JP Morgan Chase 2014 Annual Report Download - page 252

Notes to consolidated financial statements
250 JPMorgan Chase & Co./2014 Annual Report
Other consumer impaired loans and loan
modifications
The table below sets forth information about the Firm’s
other consumer impaired loans, including risk-rated
business banking and auto loans that have been placed on
nonaccrual status, and loans that have been modified in
TDRs.
December 31,
(in millions) 2014 2013
Impaired loans
With an allowance $ 557 $ 571
Without an allowance(a) 35 47
Total impaired loans(b)(c) $ 592 $ 618
Allowance for loan losses related to
impaired loans $ 117 $ 107
Unpaid principal balance of impaired
loans(d) 719 788
Impaired loans on nonaccrual status 456 441
(a) When discounted cash flows, collateral value or market price equals or
exceeds the recorded investment in the loan, the loan does not require an
allowance. This typically occurs when the impaired loans have been
partially charged off and/or there have been interest payments received
and applied to the loan balance.
(b) Predominantly all other consumer impaired loans are in the U.S.
(c) Other consumer average impaired loans were $599 million, $648 million
and $733 million for the years ended December 31, 2014, 2013 and
2012, respectively. The related interest income on impaired loans,
including those on a cash basis, was not material for the years ended
December 31, 2014, 2013 and 2012.
(d) Represents the contractual amount of principal owed at December 31,
2014 and 2013. The unpaid principal balance differs from the impaired
loan balances due to various factors, including charge-offs; interest
payments received and applied to the principal balance; net deferred loan
fees or costs; and unamortized discounts or premiums on purchased loans.
Loan modifications
The following table provides information about the Firm’s
other consumer loans modified in TDRs. All of these TDRs
are reported as impaired loans in the tables above.
December 31,
(in millions) 2014 2013
Loans modified in troubled debt
restructurings(a)(b) $ 442 $ 378
TDRs on nonaccrual status 306 201
(a) The impact of these modifications was not material to the Firm for the
years ended December 31, 2014 and 2013.
(b) Additional commitments to lend to borrowers whose loans have been
modified in TDRs as of December 31, 2014 and 2013 were immaterial.
Other consumer new TDRs were $291 million, $156
million, and $249 million for the years ended
December 31, 2014, 2013 and 2012, respectively.
Financial effects of modifications and redefaults
For auto loans, TDRs typically occur in connection with the
bankruptcy of the borrower. In these cases, the loan is
modified with a revised repayment plan that typically
incorporates interest rate reductions and, to a lesser
extent, principal forgiveness.
For business banking loans, concessions are dependent on
individual borrower circumstances and can be of a short-
term nature for borrowers who need temporary relief or
longer term for borrowers experiencing more fundamental
financial difficulties. Concessions are predominantly term or
payment extensions, but also may include interest rate
reductions.
The balance of business banking loans modified in TDRs
that experienced a payment default, and for which the
payment default occurred within one year of the
modification, was $25 million, $43 million and $42 million,
during the years ended December 31, 2014, 2013 and
2012, respectively. The balance of auto loans modified in
TDRs that experienced a payment default, and for which the
payment default occurred within one year of the
modification, was $43 million, $54 million, and $46
million, during the years ended December 31, 2014, 2013,
and 2012, respectively. A payment default is deemed to
occur as follows: (1) for scored auto and business banking
loans, when the loan is two payments past due; and (2) for
risk-rated business banking loans and auto loans, when the
borrower has not made a loan payment by its scheduled
due date after giving effect to the contractual grace period,
if any.
In May 2014 the Firm began extending the deferment
period for up to 24 months for certain student loans, which
resulted in extending the maturity of the loans at their
original contractual interest rates. These modified loans are
considered TDRs and placed on nonaccrual status.