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1.0.0.3 false Loans false 1 $ false false Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 2 Loans [Abstract] 0 jpm_LoansAbstract jpm false na duration string Loans Abstract. false false false false false true false false false 1 false false 0 0 false false Loans Abstract. false 3 Loans 1 jpm_LoansNotesTradeAndOtherReceivablesGrossOfAllowanceForCreditLossesTextBlock jpm false na duration string Disclosure itemizing the categories of loans receivable trade accounts and notes receivable, and for each the gross carrying... false false false false false false false false false 1 false false 0 0   <div style="font-family: Helvetica,Arial,sans-serif"> <div style="position: relative"> <div align="left" style="font-size: 12pt; margin-top: 12pt"><b>Note 13 – Loans</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The accounting for a loan may differ based on whether it is originated or purchased and whether the loan is used in an investing or trading strategy. For purchased loans held-for-investment, the accounting also differs depending on whether a loan is credit-impaired at the date of acquisition. Purchased loans with evidence of credit deterioration since the origination date and for which it is probable, at acquisition, that all contractually required payments receivable will not be collected are considered to be credit-impaired. The measurement framework for loans in the Consolidated Financial Statements is one of the following: </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="1%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>At the principal amount outstanding, net of the allowance for loan losses, unearned income, unamortized discounts and premiums, and any net deferred loan fees or costs, for loans held for investment (other than purchased credit-impaired loans);</td> </tr> </table> </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="1%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>At the lower of cost or fair value, with valuation changes recorded in noninterest revenue, for loans that are classified as held-for-sale;</td> </tr> </table> </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="1%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>At fair value, with changes in fair value recorded in noninterest revenue, for loans classified as trading assets or risk managed on a fair value basis; or</td> </tr> </table> </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="1%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>Purchased credit-impaired loans held-for-investment are initially measured at fair value, which includes estimated future credit losses. Accordingly, an allowance for loan losses related to these loans is not recorded at the acquisition date.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">See Note 4 on pages 165–167 of this Annual Report for further information on the Firm’s elections of fair value accounting under the fair value option. See Note 3 and Note 4 on pages 148–165 and 165–167 of this Annual Report for further information on loans carried at fair value and classified as trading assets. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">For loans held-for-investment, other than purchased credit-impaired loans, interest income is recognized using the interest method or on a basis approximating a level rate of return over the term of the loan. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Nonaccrual loans are those on which the accrual of interest has been suspended. Loans (other than credit card loans, certain consumer loans insured by U.S. government agencies and purchased credit-impaired loans, which are discussed below) are placed on nonaccrual status and considered nonperforming when full payment of principal and interest is in doubt, or when principal or interest is 90 days or more past due and collateral, if any, is insufficient to cover principal and interest. Interest accrued but not collected at the date a loan is placed on nonaccrual status is reversed against interest income. In addition, the amortization of net deferred loan fees is suspended. Interest income on nonaccrual loans may be recognized only to the extent it is received in cash. However, where there is doubt regarding the ultimate collectibility of loan principal, cash receipts are applied to reduce the carrying value of such loans (i.e., the cost recovery method). Interest and fees related to credit card loans continue to accrue until the loan is charged off or paid in full. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Loans may be returned to accrual status when repayment is reasonably assured and there has been demonstrated performance under the terms of the loan or, if applicable, the terms of the restructured loans. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Wholesale and business banking loans (which are risk-rated) are charged off to the allowance for loan losses when it is highly certain that a loss has been realized. This determination includes many factors, including the prioritization of the Firm’s claim in bankruptcy, expectations of the workout/restructuring of the loan and valuation of the borrower’s equity. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Consumer loans, other than business banking and purchased credit-impaired loans, are generally charged off to the allowance for loan losses upon reaching specified stages of delinquency, in accordance with the Federal Financial Institutions Examination Council policy. For example, credit card loans are charged off by the end of the month in which the account becomes 180 days past due or within 60 days from receiving notification about a specified event (e.g., bankruptcy of the borrower), which ever is earlier. Residential mortgage products are generally charged off to net realizable value no later than 180 days past due. Other consumer products, if collateralized, are generally charged off to net realizable value at 120 days past due. