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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year endedCommission file
December 31, 20182020number1-5805
JPMorgan Chase & Co.
(Exact name of registrant as specified in its charter)
Delaware13-2624428
(State or other jurisdiction of

incorporation or organization)
(I.R.S. employer

identification no.)
383 Madison Avenue, New York, New York10179
New York,New York10179
(Address of principal executive offices)(Zip code)
Code)

Registrant’s telephone number, including area code: (212) 270-6000
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stockJPMThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 5.45% Non-Cumulative Preferred Stock, Series PThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.70% Non-Cumulative Preferred Stock, Series TThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.30% Non-Cumulative Preferred Stock, Series WThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.125% Non-Cumulative Preferred Stock, Series YThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.10% Non-Cumulative Preferred Stock, Series AAJPM PR GThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.15% Non-Cumulative Preferred Stock, Series BBJPM PR HThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 5.75% Non-Cumulative Preferred Stock, Series DDJPM PR DThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.00% Non-Cumulative Preferred Stock, Series EEJPM PR CThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of
4.75% Non-Cumulative Preferred Stock, Series GG		JPM PR JThe New York Stock Exchange
Alerian MLP Index ETNs due May 24, 2024AMJNYSE Arca, Inc.
Guarantee of Callable Step-Up Fixed Rate Notes due April 26, 2028 of JPMorgan Chase Financial Company LLCJPM/28The New York Stock Exchange
Guarantee of Cushing 30 MLP Index ETNs due June 15, 2037 of JPMorgan Chase Financial Company LLCNYSE Arca, Inc.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o☐ Yes x☒ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o☐ Yes x☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x☒ Yes o☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x☒ Yes o☐ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-Kor any amendment to thisForm 10-K.x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
x☒
Large accelerated filer
o☐
Accelerated filer
o☐

Non-accelerated filer

o☐
Smaller reporting company
o☐
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒Yes☐No
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o☐ Yes x☒ No
The aggregate market value of JPMorgan Chase & Co. common stock held by non-affiliates as of June 30, 2018: $347,963,159,6742020: $383,953,778,298
Number of shares of common stock outstanding as of January 31, 2019: 3,274,241,7262021: 3,051,506,436
Documents incorporated by reference: Portions of the registrant’s Proxy Statement for the annual meeting of stockholders to be held on May 21, 2019,18, 2021, are incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III.




Form 10-K Index
Page
1
Overview
1
Business segments
1
Competition
1
Human capital
2-3
Supervision and regulation
1–63-7
Distribution of assets, liabilities and stockholders’ equity; interest rates and interest differentials
288–292300-304
Return on equity and assets
40, 287, 28844, 299, 300
Investment securities portfolio
300312
Loan portfolio
102–119, 219–238,
301–306110-131, 232-247, 313-318
Summary of loan and lending-related commitments loss experience
120–122, 239–243,
307–308132-133, 248-252, 319-320
Deposits
256, 309265, 321
Short-term and other borrowed funds
310322
7–288-32
2833
2933
2933
2933
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
3034
3034
3034
3034
3034-35
3135
3135
3135
3236
3337
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
3337
3337
3337
34-3738-41



