JP Morgan Chase 2010 Annual Report Download - page 74

Management’s discussion and analysis
JPMorgan Chase & Co./2010 Annual Report
74
Retail Banking
Selected income statement data
Year ended December 31,
(in millions, except ratios) 2010 2009 2008
Noninterest revenue
$
6,792
$ 7,169 $
4,951
Net interest income
10,785
10,781 7,659
Total net
revenue
17,577
17,950 12,610
Provision for credit losses 607 1,142 449
Noninterest expense
10,657
10,357 7,232
Income before income
tax expense 6,313 6,451
4,929
Net i
n
come
$
3,614
$ 3,903
$ 2,982
Overhead ratio
61
%
58% 57%
Overhead ratio excluding core
deposit intangibles(a) 59 56 54
(a) Retail Banking uses the overhead ratio (excluding the amortization of CDI), a
non-GAAP financial measure, to evaluate the underlying expense trends of
the business. Including CDI amortization expense in the overhead ratio
calculation would result in a higher overhead ratio in the earlier years and a
lower overhead ratio in later years; this method would therefore result in an
improving overhead ratio over time, all things remaining equal. The non-
GAAP ratio excludes Retail Banking’s CDI amortization expense related to
prior business combination transactions of $276 million, $328 million and
$394 million for the years ended December 31, 2010, 2009 and 2008,
respectively.
Selected metrics
As of or for the year ended
December 31, (in billions, except
ratios and where otherwise noted) 2010
2009 2008
Business metrics
Business banking origination
volume
(in millions) $ 4,688 $ 2,299 $ 5,531
End-of-period loans owned
16.8
17.0 18.4
End-of-period deposits:
Checking
$
131.7
$ 121.9 $
109.2
Savings
166.6
153.4 144.0
Time and other
45.9
58.0 89.1
Total end
-
of
-
period deposits
3
44.2
333.3 342.3
Average loans owned
$
16.7
$ 17.8 $ 16.7
Average deposits
:
Checking
$
123.4
$ 113.5 $
77.1
Savings
162.1
150.9 114.3
Time and other
51.0
76.4 53.2
Total average dep
osits
336.5
340.8 244.6
Deposit margin
3.03
%
2.96 % 2.89 %
Average assets
$
28.3
$ 28.9 $ 26.3
Credit data and quality st
a
tistics
(in millions, except ratios)
Net charge-offs
$
707
$ 842 $ 346
Net charge-off rate
4.23
%
4.73 % 2.07 %
Nonperforming assets
$
846
$ 839 $ 424
Retail branch business metrics
Year ended December 31,
20
10
2009 2008
Investment sales volume (in millions)
$ 23,579
$ 21,784 $
17,640
Number of:
Branches
5,268
5,154 5,474
ATMs
16,145
15,406 14,568
Personal bankers
21,715
17,991 15,825
Sales specialists
7,196
5,912 5,661
Active online customers
(in thousands) 17,744 15,424 11,710
Checking accounts (in thousands)
27,252
25,712 24,499
2010 compared with 2009
Retail Banking reported net income of $3.6 billion, a decrease of
$289 million, or 7%, compared with the prior year. Total net
revenue was $17.6 billion, down 2% compared with the prior year.
The decrease was driven by lower deposit-related fees, largely
offset by higher debit card income and a shift to wider-spread
deposit products. The provision for credit losses was $607 million,
down $535 million compared with the prior year. The current-year
provision reflected lower net charge-offs and a reduction of $100
million to the allowance for loan losses due to lower estimated
losses, compared with a $300 million addition to the allowance for
loan losses in the prior year. Retail Banking net charge-offs were
$707 million, compared with $842 million in the prior year.
Noninterest expense was $10.7 billion, up 3% compared with the
prior year, resulting from sales force increases in Business Banking
and bank branches.
2009 compared with 2008
Retail Banking reported net income of $3.9 billion, up by $921
million, or 31%, from the prior year. Total net revenue was $18.0
billion, up by $5.3 billion, or 42%, from the prior year. The increase
reflected the impact of the Washington Mutual transaction, wider
deposit spreads, higher average deposit balances and higher debit
card income. The provision for credit losses was $1.1 billion,
compared with $449 million in the prior year, reflecting higher
estimated losses in the Business Banking portfolio. Noninterest
expense was $10.4 billion, up by $3.1 billion, or 43%. The increase
reflected the impact of the Washington Mutual transaction, higher
FDIC insurance premiums and higher headcount-related expense.
Mortgage Banking, Auto & Other Consumer
Lending
Selected income statement data
Year ended December 31,
(in millions, except ratios) 2010 2009 2008
Noninterest revenue
$
5,321
$ 5,057 $ 4,689
Net interest income
3,311
3,165 2,279
Total net revenue
8,632
8,222 6,968
Provision for credit losses 614 1,235 895
Noninterest expense
5,580
4,544 3,956
Income before income
tax expense 2,438 2,443 2,117
Net
i
ncome
$
1,405
$ 1,643 $ 1,286
Overhead ratio
65
%
55 % 57 %
2010 compared with 2009
Mortgage Banking, Auto & Other Consumer Lending
reported net income of $1.4 billion, a decrease of $238 million, or
14%, from the prior year.
Net revenue was $8.6 billion, up by $410 million, or 5%, from the
prior year. Mortgage Banking net revenue was $5.2 billion, flat to
the prior year. Other Consumer Lending net revenue, comprising
Auto and Student Lending, was $3.5 billion, up by $447 million,
predominantly as a result of higher auto loan and lease balances.
Mortgage Banking net revenue included $904 million of net
interest income, $3.9 billion of mortgage fees and related income,