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In addition, any impaired loan that is determined to be collateral-dependent is charged-off to an amount equal to the fair value of the collateral less costs to sell. Loans are identified as collateral-dependent when management believes that collateral is the sole source of repayment. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">A collateralized loan is reclassified to assets acquired in loan satisfactions, within other assets, at the lower of the recorded investment in the loan or the fair value of the collateral less estimated costs to sell, only when JPMorgan Chase has taken physical possession of the collateral, regardless of whether formal foreclosure proceedings have taken place. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Loans within the held-for-investment portfolio that management decides to sell are transferred to the held-for-sale portfolio. Transfers to held-for-sale are recorded at the lower of cost or fair value on the date of transfer. Credit-related losses are charged off to the allowance for loan losses and losses due to changes in interest rates or exchange rates are recognized in noninterest revenue. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Loans within the held-for-sale portfolio that management decides to retain are transferred to the held-for-investment portfolio at the lower of cost or fair value. These loans are subsequently assessed for impairment based on the Firm’s allowance methodology. For a further discussion of the methodologies used in establishing the Firm’s allowance for loan losses, see Note 14 on pages 196–198 of this Annual Report. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The composition of the Firm’s aggregate loan portfolio at each of the dates indicated was as follows. </div> <div align="center"> <table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">December 31, (in millions)</td> <td> </td> <td nowrap="nowrap" align="right" colspan="2"><b>2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="right" colspan="2">2008</td> <td> </td> </tr>   <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>U.S. wholesale loans:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Commercial and industrial </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>49,103</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">70,208</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Real estate </div></td> <td> </td> <td> </td> <td align="right"><b>54,968</b></td> <td> </td> <td> </td> <td> </td> <td align="right">61,888</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Financial institutions </div></td> <td> </td> <td> </td> <td align="right"><b>13,372</b></td> <td> </td> <td> </td> <td> </td> <td align="right">20,615</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Government agencies </div></td> <td> </td> <td> </td> <td align="right"><b>5,634</b></td> <td> </td> <td> </td> <td> </td> <td align="right">5,918</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Other </div></td> <td> </td> <td> </td> <td align="right"><b>23,383</b></td> <td> </td> <td> </td> <td> </td> <td align="right">23,157</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Loans held-for-sale and at fair value </div></td> <td> </td> <td> </td> <td align="right"><b>2,625</b></td> <td> </td> <td> </td> <td> </td> <td align="right">4,990</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Total U.S. wholesale loans </div></td> <td> </td> <td> </td> <td align="right"><b>149,085</b></td> <td> </td> <td> </td> <td> </td> <td align="right">186,776</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Non-U.S. wholesale loans:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Commercial and industrial </div></td> <td> </td> <td> </td> <td align="right"><b>19,138</b></td> <td> </td> <td> </td> <td> </td> <td align="right">27,977</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Real estate </div></td> <td> </td> <td> </td> <td align="right"><b>2,227</b></td> <td> </td> <td> </td> <td> </td> <td align="right">2,623</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Financial institutions </div></td> <td> </td> <td> </td> <td align="right"><b>11,755</b></td> <td> </td> <td> </td> <td> </td> <td align="right">16,381</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Government agencies </div></td> <td> </td> <td> </td> <td align="right"><b>1,707</b></td> <td> </td> <td> </td> <td> </td> <td align="right">603</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Other </div></td> <td> </td> <td> </td> <td align="right"><b>18,790</b></td> <td> </td> <td> </td> <td> </td> <td align="right">18,719</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Loans held-for-sale and at fair value </div></td> <td> </td> <td> </td> <td align="right"><b>1,473</b></td> <td> </td> <td> </td> <td> </td> <td align="right">8,965</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Total non-U.S. wholesale loans </div></td> <td> </td> <td> </td> <td align="right"><b>55,090</b></td> <td> </td> <td> </td> <td> </td> <td align="right">75,268</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Total wholesale loans: </b><sup style="font-size: 85%; vertical-align: text-top">(a)(b)</sup> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Commercial and industrial </div></td> <td> </td> <td> </td> <td align="right"><b>68,241</b></td> <td> </td> <td> </td> <td> </td> <td align="right">98,185</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Real estate<sup style="font-size: 85%; vertical-align: text-top">(c)</sup> </div></td> <td> </td> <td> </td> <td align="right"><b>57,195</b></td> <td> </td> <td> </td> <td> </td> <td align="right">64,511</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Financial