Part I


Item 1. Business.
Overview
JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”, NYSE: JPM), a financial holding company incorporated under Delaware law in 1968, is a leading global financial services firm and one of the largest banking institutionsbased in the United States of America (“U.S.”), withand has operations worldwide; JPMorgan Chase had $2.6$3.4 trillion in assets and $256.5$279.4 billion in stockholders’ equity as of December 31, 2018.2020. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the U.S. and globally many of the world’s most prominent corporate, institutional and government clients.
JPMorgan Chase’s principal bank subsidiaries aresubsidiary is JPMorgan Chase Bank, National Association (“JPMorgan Chase Bank, N.A.”), a national banking association with U.S. branches in 2738 states and the District of ColumbiaWashington, D.C. as of December 31, 2018, and Chase Bank USA, National Association (“Chase Bank USA, N.A.”), a national banking association that is the Firm’s principal credit card-issuing bank. In January 2019, the OCC approved an application of merger which was filed by JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. in December 2018 and which contemplates that Chase Bank USA, N.A. will merge with and into JPMorgan Chase Bank, N.A., with JPMorgan Chase Bank, N.A. as the surviving bank. For additional information refer to Supervision and Regulation on pages 1-6 in the 2018 Form 10-K.2020. JPMorgan Chase’s principal nonbanknon-bank subsidiary is J.P. Morgan Securities LLC (“J.P. Morgan Securities”), a U.S. broker-dealer. The bank and non-bank subsidiaries of JPMorgan Chase operate nationally as well as through overseas branches and subsidiaries, representative offices and subsidiary foreign banks. The Firm’s principal operating subsidiary inoutside the U.K.U.S. is J.P. Morgan Securities plc, a U.K.-based subsidiary of JPMorgan Chase Bank, N.A.
The Firm’s website is www.jpmorganchase.com. JPMorgan Chase makes available on its website, free of charge, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after it electronically files or furnishes such material to the U.S. Securities and Exchange Commission (the “SEC”) at www.sec.gov. JPMorgan Chase also makes additional information about the Firm available on the Investor Relations section of its website at https://www.jpmorganchase.com/corporate/investor-relations/investor-relations.htm. The Firm has adopted, and posted on its website, a Code of Conduct for all employees of the Firm and a Code of Ethics for its Chairman and Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and all other professionals of the Firm worldwide serving in a finance, accounting, treasury, tax or investor relations role.







Business segments
For management reporting purposes, JPMorgan Chase’s activities are organized for management reporting purposes, into four major reportable business segments, as well as a Corporatesegment. The Firm’s
consumer business is the Consumer & Community Banking (“CCB”) segment. The Firm’s wholesale business segments are the Corporate & Investment Bank (“CIB”), Commercial Banking (“CB”), and Asset & Wealth Management (“AWM”).
A description of the Firm’s business segments and the products and services they provide to their respective client bases is provided in the “Business segment results” section of Management’s discussion and analysis of financial condition and results of operations (“Management’s discussion and analysis” or “MD&A”), beginning on page 4246 and in Note 31.32.
Competition
JPMorgan Chase and its subsidiaries and affiliates operate in highly competitive environments. Competitors include other banks, brokerage firms, investment banking companies, merchant banks, hedge funds, commodity trading companies, private equity firms, insurance companies, mutual fund companies, investment managers, credit card companies, mortgage banking companies, trust companies, securities processing companies, automobile financing companies, leasing companies, e-commerce and other Internet-basedinternet-based companies, financial technology companies, and other companies engaged in providing similar products and services. The Firm’s businesses generally compete on the basis of the quality and variety of the Firm’s products and services, transaction execution, innovation, reputation and price. Competition also varies based on the types of clients, customers, industries and geographies served. With respect to some of its geographies and products, JPMorgan Chase competes globally; with respect to others, the Firm competes on a national or regional basis. The Firm’s ability to compete also depends upon its ability to attract and retain professional and other personnel, and on its reputation.
CompetitionNew competitors in the financial services industry continuescontinue to be intense. In some cases,emerge, including firms that offer products and services solely through the Firm’s businesses compete with other financial institutions that may have a stronger local presence in certain geographies or that operate under different rulesinternet and regulatory regimes than the Firm, and withnon-financial companies that provide newoffer payment or innovative products or services, including thoseloan products.










