JP Morgan Chase 2012 Annual Report Download - page 74

Management’s discussion and analysis
84 JPMorgan Chase & Co./2012 Annual Report
Functional results
Year ended December 31,
(in millions, except ratios) 2012 2011 2010
Mortgage Production
Production revenue $ 5,783 $ 3,395 $ 3,440
Production-related net interest
& other income 787 840 869
Production-related revenue,
excluding repurchase losses 6,570 4,235 4,309
Production expense(a) 2,747 1,895 1,613
Income, excluding
repurchase losses 3,823 2,340 2,696
Repurchase losses (272) (1,347) (2,912)
Income/(loss) before income
tax expense/(benefit) 3,551 993 (216)
Mortgage Servicing
Loan servicing revenue 3,772 4,134 4,575
Servicing-related net interest &
other income 407 390 433
Servicing-related revenue 4,179 4,524 5,008
MSR asset modeled
amortization (1,222) (1,904) (2,384)
Default servicing expense 3,707 3,814 1,747
Core servicing expense 1,033 1,031 837
Income/(loss), excluding MSR
risk management (1,783) (2,225) 40
MSR risk management,
including related net interest
income/(expense) 616 (1,572) 1,151
Income/(loss) before income
tax expense/(benefit) (1,167) (3,797) 1,191
Real Estate Portfolios
Noninterest revenue 43 38 115
Net interest income 4,049 4,554 5,432
Total net revenue 4,092 4,592 5,547
Provision for credit losses (509) 3,575 8,231
Noninterest expense 1,653 1,521 1,627
Income/(loss) before income
tax expense/(benefit) 2,948 (504) (4,311)
Mortgage Banking income/(loss)
before income tax expense/
(benefit) $ 5,332 $ (3,308) $ (3,336)
Mortgage Banking net income/
(loss) $ 3,341 $ (2,138) $ (1,924)
Overhead ratios
Mortgage Production 43% 65% 111%
Mortgage Servicing 133 462 68
Real Estate Portfolios 40 33 29
(a) Includes credit costs associated with Production.
Selected income statement data
Year ended December 31,
(in millions) 2012 2011 2010
Supplemental mortgage fees
and related income details
Net production revenue:
Production revenue $ 5,783 $ 3,395 $ 3,440
Repurchase losses (272) (1,347) (2,912)
Net production revenue 5,511 2,048 528
Net mortgage servicing
revenue:
Operating revenue:
Loan servicing revenue 3,772 4,134 4,575
Changes in MSR asset fair
value due to modeled
amortization (1,222) (1,904) (2,384)
Total operating revenue 2,550 2,230 2,191
Risk management:
Changes in MSR asset fair
value due to market interest
rates (587) (5,390) (2,224)
Other changes in MSR asset
fair value due to inputs or
assumptions in model(a) (46) (1,727) (44)
Changes in derivative fair
value and other 1,252 5,553 3,404
Total risk management 619 (1,564) 1,136
Total net mortgage servicing
revenue 3,169 666 3,327
Mortgage fees and related
income $ 8,680 $ 2,714 $ 3,855
(a) Represents the aggregate impact of changes in model inputs and
assumptions such as costs to service, home prices, mortgage spreads,
ancillary income, and assumptions used to derive prepayment
speeds, as well as changes to the valuation models themselves.