JP Morgan Chase 2015 Annual Report Download - page 243

JPMorgan Chase & Co./2015 Annual Report 233
Note 11 – Noninterest expense
For details on noninterest expense, see Consolidated
statements of income on page 176. Included within other
expense is the following:
Year ended December 31,
(in millions) 2015 2014 2013
Legal expense $ 2,969 $ 2,883 $ 11,143
Federal Deposit Insurance
Corporation-related (“FDIC”)
expense 1,227 1,037 1,496
Note 12 – Securities
Securities are classified as trading, AFS or held-to-maturity
(“HTM”). Securities classified as trading assets are
discussed in Note 3. Predominantly all of the Firm’s AFS and
HTM investment securities (the “investment securities
portfolio”) are held by Treasury and CIO in connection with
its asset-liability management objectives. At December 31,
2015, the investment securities portfolio consisted of debt
securities with an average credit rating of AA+ (based upon
external ratings where available, and where not available,
based primarily upon internal ratings which correspond to
ratings as defined by S&P and Moody’s). AFS securities are
carried at fair value on the Consolidated balance sheets.
Unrealized gains and losses, after any applicable hedge
accounting adjustments, are reported as net increases or
decreases to accumulated other comprehensive income/
(loss). The specific identification method is used to
determine realized gains and losses on AFS securities,
which are included in securities gains/(losses) on the
Consolidated statements of income. HTM debt securities,
which management has the intent and ability to hold until
maturity, are carried at amortized cost on the Consolidated
balance sheets. For both AFS and HTM debt securities,
purchase discounts or premiums are generally amortized
into interest income over the contractual life of the security.
During 2014, the Firm transferred U.S. government agency
mortgage-backed securities and obligations of U.S. states
and municipalities with a fair value of $19.3 billion from
AFS to HTM. These securities were transferred at fair value,
and the transfer was a non-cash transaction. AOCI included
net pretax unrealized losses of $9 million on the securities
at the date of transfer. The transfer reflected the Firm’s
intent to hold the securities to maturity in order to reduce
the impact of price volatility on AOCI and certain capital
measures under Basel III.