JP Morgan Chase 2012 Annual Report Download - page 139

JPMorgan Chase & Co./2012 Annual Report 149
Credit Card
Total credit card loans were $128.0 billion at December 31,
2012, a decrease of $4.3 billion from December 31, 2011.
The decrease in outstanding loans was primarily due to
higher repayment rates.
For the retained credit card portfolio, the 30+ day
delinquency rate decreased to 2.10% at December 31,
2012, from 2.81% at December 31, 2011. For the years
ended December 31, 2012 and 2011, the net charge-off
rates were 3.95% and 5.44% respectively. Charge-offs
have improved as a result of lower delinquent loans. The
credit card portfolio continues to reflect a well-seasoned,
largely rewards-based portfolio that has good U.S.
geographic diversification. The greatest geographic
concentration of credit card retained loans is in California,
which represented 13% of total retained loans at both
December 31, 2012 and 2011. Loan concentration for the
top five states of California, New York, Texas, Florida and
Illinois consisted of $52.3 billion in receivables, or 41% of
the retained loan portfolio, at December 31, 2012,
compared with $53.6 billion, or 40%, at December 31,
2011.
Geographic composition of Credit Card loans
Modifications of credit card loans
At December 31, 2012 and 2011, the Firm had $4.8 billion
and $7.2 billion, respectively, of credit card loans
outstanding that have been modified in TDRs. These
balances included both credit card loans with modified
payment terms and credit card loans that reverted back to
their pre-modification payment terms because the
cardholder did not comply with the modified payment
terms. The decrease in modified credit card loans
outstanding from December 31, 2011, was attributable to a
reduction in new modifications as well as ongoing payments
and charge-offs on previously modified credit card loans. In
the second quarter of 2012, the Firm revised its policy for
recognizing charge-offs on restructured loans that do not
comply with their modified payment terms. Commencing
June 30, 2012 these loans are now charged-off when they
are 120 days past due rather than 180 days past due.
Consistent with the Firm’s policy, all credit card loans
typically remain on accrual status until charged-off.
However, the Firm establishes an allowance, which is offset
against loans and charged to interest income, for the
estimated uncollectible portion of accrued interest and fee
income.
For additional information about loan modification
programs to borrowers, see Note 14 on pages 250–275 of
this Annual Report.