1
Part I
Human capital
JPMorgan Chase believes that its long-term growth and success depend on its ability to attract, develop and retain a high-performing and diverse workforce, with inclusion and accessibility as key components of the way the Firm does business. The information provided below relates to JPMorgan Chase’s full-time and part-time employees and does not provide.include the Firm’s contractors.
Global workforce
JPMorgan Chase had 255,351 employees in 62 countries as of December 31, 2020, with over 60% of those employees located in the U.S. As of December 31, 2020, of the Firm’s global employees that self-identified, 49% self-identified as women and of the Firm’s U.S.-based employees that self-identified, 52% self-identified as ethnically diverse (defined as all Equal Employment Opportunity Commission classifications other than white). In addition, of the Firm’s U.S.-based employees, 3% self-identified as LGBT+, 3% as military veterans and 4% as people with disabilities. The following table presents the distribution of the Firm’s global workforce by region and by LOB as of December 31, 2020:
Employee Breakdown by RegionEmployee Breakdown by LOB
RegionEmployeesLOBEmployees
North America162,670CCB122,894
Europe/Middle East/Africa22,346CIB61,733
Latin America/Caribbean3,691CB11,675
Asia-Pacific66,644AWM20,683
Total Firm255,351Corporate38,366
Total Firm255,351
Firm culture
The foundations of JPMorgan Chase’s culture are its core values and How We Do Business Principles, which are fundamental to the Firm’s success and are represented by four central corporate tenets: exceptional client service; operational excellence; a commitment to integrity, fairness and responsibility; and cultivation of a great team and winning culture. The Firm maintains its focus on its culture of inclusion and respect, which is reinforced by increasing employee awareness and education through engagement, communication and training. An important part of these efforts includes the Firm’s Business Resource Groups, which are groups of employees who support JPMorgan Chase’s diversity and inclusion strategies by leveraging the unique perspectives of their members.
Attracting and retaining employees
The goal of JPMorgan Chase’s recruitment efforts is to attract and hire talented individuals in all roles and at all career levels. The Firm strives to provide both external candidates and internal employees who are seeking a different role with challenging and stimulating career opportunities. These opportunities range from internship training programs for students to entry-level, management and executive careers. During 2020, approximately two thirds of the Firm’s employment opportunities were filled by external candidates, with the remainder filled by existing employees.
Diversity is a critical area of focus throughout the Firm’s hiring process. JPMorgan Chase engages in efforts aimed at hiring diverse talent, including initiatives focused on gender, underrepresented ethnic groups, LGBT+ individuals, people with disabilities, veterans and others. The Firm’s Advancing Black Pathways program, which seeks to leverage JPMorgan Chase’s business and philanthropic
resources to accelerate economic opportunity for Black Americans by strengthening education and job training, growing careers, investing in entrepreneurship, and building wealth, includes initiatives to increase representation of talented Black individuals across the Firm.
JPMorgan Chase offers a competitive fellowship program that seeks to attract accomplished individuals who have taken a career break and wish to return to the workforce. In addition, where appropriate, the Firm’s hiring practices focus on the skills of a job candidate rather than degrees held.
Developing employees
JPMorgan Chase is committed to supporting the professional development and career growth of its employees. The Firm offers comprehensive training programs to employees, with over seven million hours of training delivered globally in 2020. Leadership Edge, the Firm’s global leadership development program that is offered to managers, is focused on creating one Firm leadership culture.
Compensation and benefits
The Firm provides comprehensive and market-competitive compensation and benefits programs. JPMorgan Chase’s compensation philosophy provides the guiding principles that drive compensation-related decisions across the Firm, including pay-for-performance, responsiveness and alignment with shareholder interests, reinforcement of the Firm’s culture and How We Do Business Principles, and integration of risk, controls and conduct considerations. The Firm’s commitment to diversity and inclusion for all employees includes compensation review processes that seek to ensure that the Firm’s employees are paid equitably for the work they do.

2

The Firm is also committed to supporting employees’ well-being. JPMorgan Chase offers a comprehensive benefits and wellness package to employees and their families, including healthcare coverage, retirement benefits, life and disability insurance, on-site health and wellness centers, employee assistance programs, competitive vacation and leave policies, backup child care arrangements, tuition reimbursement programs, mental health counseling and support, and financial coaching. The Firm has taken action to protect and support its employees during the COVID-19 pandemic, including by implementing health and safety protocols and providing additional benefits.
Supervision and regulation
The Firm is subject to extensive and comprehensive regulation under U.S. federal and state laws, as well as the applicable laws of the jurisdictions outside the U.S. in which the Firm does business. The Firm has experienced an extended period of significant change in regulation which has had and could continue to have significant consequences for how the Firm conducts business in the U.S. and other countries.

