JP Morgan Chase 2015 Annual Report Download - page 274

Notes to consolidated financial statements
264 JPMorgan Chase & Co./2015 Annual Report
Allowance for credit losses and related information
The table below summarizes information about the allowances for loan losses, and lending-relating commitments, and includes
a breakdown of loans and lending-related commitments by impairment methodology.
2015
Year ended December 31,
(in millions)
Consumer,
excluding
credit card Credit card Wholesale Total
Allowance for loan losses
Beginning balance at January 1, $ 7,050 $ 3,439 $ 3,696 $ 14,185
Gross charge-offs 1,658 3,488 95 5,241
Gross recoveries (704) (366) (85) (1,155)
Net charge-offs/(recoveries) 954 3,122 10 4,086
Write-offs of PCI loans(a) 208 — — 208
Provision for loan losses (82) 3,122 623 3,663
Other —(5) 6 1
Ending balance at December 31, $ 5,806 $ 3,434 $ 4,315 $ 13,555
Allowance for loan losses by impairment methodology
Asset-specific(b) $ 364 $ 460 (c) $ 274 $ 1,098
Formula-based 2,700 2,974 4,041 9,715
PCI 2,742 — — 2,742
Total allowance for loan losses $ 5,806 $ 3,434 $ 4,315 $ 13,555
Loans by impairment methodology
Asset-specific $ 9,606 $ 1,465 $ 1,024 $ 12,095
Formula-based 293,751 129,922 356,022 779,695
PCI 40,998 — 4 41,002
Total retained loans $ 344,355 $ 131,387 $ 357,050 $ 832,792
Impaired collateral-dependent loans
Net charge-offs $ 104 $ — $ 16 $ 120
Loans measured at fair value of collateral less cost to sell 2,566 — 283 2,849
Allowance for lending-related commitments
Beginning balance at January 1, $ 13 $ — $ 609 $ 622
Provision for lending-related commitments 1 — 163 164
Other —— ——
Ending balance at December 31, $ 14 $ — $ 772 $ 786
Allowance for lending-related commitments by impairment methodology
Asset-specific $—$ —$73$73
Formula-based 14 — 699 713
Total allowance for lending-related commitments $ 14 $ — $ 772 $ 786
Lending-related commitments by impairment methodology
Asset-specific $ — $ — $ 193 $ 193
Formula-based 58,478 515,518 366,206 940,202
Total lending-related commitments $ 58,478 $ 515,518 $ 366,399 $ 940,395
(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.
(d) 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.