institutions </div></td> <td> </td> <td> </td> <td align="right"><b>25,127</b></td> <td> </td> <td> </td> <td> </td> <td align="right">36,996</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Government agencies </div></td> <td> </td> <td> </td> <td align="right"><b>7,341</b></td> <td> </td> <td> </td> <td> </td> <td align="right">6,521</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Other </div></td> <td> </td> <td> </td> <td align="right"><b>42,173</b></td> <td> </td> <td> </td> <td> </td> <td align="right">41,876</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Loans held-for-sale and at fair value<sup style="font-size: 85%; vertical-align: text-top">(d)</sup> </div></td> <td> </td> <td> </td> <td align="right"><b>4,098</b></td> <td> </td> <td> </td> <td> </td> <td align="right">13,955</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Total wholesale loans </div></td> <td> </td> <td> </td> <td align="right"><b>204,175</b></td> <td> </td> <td> </td> <td> </td> <td align="right">262,044</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Consumer loans:</b><sup style="font-size: 85%; vertical-align: text-top">(e)</sup> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Home equity – senior lien<sup style="font-size: 85%; vertical-align: text-top">(f)</sup> </div></td> <td> </td> <td> </td> <td align="right"><b>27,376</b></td> <td> </td> <td> </td> <td> </td> <td align="right">29,793</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Home equity – junior lien<sup style="font-size: 85%; vertical-align: text-top">(g)</sup> </div></td> <td> </td> <td> </td> <td align="right"><b>74,049</b></td> <td> </td> <td> </td> <td> </td> <td align="right">84,542</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Prime mortgage </div></td> <td> </td> <td> </td> <td align="right"><b>66,892</b></td> <td> </td> <td> </td> <td> </td> <td align="right">72,266</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Subprime mortgage </div></td> <td> </td> <td> </td> <td align="right"><b>12,526</b></td> <td> </td> <td> </td> <td> </td> <td align="right">15,330</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Option ARMs </div></td> <td> </td> <td> </td> <td align="right"><b>8,536</b></td> <td> </td> <td> </td> <td> </td> <td align="right">9,018</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Auto loans </div></td> <td> </td> <td> </td> <td align="right"><b>46,031</b></td> <td> </td> <td> </td> <td> </td> <td align="right">42,603</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Credit card<sup style="font-size: 85%; vertical-align: text-top">(h)(i)</sup> </div></td> <td> </td> <td> </td> <td align="right"><b>78,786</b></td> <td> </td> <td> </td> <td> </td> <td align="right">104,746</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Other </div></td> <td> </td> <td> </td> <td align="right"><b>31,700</b></td> <td> </td> <td> </td> <td> </td> <td align="right">33,715</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Loans held-for-sale<sup style="font-size: 85%; vertical-align: text-top">(j)</sup> </div></td> <td> </td> <td> </td> <td align="right"><b>2,142</b></td> <td> </td> <td> </td> <td> </td> <td align="right">2,028</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Total consumer loans – excluding purchased credit-impaired </div></td> <td> </td> <td> </td> <td align="right"><b>348,038</b></td> <td> </td> <td> </td> <td> </td> <td align="right">394,041</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Consumer loans – purchased credit-impaired </div></td> <td> </td> <td> </td> <td align="right"><b>81,245</b></td> <td> </td> <td> </td> <td> </td> <td align="right">88,813</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Total consumer loans </div></td> <td> </td> <td> </td> <td align="right"><b>429,283</b></td> <td> </td> <td> </td> <td> </td> <td align="right">482,854</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total loans<sup style="font-size: 85%; vertical-align: text-top">(k)</sup> </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>633,458</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">744,898</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 2px solid #000000"> </td> </tr>  </table> </div> </div> <div align="center"> <table style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="92%"></td> <td width="5%"></td> <td width="1%"></td> <td width="1%"></td> <td width="1%"></td> </tr>   <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px"> <font style="white-space: nowrap"> </font> </div> </td> <td></td> <td nowrap="nowrap" align="right" valign="bottom"></td> <td align="right" valign="bottom"></td> <td nowrap="nowrap" valign="bottom"></td> </tr>  </table> </div>   </div>  <div style="font-family: Helvetica,Arial,sans-serif"> <div align="left" style="font-size: 12pt; margin-top: 0pt"> <b> </b> </div> <div style="position: relative"> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>Includes Investment Bank, Commercial Banking, Treasury & Securities Services and Asset Management.</td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(b)</td> <td> </td> <td>During the fourth quarter of 2009, certain industry classifications were modified to better reflect risk correlations and enhance the Firm’s management of industry risk. Prior periods have been revised to reflect the current presentation.</td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(c)</td> <td> </td> <td>Represents credit extended for real estate-related purposes to borrowers who are primarily in the real estate development or investment businesses, and for which the repayment is predominantly from the sale, lease, management, operations or refinancing of the property.</td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(d)</td> <td> </td> <td>Includes loans for commercial and industrial, real estate, financial institutions and other of $3.1 billion, $44 million, $278 million and $715 million, respectively, at December 31, 2009, and $11.0 billion, $428 million, $1.5 billion and $995 million, respectively, at December 31, 2008.