1
Part I

Financial holding company:
Consolidated supervision. JPMorgan Chase & Co. is a bank holding company (“BHC”) and a financial holding company (“FHC”) under U.S. federal law, and is subject to comprehensive consolidated supervision, regulation and examination by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). The Federal Reserve acts as an “umbrella regulator,”the supervisor of the consolidated operations of BHCs, and certain of JPMorgan Chase’s subsidiaries are also regulated directly by additional authorities based on the activities or licenses of those subsidiaries.
JPMorgan Chase’s national bank subsidiaries,subsidiary, JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A., areis supervised and regulated by the Office of the Comptroller of the Currency (“OCC”) and, with respect to certain matters, by the Federal Deposit Insurance Corporation (the “FDIC”). In January 2019, the OCC approved an application of merger which was filed by JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. in December 2018 and which contemplates that Chase Bank USA, N.A. will merge with and into JPMorgan Chase Bank, N.A., with JPMorgan Chase Bank, N.A. as the surviving bank. Completion of the merger, which is expected to occur in the second quarter of 2019, will be subject to customary closing conditions which will be set forth in an agreement and plan of merger to be entered into between the banks. The merger may be abandoned by JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. at any time before completion.
JPMorgan Chase’s U.S. broker-dealers are supervised and regulated by the Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”), and subsidiaries of the Firm that engage in certain futures-related and swaps-related activities are supervised and regulated by the Commodity Futures Trading Commission (“CFTC”). J.P. Morgan Securities plc is a U.K.U.K.-based bank licensed within the European Economic Area (the “EEA”), and is regulated by the U.K. Prudential Regulation Authority (the “PRA”) and the U.K. Financial Conduct Authority (“FCA”).
The Firm’s other non-U.S. subsidiaries are regulated by the banking, securities, prudential and securitiesconduct regulatory authorities in the countries in which they operate.
Permissible business activities. The Bank Holding Company Act generally restricts BHCs from engaging in business activities other than the business of banking and certain closely-related activities. FHCs can engage in a broader range of financial activities, including underwriting, dealing and making markets in securities, and making merchant banking investments in non-financial companies.activities. The Federal Reserve has the authority to limit an FHC’s ability to conduct otherwise permissible activities if the FHC or any of its depository institution subsidiaries ceases to meet applicable eligibility requirements. The
Federal Reserve may also impose corrective capital and/or managerial requirements on the FHC, and if deficiencies are persistent, may require divestiture of the FHC’s depository institutions.
If any depository institution controlled by an FHC fails to maintain a satisfactory rating under the Community Reinvestment Act, the Federal Reserve must prohibit the FHC and its subsidiaries from engaging in any activities other than those permissible for BHCs.
Capital and liquidity requirements. The Federal Reserve establishes capital, liquidity and leverage requirements for JPMorgan Chase that are generally consistent with the international Basel III capital and liquidity framework and evaluates the Firm’s compliance with those requirements. The OCC establishes similar requirements for the Firm’s national banking subsidiaries. JPMorgan Chase Bank, N.A.
Banking supervisors globally continue to refine and enhance the Basel III capital framework for financial institutions, including the finalization of post-crisis reforms.
institutions. In January 2019, the Basel Committee issued “Minimum capital requirements for market risk,risk.” which supersedes a previous release from January 2016. The Basel Committee expects national regulators to implement these revised market risk requirements for banking organizations in their jurisdictions by January 1, 2022,2023, in line with the other elements of the Basel III Reforms.
U.S. banking regulators have announced their support for the issuance of the Basel III Reforms and are considering how to appropriately apply such reforms in the U.S. Any changes to U.S. capital rules based on the Basel III Reforms would first be proposed for public comment. In October 2018,November 2019, the U.S. banking regulators issuedadopted a notice of proposed rulemakingrule implementing “Standardized Approach for Calculating the Exposure Amount of Derivatives”Counterparty Credit Risk” (“SA-CCR”), with an implementationwhich became effective in April 2020 and which has a mandatory compliance date of JulyJanuary 1, 2020. This proposal reflects2022.
On October 20, 2020, the U.S implementation of the Basel Committee’s equivalent standard, which was finalized in 2014 as part of the post-crisis reform package.
Under Basel III, bank holding companies and banks are required to measure their liquidity against two specific liquidity tests: the liquidity coverage ratio (“LCR”) andfederal banking agencies issued a final rule for the net stable funding ratio (“NSFR”).  In April 2016, under which large banking organizations such as the U.S. banking regulators issued a proposedFirm will be required to maintain an NSFR of at least 100% on an ongoing basis. The final NSFR rule for NSFR, but no final rule has been issued.will become effective on July 1, 2021.   
For more information concerning capital and liquidity requirements, referRefer to Capital Risk Management on pages 85-9491-101 and Liquidity Risk Management on pages 95–100.102–108 .
Stress tests. As a large BHC, JPMorgan Chase is subject to supervisory stress testing administered by the Federal Reserve as part of the Federal Reserve’s annual Comprehensive Capital Analysis and Review (“CCAR”) framework. The Firm must conduct semi-annualannual company-run stress tests and must also submit an annual capital plan to the Federal Reserve, taking into account the results of separate stress tests designed by the Firm and the Federal Reserve. The Federal Reserve’s reviewReserve uses the results under the severely adverse scenario from its supervisory stress test to determine the Firm’s “stress capital buffer” (“SCB”) requirement for the coming year, which forms part of the Firm’s applicable capital plan considers both quantitative and qualitative factors.buffers. The Firm is required to receive a notice of non-objection from thefile its annual CCAR submission on April 5, 2021. The Federal Reserve each year before taking capital actions, such as paying dividends, implementing common equity repurchase programs or redeeming or repurchasing capitalwill notify the Firm of its indicative SCB requirement by June 30, 2021 and final SCB requirement by August 31, 2021. The Firm’s final SCB requirement will become effective on October 1, 2021. The OCC requires

