash advance transaction.
Interests in purchased receivables: Represents an ownership
interest in cash flows of an underlying pool of receivables trans-
ferred by a third-party seller into a bankruptcy-remote entity,
generally a trust.
Investment-grade: An indication of credit quality based on JPMor-
gan Chase’s internal risk assessment system. “Investment grade”