</td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(e)</td> <td> </td> <td>Includes Retail Financial Services, Card Services and the Corporate/Private Equity segment.</td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(f)</td> <td> </td> <td>Represents loans where JPMorgan Chase holds the first security interest on the property.</td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(g)</td> <td> </td> <td>Represents loans where JPMorgan Chase holds a security interest that is subordinate in rank to other liens.</td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(h)</td> <td> </td> <td>Includes billed finance charges and fees net of an allowance for uncollectible amounts.</td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(i)</td> <td> </td> <td>Includes $1.0 billion of loans at December 31, 2009, held by the Washington Mutual Master Trust, which were consolidated onto the Firm’s balance sheet at fair value during the second quarter of 2009. See Note 15 on pages 198–205 of this Annual Report.</td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(j)</td> <td> </td> <td>Includes loans for prime mortgage and other (largely student loans) of $450 million and $1.7 billion at December 31, 2009, respectively, and $206 million and $1.8 billion at December 31, 2008, respectively.</td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(k)</td> <td> </td> <td>Loans (other than purchased credit-impaired loans and those for which the fair value option has been elected) are presented net of unearned income, unamortized discounts and premiums, and net deferred loan costs of $1.4 billion and $2.0 billion at December 31, 2009 and 2008, respectively. Prior periods have been revised to conform to the current presentation.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table reflects information about the Firm’s loan sales. </div> <div align="center"> <table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">Year ended December 31, (in millions)</td> <td> </td> <td nowrap="nowrap" align="right" colspan="2"><b>2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="right" colspan="2">2008</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right" colspan="2">2007</td> <td> </td> </tr>   <tr style="font-size: 1px"> <td colspan="13" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net gains/(losses) on sales of loans (including lower of cost or fair value adjustments)<sup style="font-size: 85%; vertical-align: text-top">(a)</sup> </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>439</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(2,508</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">99</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="13" align="left" style="border-top: 1px solid #000000"> </td> </tr>  </table> </div> <div style="margin-top: 3pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>Excludes sales related to loans accounted for at fair value.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Impaired loans</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Impaired loans include the following: </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="1%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>Risk-rated loans that have been placed on nonaccrual status and/or that have been modified in a troubled debt restructuring.</td> </tr> </table> </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="1%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>Consumer loans that have been modified in a troubled debt restructuring.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Loans with insignificant delays or insignificant short falls in the amount of payments expected to be collected are not considered to be impaired. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">All impaired loans are evaluated for an asset-specific allowance as described in Note 14 on pages 196–198 of this Annual Report. Both wholesale and consumer loans are deemed impaired upon being contractually modified in a troubled debt restructuring. Troubled debt restructurings typically result from the Firm’s loss mitigation activities and occur when JPMorgan Chase grants a concession to a borrower who is experiencing financial difficulty in order to minimize the Firm’s economic loss and to avoid foreclosure or repossession of collateral. Once restructured in a troubled debt restructuring, a loan is generally considered impaired until its maturity, regardless of whether the borrower performs under the modified terms. Although such a loan may be returned to accrual status if the criteria set forth in the Firm’s accounting policy are met, the loan would continue to be evaluated for an asset-specific allowance for loan losses and the Firm would continue to report the loan in the impaired loan table below. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The tables below set forth information about the Firm’s impaired loans, excluding both purchased credit-impaired loans and modified credit card loans, which are separately discussed below. </div> <div align="center"> <table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">December 31, (in millions)</td> <td> </td> <td nowrap="nowrap" align="right" colspan="2"><b>2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="right" colspan="2">2008</td> <td> </td> </tr>   <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Impaired loans with an allowance: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Wholesale </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>6,216</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2,026</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Consumer<sup style="font-size: 85%; vertical-align: text-top">(a)</sup> </div></td> <td> </td> <td> </td> <td align="right"><b>3,978</b></td> <td> </td> <td> </td> <td> </td> <td align="right">2,252</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total impaired loans with an allowance </div></td> <td> </td> <td> </td> <td align="right"><b>10,194</b></td> <td> </td> <td> </td> <td> </td> <td align="right">4,278</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Impaired loans without an allowance:<sup style="font-size: 85%; vertical-align: text-top">(b)</sup> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Wholesale </div></td> <td> </td> <td> </td> <td align="right"><b>760</b></td> <td> </td> <td> </td> <td> </td> <td align="right">62</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Consumer<sup style="font-size: 85%; vertical-align: text-top">(a)</sup> </div></td> <td> </td> <td> </td> <td align="right"><b>—</b></td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total impaired loans without an allowance </div></td> <td> </td> <td> </td> <td align="right"><b>760</b></td> <td> </td> <td> </td> <td> </td> <td align="right">62</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Total impaired loans</b> </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>10,954</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">4,340</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Allowance for impaired loans: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Wholesale </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>2,046</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">712</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Consumer<sup style="font-size: 85%; vertical-align: text-top">(a)</sup> </div></td> <td> </td> <td> </td> <td align="right"><b>996</b></td> <td> </td> <td> </td> <td> </td> <td align="right">379</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Total allowance for impaired loans</b><sup style="font-size: 85%; vertical-align: text-top">(c)</sup> </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>3,042</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,091</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr>  </table> </div> <div align="center"> <table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">Year ended December 31, (in millions)</td> <td> </td> <td nowrap="nowrap" align="right" colspan="2"><b>2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="right" colspan="2">2008</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right" colspan="2">2007</td> <td> </td> </tr>   <tr style="font-size: 1px"> <td colspan="13" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Average balance of impaired loans : </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Wholesale </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>4,719</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">896</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">316</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Consumer<sup style="font-size: 85%; vertical-align: text-top">(a)</sup> </div></td> <td> </td> <td> </td> <td align="right"><b>3,518</b></td> <td> </td> <td> </td> <td> </td> <td align="right">1,211</td> <td> </td> <td> </td> <td> </td> <td align="right">317</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="13" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total average impaired loans </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>8,237</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2,107</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">633</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="13" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Interest income recognized on impaired loans: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Wholesale </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>15</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Consumer<sup style="font-size: 85%; vertical-align: text-top">(a)</sup> </div></td> <td> </td> <td> </td> <td align="right"><b>138</b></td> <td> </td> <td> </td> <td> </td> <td align="right">57</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="13" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total interest income recognized on impaired loans </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>153</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">57</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="13" align="left" style="border-top: 1px solid #000000"> </td> </tr>  </table> </div> <div style="margin-top: 3pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>Excludes credit card loans.</td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(b)</td> <td> </td> <td>When the discounted cash flows, collateral value or market price equals or exceeds the carrying value of the loan, then the loan does not require an allowance.</td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(c)</td> <td> </td> <td>The allowance for impaired loans is included in JPMorgan Chase’s allowance for loan losses.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">As of December 31, 2009, wholesale loans restructured in troubled debt restructurings were approximately $1.1 billion. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During 2009, the Firm reviewed its residential real estate portfolio to identify homeowners most in need of assistance, opened new regional counseling centers, hired additional loan counselors, introduced new financing alternatives, proactively reached out to borrowers to offer prequalified modifications, and commenced a new process to independently review each loan before moving it into the foreclosure process. In addition, during the first quarter of 2009, the U.S. Treasury introduced the Making Home Affordable (“MHA”) programs, which are designed to assist eligible homeowners in a number of ways, one of which is by modifying the terms of their mortgages. The Firm is participating in the MHA programs while continuing to expand its other loss mitigation efforts for financially distressed borrowers who do not qualify for the MHA programs. The MHA programs and the Firm’s other loss-mitigation programs for financially troubled borrowers generally represent various concessions, such as term extensions, rate reductions and deferral of principal payments, that would have otherwise been required under the terms of the original agreement. When the Firm modifies home equity lines of credit in troubled debt restructurings, future lending commitments related to the modified loans are canceled as part of the terms of the modification. Under all of these programs, borrowers must make at least three payments under the revised contractual terms during a trial period and be successfully re-underwritten with income verification before their loan can be permanently modified. Upon contractual modification, retained residential real estate loans, other than purchased credit-impaired loans, are accounted for as troubled debt restructurings. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Consumer loans with balances of approximately $3.1 billion and $1.8 billion have been permanently modified and accounted for as troubled debt restructurings as of December 31, 2009 and 2008, respectively. Of these loans, $966 million and $853 million were classified as nonperforming at December 31, 2009 and 2008, respectively. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">JPMorgan Chase has also modified the terms of credit card loan agreements with borrowers who have experienced financial difficulty. Such modifications may include reducing the interest rate on the card and/or placing the customer on a fixed payment plan not exceeding 60 months; in all cases, the Firm cancels the customer’s available line of credit on the credit card. If the cardholder does not comply with the modified payment terms, then the credit card loan agreement will revert back to its original payment terms, with the amount of any loan outstanding reflected in the appropriate delinquency “bucket.” The loan amount may then be charged-off in accordance with the Firm’s standard charge-off policy. Under these modification programs, $5.1 billion and $2.4 billion of on-balance sheet credit card loans outstandings have been modified at December 31, 2009 and 2008, respectively. In accordance with the Firm’s methodology for determining its consumer allowance for loan losses, the Firm had already recognized a provision for loan losses on these credit card loans; accordingly the modifications to these credit card loans had no incremental impact on the Firm’s allowance for loan losses. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Purchased credit-impaired loans</b> </div> <div align="left" style="font-size: 10pt">In connection with the Washington Mutual transaction, JPMorgan Chase acquired certain loans that it deemed to be credit-impaired. Wholesale loans with a carrying amount of $135 million at December 31, 2009, down from $224 million at December 31, 2008, were determined to be credit-impaired at the date of acquisition. These wholesale loans are being accounted for individually (not on a pooled basis) and are reported as nonperforming loans since cash flows for each individual loan are not reasonably estimable. Such loans are excluded from the remainder of the following discussion, which relates solely to purchased credit-impaired consumer loans. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Purchased credit-impaired consumer loans were determined to be credit-impaired based on specific risk characteristics of the loan, including product type, loan-to-value ratios, FICO scores, and past due status. Purchasers are permitted to aggregate credit-impaired loans acquired in the same fiscal quarter into one or more pools, provided that the loans have common risk characteristics. A pool is then accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. With respect to the Washington Mutual transaction, all of the consumer loans were aggregated into pools of loans with common risk characteristics. </div> </div> <div style="position: relative"> <div align="left" style="font-size: 10pt; margin-top: 6pt">The table below sets forth information about these purchased credit-impaired consumer loans at the acquisition date. </div> <div align="center"> <table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="88%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(in millions)</td> <td> </td> <td nowrap="nowrap" align="right" colspan="2">September 25, 2008<sup style="font-size: 85%; vertical-align: text-top">(d)</sup></td> <td> </td> </tr>   <tr style="font-size: 1px"> <td colspan="5" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Contractually required payments receivable </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">(including interest) </div></td> <td> </td> <td align="left">$</td> <td align="right">188,958</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Less: Nonaccretable difference </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(59,396</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td colspan="5" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Cash flows expected to be collected<sup style="font-size: 85%; vertical-align: text-top">(a)(b)</sup> </div></td> <td> </td> <td> </td> <td align="right">129,562</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Less: Accretable yield<sup style="font-size: 85%; vertical-align: text-top">(b)(c)</sup> </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(39,454</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td colspan="5" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px"><b>Fair value of loans acquired</b> </div></td> <td> </td> <td align="left">$</td> <td align="right">90,108</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="5" align="left" style="border-top: 1px solid #000000"> </td> </tr>  </table> </div> <div style="margin-top: 3pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>Represents undiscounted principal and interest cash flows expected at acquisition.