JP Morgan Chase 2010 Annual Report Download - page 302

Glossary of Terms
JPMorgan Chase & Co./2010 Annual Report
302
valuation model; and derivative valuation adjustments and other,
which represents changes in the fair value of derivative instruments
used to offset the impact of changes in the market-based inputs to
the MSR valuation model.
Multi-asset: Any fund or account that allocates assets under
management to more than one asset class (e.g., long-term fixed
income, equity, cash, real assets, private equity, or hedge funds).
NA: Data is not applicable or available for the period presented.
Net charge-off ratio: Represents net charge-offs (annualized)
divided by average retained loans for the reporting period.
Net yield on interest-earning assets: The average rate for
interest-earning assets less the average rate paid for all sources of
funds.
NM: Not meaningful.
Nonconforming mortgage loans: Mortgage loans that do not
meet the requirements for sale to U.S. government agencies and
U.S. government sponsored enterprises. These requirements include
limits on loan-to-value ratios, loan terms, loan amounts, down
payments, borrower creditworthiness and other requirements.
OPEB: Other postretirement employee benefits.
Overhead ratio: Noninterest expense as a percentage of total net
revenue.
Participating securities: Represent unvested stock-based com-
pensation awards containing nonforfeitable rights to dividends or
dividend equivalents (collectively,”dividends”), which are included
in the earnings per share calculation using the two-class method.
JPMorgan Chase grants restricted stock and RSUs to certain em-
ployees under its stock-based compensation programs, which
entitle the recipients to receive nonforfeitable dividends during the
vesting period on a basis equivalent to the dividends paid to hold-
ers of common stock. These unvested awards meet the definition of
participating securities. Under the two-class method, all earnings
(distributed and undistributed) are allocated to each class of com-
mon stock and participating securities, based on their respective
rights to receive dividends.
Personal bankers: Retail branch office personnel who acquire,
retain and expand new and existing customer relationships by
assessing customer needs and recommending and selling appropri-
ate banking products and services.
Portfolio activity: Describes changes to the risk profile of existing
lending-related exposures and their impact on the allowance for
credit losses from changes in customer profiles and inputs used to
estimate the allowances.
Pre-provision profit: The Firm believes that this financial meas-
ure is useful in assessing the ability of a lending institution to
generate income in excess of its provision for credit losses.
Pretax margin: Represents income before income tax expense
divided by total net revenue, which is, in management’s view, a
comprehensive measure of pretax performance derived by measur-
ing earnings after all costs are taken into consideration. It is, there-
fore, another basis that management uses to evaluate the
performance of TSS and AM against the performance of their
respective competitors.
Principal transactions: Realized and unrealized gains and losses
from trading activities (including physical commodities inventories
that are accounted for at the lower of cost or fair value) and
changes in fair value associated with financial instruments held
predominantly by IB for which the fair value option was elected.
Principal transactions revenue also includes private equity gains and
losses.
Purchased credit-impaired (“PCI“) loans: Acquired loans
deemed to be credit-impaired under the FASB guidance for PCI
loans. The guidance allows purchasers to aggregate credit-impaired
loans acquired in the same fiscal quarter into one or more pools,
provided that the loans have common risk characteristics (e.g.,
FICO score, geographic location). A pool is then accounted for as a
single asset with a single composite interest rate and an aggregate
expectation of cash flows. Wholesale loans are determined to be
credit-impaired if they meet the definition of an impaired loan
under U.S. GAAP at the acquisition date. Consumer loans are
determined to be credit-impaired based on specific risk characteris-
tics of the loan, including product type, LTV ratios, FICO scores, and
past due status.
Real estate investment trust (“REIT”): A special purpose
investment vehicle that provides investors with the ability to par-
ticipate directly in the ownership or financing of real-estate related
assets by pooling their capital to purchase and manage income
property (i.e., equity REIT) and/or mortgage loans (i.e., mortgage
REIT). REITs can be publicly- or privately-held and they also qualify
for certain favorable tax considerations.
Receivables from customers: Primarily represents margin loans
to prime and retail brokerage customers which are included in
accrued interest and accounts receivable on the Consolidated
Balance Sheets for the wholesale lines of business.
Reported basis: Financial statements prepared under U.S. GAAP,
which excludes the impact of taxable-equivalent adjustments. For
periods ended prior to the January 1, 2010, adoption of new guid-
ance requiring the consolidation of the Firm-sponsored credit card
securitization trusts, the reported basis included the impact of credit
card securitizations.
Retained loans: Loans that are held for investment excluding
loans held-for-sale and loans at fair value.
Sales specialists: Retail branch office personnel who specialize in
the marketing of a single product, including mortgages, invest-
ments and business banking, by partnering with the personal
bankers.
Seed capital: Initial JPMorgan capital invested in products, such
as mutual funds, with the intention of ensuring the fund is of