23

Part I
instruments. The OCC requires JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. to perform separate, similar stress tests annually. The Firm publishes each year the results of its mid-cycle stress tests under the Firm’s internally-developed “severely adverse” scenario and the results of the annual stress tests for the Firm and its principal banking subsidiariesJPMorgan Chase Bank, N.A. under the supervisory “severely adverse” scenarios provided by the Federal Reserve and the OCC. The Firm is required to file its 2019 annual CCAR submission on April 5, 2019. Results will be published by the Federal Reserve by June 30, 2019, with disclosures of results by BHCs, including the Firm, to follow within 15 days. The mid-cycle capital stress test submissions are due on October 5, 2019 and BHCs, including the Firm, will publish results by November 4, 2019. For more information concerning the Firm’s CCAR, refer
Refer to Capital Risk Management on pages 85-94.91-101 for more information concerning the Firm’s CCAR.
Enhanced prudential standards. As part of its mandate to identify and monitor risks to the financial stability of the U.S. posed by large banking organizations, the Financial Stability Oversight Council (“FSOC”) recommends prudential standards and reporting requirements to the Federal Reserve for systemically important financial institutions (“SIFIs”), such as JPMorgan Chase. The Federal Reserve has adopted several rules to implement those heightened prudential standards, including rules relating to risk management and corporate governance of subject BHCs. Large BHCs such as JPMorgan Chase areis required under these rules to comply with enhanced liquidity and overall risk management standards, including oversight by the board of directors of risk management activities.
Orderly liquidation authority and resolutionResolution and recovery. The Firm is required to submit periodically to the Federal Reserve and the FDIC a plan for resolution under Title I of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) in the event of material distress or failure (a “resolution plan”). In 2019, the FDIC and Federal Reserve revised the regulations governing resolution plan requirements, and on the basis of those revisions, the Firm’s resolution plan submissions will alternate between “targeted” and “full” plans. The Firm’s next “targeted” resolution plan is due to be filed on or before July 1, 2019.2021. The Firm also has a comprehensive recovery plan, detailingupdated annually, summarizing the actions it would take to avoid failure by remaining well-capitalized and well-funded in the case of an adverse event.
JPMorgan Chase Bank, N.A. is also required to provide a resolution plan to the FDIC. The FDIC has proposed changes
to its rules relating to the resolution plans of insured depository institutions (“IDIs”) in a 2019 advanced notice of proposed rulemaking. In January 2021, the FDIC announced that the moratorium on the preparation of resolution plans for the IDIs has ended. Banks will be given notice of at least 12 months prior to the required submission date for their IDI resolution plans. The OCC has published guidelines establishing standards for recovery planning by insured national banks, and JPMorgan Chase Bank, N.A. has submitted its recovery plan to the OCC.
Certain of the Firm’s non-U.S. subsidiaries are also subject to local resolution and recovery planning requirements.
Orderly liquidation authority. Certain financial companies, including JPMorgan Chase and certain of its subsidiaries, can also be subjected to resolution under an “orderly liquidation authority.” The U.S. Treasury Secretary, in consultation with the President of the United States, must first make certain determinations concerning extraordinary
