JP Morgan Chase 2015 Annual Report Download - page 124

Management’s discussion and analysis
114 JPMorgan Chase & Co./2015 Annual Report
CREDIT PORTFOLIO
In the following tables, reported loans include loans
retained (i.e., held-for-investment); loans held-for-sale
(which are carried at the lower of cost or fair value, with
valuation changes recorded in noninterest revenue); and
certain loans accounted for at fair value. In addition, the
Firm records certain loans accounted for at fair value in
trading assets. For further information regarding these
loans, see Note 3 and Note 4. For additional information on
the Firm’s loans and derivative receivables, including the
Firm’s accounting policies, see Note 14 and Note 6,
respectively. For further information regarding the credit
risk inherent in the Firm’s cash placed with banks,
investment securities portfolio, and securities financing
portfolio, see Note 5, Note 12, and Note 13, respectively.
Effective January 1, 2015, the Firm no longer includes
within its disclosure of wholesale lending-related
commitments the unused amount of advised uncommitted
lines of credit as it is within the Firm’s discretion whether or
not to make a loan under these lines, and the Firm’s
approval is generally required prior to funding. Prior period
amounts have been revised to conform with the current
period presentation.
For discussion of the consumer credit environment and
consumer loans, see Consumer Credit Portfolio on pages
115–121 and Note 14. For discussion of wholesale credit
environment and wholesale loans, see Wholesale Credit
Portfolio on pages 122–129 and Note 14.
Total credit portfolio
December 31,
(in millions)
Credit exposure Nonperforming(b)(c)
2015 2014 2015 2014
Loans retained $ 832,792 $ 747,508 $ 6,303 $ 7,017
Loans held-for-sale 1,646 7,217 101 95
Loans at fair value 2,861 2,611 25 21
Total loans – reported 837,299 757,336 6,429 7,133
Derivative receivables 59,677 78,975 204 275
Receivables from
customers and other 13,497 29,080 ——
Total credit-related
assets 910,473 865,391 6,633 7,408
Assets acquired in loan
satisfactions
Real estate owned NA NA 347 515
Other NA NA 54 44
Total assets acquired in
loan satisfactions NA NA 401 559
Total assets 910,473 865,391 7,034 7,967
Lending-related
commitments 940,395 950,997 193 103
Total credit portfolio $1,850,868 $1,816,388 $ 7,227 $ 8,070
Credit derivatives used in
credit portfolio
management activities(a) $ (20,681) $ (26,703) $(9)$—
Liquid securities and other
cash collateral held
against derivatives (16,580) (19,604) NA NA
Year ended December 31,
(in millions, except ratios) 2015 2014
Net charge-offs $ 4,086 $ 4,759
Average retained loans
Loans – reported 780,293 729,876
Loans – reported, excluding
residential real estate PCI loans 736,543 679,869
Net charge-off rates
Loans – reported 0.52% 0.65%
Loans – reported, excluding PCI 0.55 0.70
(a) Represents the net notional amount of protection purchased and sold through
credit derivatives used to manage both performing and nonperforming wholesale
credit exposures; these derivatives do not qualify for hedge accounting under
U.S. GAAP. For additional information, see Credit derivatives on page 129 and
Note 6.
(b) Excludes PCI loans. The Firm is recognizing interest income on each pool of PCI
loans as each of the pools is performing.
(c) At December 31, 2015 and 2014, nonperforming assets excluded: (1) mortgage
loans insured by U.S. government agencies of $6.3 billion and $7.8 billion,
respectively, that are 90 or more days past due; (2) student loans insured by U.S.
government agencies under the FFELP of $290 million and $367 million,
respectively, that are 90 or more days past due; and (3) REO insured by U.S.
government agencies of $343 million and $462 million, respectively. These
amounts have been excluded based upon the government guarantee. In addition,
the Firm’s policy is generally to exempt credit card loans from being placed on
nonaccrual status as permitted by regulatory guidance issued by the Federal
Financial Institutions Examination Council (“FFIEC”).