JP Morgan Chase 2014 Annual Report Download - page 262

Notes to consolidated financial statements
260 JPMorgan Chase & Co./2014 Annual Report
Allowance for credit losses and loans and lending-related commitments by impairment methodology
The table below summarizes information about the allowance for loan losses, loans by impairment methodology, the allowance
for lending-related commitments and lending-related commitments by impairment methodology.
2014
Year ended December 31,
(in millions)
Consumer,
excluding
credit card Credit card Wholesale Total
Allowance for loan losses
Beginning balance at January 1, $ 8,456 $ 3,795 $ 4,013 $ 16,264
Gross charge-offs 2,132 3,831 151 6,114
Gross recoveries (814) (402) (139) (1,355)
Net charge-offs/(recoveries) 1,318 3,429 12 4,759
Write-offs of PCI loans(a) 533 — — 533
Provision for loan losses 414 3,079 (269) 3,224
Other 31 (6) (36) (11)
Ending balance at December 31, $ 7,050 $ 3,439 $ 3,696 $ 14,185
Allowance for loan losses by impairment methodology
Asset-specific(b) $ 539 $ 500 (c) $ 87 $ 1,126
Formula-based 3,186 2,939 3,609 9,734
PCI 3,325 — — 3,325
Total allowance for loan losses $ 7,050 $ 3,439 $ 3,696 $ 14,185
Loans by impairment methodology
Asset-specific $ 12,020 $ 2,029 $ 637 $ 14,686
Formula-based 236,263 125,998 323,861 686,122
PCI 46,696 — 4 46,700
Total retained loans $ 294,979 $ 128,027 $ 324,502 $ 747,508
Impaired collateral-dependent loans
Net charge-offs $ 133 $ — $ 21 $ 154
Loans measured at fair value of collateral less cost to sell 3,025 — 326 3,351
Allowance for lending-related commitments
Beginning balance at January 1, $ 8 $ — $ 697 $ 705
Provision for lending-related commitments 5 — (90) (85)
Other — — 2 2
Ending balance at December 31, $ 13 $ — $ 609 $ 622
Allowance for lending-related commitments by impairment methodology
Asset-specific $ — $ — $ 60 $ 60
Formula-based 13 — 549 562
Total allowance for lending-related commitments $ 13 $ — $ 609 $ 622
Lending-related commitments by impairment methodology
Asset-specific $ — $ — $ 103 $ 103
Formula-based 58,153 525,963 471,953 1,056,069
Total lending-related commitments $ 58,153 $ 525,963 $ 472,056 $ 1,056,172
(a) Write-offs of PCI loans are recorded against the allowance for loan losses when actual losses for a pool exceed estimated losses that were recorded as purchase accounting
adjustments at the time of acquisition. A write-off of a PCI loan is recognized when the underlying loan is removed from a pool (e.g., upon liquidation). During the fourth quarter
of 2014, the Firm recorded a $291 million adjustment to reduce the PCI allowance and the recorded investment in the Firm’s PCI loan portfolio, primarily reflecting the
cumulative effect of interest forgiveness modifications. This adjustment had no impact to the Firm’s Consolidated statements of income.
(b) Includes risk-rated loans that have been placed on nonaccrual status and loans that have been modified in a TDR.
(c) The asset-specific credit card allowance for loan losses is related to loans that have been modified in a TDR; such allowance is calculated based on the loans’ original contractual
interest rates and does not consider any incremental penalty rates.