financial distress and systemic risk, and action must be recommended by the FDIC and the Federal Reserve. Absent such actions, the Firm, as a BHC, would remain subject to resolution under the Bankruptcy Code. The FDIC has issued a draft policy statement describing its “single point of entry” strategy for resolution of SIFIs under the orderly liquidation authority, which seeks to keep operating subsidiaries of a BHC open and impose losses on shareholders and creditors of the BHC in receivership according to their statutory order of priority.
The FDIC has not formally adopted its proposed single point of entry strategy.
JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. are both required to provide resolution plans to the FDIC. The FDIC is expected to propose changes to its rules relating to the resolution plans of insured depository institutions (“IDIs”) in an advanced notice of proposed rulemaking. The OCC has published guidelines establishing standards for recovery planning by insured national banks, and JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. have submitted their recovery plans to the OCC.
Certain of the Firm’s non-U.S. subsidiaries are also subject to resolution and recovery planning requirements in the jurisdictions in which they operate.
Holding company as a source of strength. JPMorgan Chase & Co. is required to serve as a source of financial strength for its depository institution subsidiaries and to commit resources to support those subsidiaries, including when directed to do so by the Federal Reserve.
Regulation of acquisitions. Acquisitions by BHCs and their banks are subject to multiple requirements established by the Federal Reserve and the OCC. For example, FHCs and BHCs are required to obtain the approval of the Federal Reserve before they may acquire more than 5% of the voting shares of an unaffiliated bank. In addition, acquisitions by financial companies are prohibited if, as a result of the acquisition, the total liabilities of the financial company would exceed 10% of the total liabilities of all financial companies. Furthermore, for certain acquisitions, the Firm must provide written notice to the Federal Reserve prior to acquiring direct or indirect ownership or control of any voting shares of any company with over $10 billion in assets that is engaged in activities that are “financial in nature.”
Volcker Rule. The Volcker Rule prohibits banking entities, including the Firm, from engaging in certain “proprietary trading” activities, subject to exceptions for underwriting, market-making, risk-mitigating hedging and certain other activities. The Volcker Rule also limits the sponsorship of, and investment in, “covered funds,” and imposes limits on certain transactions between the Firm and covered funds for which a JPMorgan Chase entity serves as the investment manager, investment advisor, commodity trading advisor or sponsor, as well as certain covered funds controlled by such funds. The Volcker Rule requires banking entities to establish comprehensive compliance programs reasonably designed to help ensure and monitor compliance with the restrictions under the Volcker Rule.
Consent ordersOngoing obligations. The Firm remains subject to a consent ordersorder entered into with its banking regulators between 2013 and 2016the Federal Reserve concerning anti-money laundering, the CIO investigation, foreign exchange tradingtrading. The Firm is also subject to obligations under the terms of a Deferred Prosecution Agreement entered into with the Department of Justice on September 29, 2020 relating to precious metals and referral hiring practices.U.S. Treasuries markets investigations as well as under a related order issued by the CFTC.

