JP Morgan Chase 2012 Annual Report Download - page 118

Management’s discussion and analysis
128 JPMorgan Chase & Co./2012 Annual Report
Deposits Year ended December 31,
December 31, Average
(in millions) 2012 2011 2012 2011
Consumer &
Community
Banking $ 438,484 $ 397,825 $ 413,911 $ 382,678
Corporate &
Investment
Bank 385,560 362,384 353,048 317,213
Commercial
Banking 198,383 196,366 181,805 157,899
Asset
Management 144,579 127,464 129,208 106,421
Corporate/
Private Equity 26,587 43,767 27,911 47,779
Total Firm $1,193,593 $1,127,806 $1,105,883 $1,011,990
A significant portion of the Firm’s deposits are retail
deposits (37% and 35% at December 31, 2012 and 2011,
respectively), which are considered particularly stable as
they are less sensitive to interest rate changes or market
volatility. Additionally, the majority of the Firm’s
institutional deposits are also considered to be stable
sources of funding since they are generated from customers
that maintain operating service relationships with the Firm.
For further discussions of deposit balance trends, see the
discussion of the results for the Firm’s business segments
and the Balance Sheet Analysis on pages 80–104 and 106–
108, respectively, of this Annual Report.
Short-term funding
Short-term unsecured funding sources include federal funds
and Eurodollars purchased; certificates of deposit; time
deposits; commercial paper; and other borrowed funds that
generally have maturities of one year or less.
The Firm’s reliance on short-term unsecured funding
sources is limited. A significant portion of the total
commercial paper liabilities, approximately 72% as of
December 31, 2012, as shown in the table below, were
originated from deposits that customers choose to sweep
into commercial paper liabilities as a cash management
program offered by CIB and are not sourced from wholesale
funding markets.
The Firm’s sources of short-term secured funding primarily
consist of securities loaned or sold under agreements to
repurchase. Securities loaned or sold under agreements to
repurchase generally mature between one day and three
months, are secured predominantly by high-quality
securities collateral, including government-issued debt,
agency debt and agency MBS, and constitute a significant
portion of the federal funds purchased and securities
loaned or sold under purchase agreements. The increase in
the balance at December 31, 2012, compared with the
balance at December 31, 2011 was predominantly because
of higher secured financing of the Firm’s assets. The
balances associated with securities loaned or sold under
agreements to repurchase fluctuate over time due to
customers’ investment and financing activities; the Firm’s
demand for financing; the ongoing management of the mix
of the Firm’s liabilities, including its secured and unsecured
financing (for both the investment and market-making
portfolios); and other market and portfolio factors.
At December 31, 2012, the balance of total unsecured and
secured other borrowed funds increased, compared with
the balance at December 31, 2011. The increase was
primarily driven by an increase in term federal funds
purchased and in CIB structured notes. The average balance
for the year ended December 31, 2012, decreased from the
prior year, predominantly driven by maturities of short-term
unsecured bank notes and other unsecured borrowings, and
other secured short-term borrowings.
For additional information, see the Balance Sheet Analysis
on pages 106–108 and Note 13 on page 249 of this Annual
Report. The following table summarizes by source select
short-term unsecured and secured funding as of December
31, 2012 and 2011, and average balances for the year
ended December 31, 2012 and 2011, respectively.
December 31,
2012 December 31, 2011
Year ended December 31,
Select Short-term funding Average
(in millions) 2012 2011
Commercial paper:
Wholesale funding $ 15,589 $ 4,245 $ 14,302 $ 6,119
Client cash management 39,778 47,386 36,478 36,534
Total commercial paper $ 55,367 $ 51,631 $ 50,780 $ 42,653
Other borrowed funds $ 26,636 $ 21,908 $ 24,174 $ 30,943
Securities loaned or sold under agreements to repurchase:
Securities sold under agreements to repurchase $ 212,278 $ 191,649 $ 219,625 $ 228,514
Securities loaned 23,125 14,214 20,763 19,438
Total securities loaned or sold under agreements to repurchase(a)(b)(c) $ 235,403 $ 205,863 $ 240,388 $ 247,952
(a) Excludes federal funds purchased.
(b) Excludes long-term structured repurchase agreements of $3.3 billion and $6.1 billion as of December 31, 2012 and 2011, respectively, and average balance of $7.0 billion and
$4.6 billion for the years ended December 31, 2012 and 2011, respectively.
(c) Excludes long-term securities loaned of $457 million as of December 31, 2012, and average balance of $113 million for the year ended December 31, 2012. There were no long-
term securities loaned as of December 31, 2011.