JP Morgan Chase 2013 Annual Report Download - page 84

Management’s discussion and analysis
90 JPMorgan Chase & Co./2013 Annual Report
Functional results
Year ended December 31,
(in millions, except ratios) 2013 2012 2011
Mortgage Production
Production revenue $ 2,673 $ 5,783 $ 3,395
Production-related net interest
& other income 909 787 840
Production-related revenue,
excluding repurchase
(losses)/benefits 3,582 6,570 4,235
Production expense(a) 3,088 2,747 1,895
Income, excluding
repurchase (losses)/
benefits 494 3,823 2,340
Repurchase (losses)/benefits 331 (272) (1,347)
Income before income tax
expense 825 3,551 993
Mortgage Servicing
Loan servicing revenue 3,552 3,772 4,134
Servicing-related net interest &
other income 411 407 390
Servicing-related revenue 3,963 4,179 4,524
Changes in MSR asset fair value
due to collection/realization of
expected cash flows (1,094) (1,222) (1,904)
Default servicing expense 2,069 3,707 3,814
Core servicing expense 904 1,033 1,031
Income/(loss), excluding MSR
risk management (104) (1,783) (2,225)
MSR risk management,
including related net interest
income/(expense) (268) 616 (1,572)
Income/(loss) before income
tax expense/(benefit) (372) (1,167) (3,797)
Real Estate Portfolios
Noninterest revenue (209) 43 38
Net interest income 3,721 4,049 4,554
Total net revenue 3,512 4,092 4,592
Provision for credit losses (2,693) (509) 3,575
Noninterest expense 1,553 1,653 1,521
Income/(loss) before income
tax expense/(benefit) 4,652 2,948 (504)
Mortgage Banking income/(loss)
before income tax expense/
(benefit) $ 5,105 $ 5,332 $ (3,308)
Mortgage Banking net income/
(loss) $ 3,082 $ 3,341 $ (2,138)
Overhead ratios
Mortgage Production 79% 43% 65%
Mortgage Servicing 114 133 462
Real Estate Portfolios 44 40 33
(a) Includes provision for credit losses associated with Mortgage
Production.
Selected income statement data
Year ended December 31,
(in millions) 2013 2012 2011
Supplemental mortgage fees
and related income details
Net production revenue:
Production revenue $ 2,673 $ 5,783 $ 3,395
Repurchase (losses)/benefits 331 (272) (1,347)
Net production revenue 3,004 5,511 2,048
Net mortgage servicing
revenue:
Operating revenue:
Loan servicing revenue 3,552 3,772 4,134
Changes in MSR asset fair
value due to collection/
realization of expected
cash flows (1,094) (1,222) (1,904)
Total operating revenue 2,458 2,550 2,230
Risk management:
Changes in MSR asset fair
value due to market interest
rates and other(a) 2,119 (587) (5,390)
Other changes in MSR asset
fair value due to other
inputs and assumptions in
model(b) (511) (46) (1,727)
Changes in derivative fair
value and other (1,875) 1,252 5,553
Total risk management (267) 619 (1,564)
Total net mortgage servicing
revenue 2,191 3,169 666
Mortgage fees and related
income $ 5,195 $ 8,680 $ 2,714
(a) Represents both the impact of changes in estimated future
prepayments due to changes in market interest rates, and the
difference between actual and expected prepayments.
(b) Represents the aggregate impact of changes in model inputs and
assumptions such as projected cash flows (e.g. cost to service),
discount rates and changes in prepayments other than those
attributable to changes in market interest rates (e.g. changes in
prepayments due to changes in home prices).