</td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(b)</td> <td> </td> <td>During the first quarter of 2009, the Firm continued to refine its model to estimate future cash flows for its purchased credit-impaired consumer loans, which resulted in an adjustment of the initial estimate of cash flows expected to be collected. These refinements, which primarily affected the amount of the undiscounted interest cash flows expected to be received over the life of the loans, resulted in a $6.8 billion increase in the Firm’s initial estimates of cash flows expected to be collected and the accretable yield.</td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(c)</td> <td> </td> <td>This amount is recognized into interest income over the estimated lives of the underlying pools of loans.</td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(d)</td> <td> </td> <td>Date of the Washington Mutual transaction.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Firm determined the fair value of the purchased credit-impaired consumer loans at the acquisition date by discounting the cash flows expected to be collected at a market observable discount rate, when available, adjusted for factors that a market participant would consider in determining fair value. In determining the cash flows expected to be collected, management incorporated assumptions regarding default rates, loss severities and the amounts and timing of prepayments. Contractually required payments receivable represent the total undiscounted amount of all uncollected contractual principal and interest payments, both past due and due in the future, adjusted for the effect of estimated prepayments. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The accretable yield represents the excess of cash flows expected to be collected over the carrying value of the purchased credit-impaired loans. This amount is not reported on the Firm’s Consolidated Balance Sheets but is accreted into interest income at a level rate of return over the expected lives of the underlying pools of loans. For variable rate loans, expected future cash flows were initially based on the rate in effect at acquisition; expected future cash flows are recalculated as rates change over the lives of the loans. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The table below sets forth the accretable yield activity for these loans for the years ended December 31, 2009 and 2008. </div> <div align="center"> <table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><b>Accretable Yield Activity</b></td> <td> </td> <td nowrap="nowrap" align="right" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="right" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(in millions)</td> <td> </td> <td nowrap="nowrap" align="right" colspan="2"><b>2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="right" colspan="2">2008</td> <td> </td> </tr>   <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Balance, January 1 </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>32,619</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Washington Mutual acquisition<sup style="font-size: 85%; vertical-align: text-top">(a)</sup> </div></td> <td> </td> <td> </td> <td align="right"><b>—</b></td> <td> </td> <td> </td> <td> </td> <td align="right">39,454</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Accretion into interest income </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(4,363</b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,292</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Changes in interest rates on variable rate loans </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(4,849</b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(5,543</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Other changes in expected cash flows<sup style="font-size: 85%; vertical-align: text-top">(b)</sup> </div></td> <td> </td> <td> </td> <td align="right"><b>2,137</b></td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Balance, December 31,</b> </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>25,544</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">32,619</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Accretable yield percentage </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>5.14</b></td> <td nowrap="nowrap"><b>%</b></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">5.81</td> <td nowrap="nowrap">%</td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr>  </table> </div> <div style="margin-top: 3pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>During the first quarter of 2009, the Firm continued to refine its model to estimate future cash flows for its purchased credit-impaired consumer loans, which resulted in an adjustment of the initial estimate of cash flows expected to be collected. These refinements, which primarily affected the amount of undiscounted interest cash flows expected to be received over the life of the loans, resulted in a $6.8 billion increase in the Firm’s initial estimate of cash flows expected to be collected and the accretable yield. However, on a discounted basis, these refinements did not have a material impact on the fair value of the purchased credit-impaired loans as of the September 25, 2008, acquisition date; nor did they have a material impact on the amount of interest income recognized in the Firm’s Consolidated Statements of Income since that date.</td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(b)</td> <td> </td> <td>Other changes in expected cash flows include the net impact of changes in estimated prepayments and reclassifications to the nonaccretable difference.