3
Part I

JPMorgan Chase’s subsidiarySubsidiary banks:
The activities of JPMorgan Chase Bank, N.A., the Firm’s principal subsidiary banks, JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A.,bank, are limited to those specifically authorized under the National Bank Act and related interpretations of the OCC. The OCC has authority to bring an enforcement action against JPMorgan Chase Bank, N.A. for unsafe or unsound banking practices, which could
4

include limiting JPMorgan Chase Bank, N.A.’s ability to conduct otherwise permissible activities, or imposing corrective capital or managerial requirements on the bank.
FDIC deposit insurance. The FDIC deposit insurance fund provides insurance coverage for certain deposits and is funded through assessments on banks, such as JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A.
FDIC powers upon a bank insolvency. Upon the insolvency of an IDI, such as JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A., the FDIC could be appointed as the conservator or receiver under the Federal Deposit Insurance Act (“FDIA”).Act. The FDIC has broad powers to transfer any assets and liabilities without the approval of the institution’s creditors.
Cross-guarantee. An FDIC-insured depository institution can be held liable for any loss incurred or expected to be incurred by the FDIC if another FDIC-insured institution that is under common control with such institution is in default or is deemed to be “in danger of default” (commonly referred to as “cross-guarantee” liability). An FDIC cross-guarantee claim against a depository institution is generally superior in right of payment to claims of the holding company and its affiliates against such depository institution.
Prompt corrective action. The Federal Deposit Insurance Corporation Improvement Act of 1991 requires the relevant federal banking regulator to take “prompt corrective action” with respect to a depository institution if that institution does not meet certain capital adequacy standards. Although these regulations apply only to banks, such as JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A., theThe Federal Reserve is also authorized to take appropriate action against the parent BHC,, such as JPMorgan Chase & Co., based on the undercapitalized status of any bank subsidiary. In certain instances, the BHC would be required to guarantee the performance of the capital restoration plan for its undercapitalized subsidiary.
OCC Heightened Standards. The OCC has established guidelines setting forth heightened standards for large banks, including minimum standards for the design and implementation of a risk governance framework for banks. Under these standards, a bank’s risk governance framework must ensure that the bank’s risk profile is easily distinguished and separate from that of its parent BHC for risk management purposes. The bank’s board or risk committee is responsible for approving the bank’s risk governance framework, providing active oversight of the bank’s risk-taking activities, and holding management accountable for adhering to the risk governance framework.
Restrictions on transactions with affiliates.The bank subsidiaries of JPMorgan Chase (includingBank, N.A. and its subsidiaries of those banks) are subject to restrictions imposed by federal law on extensions of credit to, investments in stock or
securities of, and derivatives, securities lending and certain other transactions with, JPMorgan Chase & Co. and certain other affiliates. These restrictions prevent JPMorgan Chase & Co. and other affiliates from borrowing from such subsidiaries unless the loans are secured in specified amounts and comply with certain other requirements.
Dividend restrictions. Federal law imposes limitations on the payment of dividends by national banks, such as JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. Refer to Note 2526 for the amount of dividends that the Firm’s principal bank subsidiariesJPMorgan Chase Bank, N.A. could pay, at January 1, 2019,2021, to their respective BHCsJPMorgan Chase without the approval of theirthe banking regulators. The OCC and the Federal Reserve also have authority to prohibit or limit the payment of dividends of thea bank subsidiariessubsidiary that they supervise if, in the banking regulator’s opinion, payment of a dividend would
constitute an unsafe or unsound practice in light of the financial condition of the bank.
Depositor preference. Under federal law, the claims of a receiver of an IDI for administrative expense and the claims of holders of U.S. deposit liabilities (including the FDIC and deposits in non-U.S. branches that are dually payable in the U.S. and in a non-U.S. branch) have priority over the claims of other unsecured creditors of the institution, including depositors in non-U.S. branches and public noteholders.
Consumer supervision and regulation. JPMorgan Chase and its national bank subsidiariesJPMorgan Chase Bank, N.A. are subject to supervision and regulation by the Consumer Financial Protection Bureau (“CFPB”) with respect to federal consumer protection laws, including laws relating to fair lending and the prohibition of unfair, deceptive or abusive acts or practices in connection with the offer, sale or provision of consumer financial products and services. These laws include the Truth-in-Lending, Equal Credit Opportunity Act (“ECOA”), Fair Credit Reporting, Fair Debt Collection Practice, Electronic Funds Transfer, Credit Card Accountability, Responsibility and Disclosure (“CARD”) and Home Mortgage Disclosure Acts. The CFPB also has jurisdiction over small business lending activities with respect to fair lending and ECOA.the Equal Credit Opportunity Act. As part of its regulatory oversight, the CFPB has authority to take enforcement actions against firms that offer certain products and services to consumers using practices that are deemed to be unfair, deceptive or abusive. The Firm’s consumer activities are also subject to regulation under state statutes which are enforced by the Attorney General or empowered agency of each state.
Securities and broker-dealer regulation:
The Firm conducts securities underwriting, dealing and brokerage activities in the U.S. through J.P. Morgan Securities LLC and other non-bank broker-dealer subsidiaries, all of which are subject to regulations of the SEC, FINRA and the New York Stock Exchange, among others. The Firm conducts similar securities activities outside the U.S. subject to local regulatory requirements. In the U.K., those activities are conducted by J.P. Morgan Securities plc. Broker-dealers are subject to laws and