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On a quarterly basis, the Firm updates the amount of loan principal and interest cash flows expected to be collected, incorporating assumptions regarding default rates, loss severities, the amounts and timing of prepayments and other factors that are reflective of current market conditions. Probable decreases in expected loan principal cash flows trigger the recognition of impairment, which is then measured as the present value of the expected principal loss plus any related foregone interest cash flows discounted at the pool’s effective interest rate. Impairments that occur after the acquisition date are recognized through the provision and allowance for loan losses. Probable and significant increases in expected principal cash flows would first reverse any previously recorded allowance for loan losses; any remaining increases are recognized prospectively as interest income. The impacts of (i) prepayments, (ii) changes in variable interest rates, and (iii) any other changes in the timing of expected cash flows are recognized prospectively as adjustments to interest income. Disposals of loans, which may include sales of loans, receipt of payments in full by the borrower, or foreclosure, result in removal of the loan from the purchased credit-impaired portfolio. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">If the timing and/or amounts of expected cash flows on these purchased credit-impaired loans were determined not to be reasonably estimable, no interest would be accreted and the loans would be reported as nonperforming loans; however, since the timing and amounts of expected cash flows for these purchased credit-impaired loans are reasonably estimable, interest is being accreted and the loans are being reported as performing loans. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Charge-offs are not recorded on purchased credit-impaired loans until actual losses exceed the estimated losses that were recorded as purchase accounting adjustments at acquisition date. To date, no charge-offs have been recorded for these loans. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Purchased credit-impaired loans acquired in the Washington Mutual transaction are reported in loans on the Firm’s Consolidated Balance Sheets. In 2009, an allowance for loan losses of $1.6 billion was recorded for the prime mortgage and option ARM pools of loans. The net aggregate carrying amount of the pools that have an allowance for loan losses was $47.2 billion at December 31, 2009. This allowance for loan losses is reported as a reduction of the carrying amount of the loans in the table below. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The table below provides additional information about these purchased credit-impaired consumer loans. </div> <div align="center"> <table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">December 31, (in millions)</td> <td> </td> <td nowrap="nowrap" align="right" colspan="2"><b>2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="right" colspan="2">2008</td> <td> </td> </tr>   <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Outstanding balance<sup style="font-size: 85%; vertical-align: text-top">(a)</sup> </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>103,369</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">118,180</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Carrying amount </div></td> <td> </td> <td> </td> <td align="right"><b>79,664</b></td> <td> </td> <td> </td> <td> </td> <td align="right">88,813</td> <td> </td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000"> </td> </tr>  </table> </div> <div style="margin-top: 3pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>Represents the sum of contractual principal, interest and fees earned at the reporting date.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Purchased credit-impaired loans are also being modified under the MHA programs and the Firm’s other loss mitigation programs. For these loans, the impact of the modification is incorporated into the Firm’s quarterly assessment of whether a probable and/or significant change in estimated future cash flows has occurred, and the loans continue to be accounted for as and reported as purchased credit-impaired loans. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Foreclosed property</b> </div> <div align="left" style="font-size: 10pt">The Firm acquires property from borrowers through loan restructurings, workouts, and foreclosures, which is recorded in other assets on the Consolidated Balance Sheets. Property acquired may include real property (e.g., land, buildings, and fixtures) and commercial and personal property (e.g., aircraft, railcars, and ships). Acquired property is valued at fair value less costs to sell at acquisition. Each quarter the fair value of the acquired property is reviewed and adjusted, if necessary. Any adjustments to fair value in the first 90 days are charged to the allowance for loan losses and thereafter adjustments are charged/credited to noninterest revenue–other. Operating expense, such as real estate taxes and maintenance, are charged to other expense. </div> </div> </div>  <!-- Begin Block Tagged Note false false Disclosure itemizing the categories of loans receivable trade accounts and notes receivable, and for each the gross carrying value as of the balance sheet date. This disclosure may also include detail of related credit-impaired loans such as carrying value and accretable yield activity, carrying amount of loans with terms that have been modified in a troubled debt restructuring and, loans held-for-sale and foreclosed property which the Firm acquired from borrowers through loan restructuring, workouts, and foreclosures. No authoritative reference available. false false 1 2 false UnKnown UnKnown UnKnown false true