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regulations covering all aspects of the securities business, including sales and trading practices, securities offerings, publication of research reports, use of customer funds, the financing of client purchases, capital structure, record-keeping and retention, and the conduct of their directors, officers and employees. ForRefer to Broker-dealer regulatory capital on page 101 for information concerning the capital of J.P. Morgan Securities LLC and J.P. Morgan Securities plc, refer to Broker-dealer regulatory capital on page 94.plc.
Investment management regulation:
The Firm’s asset and wealth management businesses are subject to significant regulation in jurisdictions around the world relating to, among other things, the safeguarding and management of client assets, offerings of funds and marketing activities. Certain of the Firm’s subsidiaries are registered with, and subject to oversight by, the SEC as investment advisers.advisers and broker-dealers. The Firm’s registered investment advisers are subject to the fiduciary and other obligations imposed under the Investment Advisers Act of 1940, as well as various state securities laws. The Firm’s bank fiduciary activities are also subject to supervision by the OCC.
The Firm’s asset and wealth management businesses continue to be affected by ongoing rule-making and implementation of new regulations, including the SEC’s proposed Regulation Best Interest and rules proposed or adopted by certain U.S. states relating to enhanced standards of conduct for broker-dealers and certain other market participants. In June 2018, the Department of Labor’s fiduciary rule, which would have significantly expanded the universe of persons viewed as investment advice fiduciaries to retirement plans and individual retirement accounts under the Employee Retirement Income Security Act of 1974, as amended, was vacated by the United States Court of Appeals for the Fifth Circuit.
In the European Union (“EU”), substantial revisions to the Markets in Financial Instruments Directive (“MiFID II”) became effective in EU member states beginning in January 2018. These revisions introduced expanded requirements for a broad range of investment management activities, including product governance, transparency on costs and charges, independent investment advice, inducements, record-keeping and client reporting. In addition, the Regulation on Money Market Funds has instituted new requirements to enhance the liquidity and stability of money market funds in the EU.
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Derivatives regulation:
The Firm is subject to comprehensive regulation of its derivatives businesses, including regulations that impose capital and margin requirements, require central clearing of standardized over-the-counter (“OTC”) derivatives, mandate that certain standardized over-the-counterOTC swaps be traded on regulated trading venues, and provide for reporting of certain mandated information. In accordance with requirements under the Dodd-Frank Act, JPMorgan Chase Bank, N.A., J.P. Morgan Securities LLC and J.P. Morgan Securities plc haveare registered with the CFTC as “swap dealers” and may be required to register with the SEC as
“security-based “security-based swap dealers.” As a result, these entities are or will be subject to a comprehensive regulatory framework applicable to their swap or security-based swap activities, including capital requirements, rules requiring the collateralization of uncleared swaps and security-based swaps, rules regarding segregation of counterparty collateral, business conduct and documentation standards, record-keeping and reporting obligations, and anti-fraud and anti-manipulation requirements. InSimilar requirements have also been implemented in the EU the implementation ofunder the European Market Infrastructure Regulation (“EMIR”) and MiFID II has resulted in comparable, but not identical, changes to the European regulatory regime for derivatives.
The Firm and other derivatives market participants have agreed to adhere to the 2015 Universal Resolution Stay Protocol (the “2015 Protocol”), the 2018 U.S. Resolution Stay Protocol (the “2018 Protocol”) and the Resolution Stay Jurisdictional Modular Protocol, each developed by the International Swaps and Derivatives Association (“ISDA”) in response to regulator concerns that the close-out of derivatives and other financial transactions during the resolution of a large cross-border financial institution could impede resolution efforts and potentially destabilize markets. These protocols provide for the contractual recognition of cross-border stays under various statutory resolution regimes and, in the case of the 2015 Protocol and 2018 Protocol, a contractual stay on certain cross-default rights.II.
J.P. Morgan Securities LLC is also registered with the CFTC as a futures commission merchant and is a member of the National Futures Association.
Data, privacy and cybersecurity regulation:
The Firm and its subsidiaries are subject to numerous U.S. federal, state and statelocal as well as international laws and regulations concerning data that are central to the collection,Firm’s businesses, functions and operations. These include laws and regulations relating to data protection, privacy, data use, confidentiality, secrecy, cybersecurity, technology, artificial intelligence, data localization and storage, data retention and destruction, disclosure, transfer, protectionavailability, integrity and handlingother similar matters. The application, interpretation and enforcement of information, including personal informationthese laws and regulations are often uncertain, particularly in light of individualsnew and confidential information (including the EU General Data Protection Regulation), as well as the management of internalrapidly evolving data-driven technologies and external threats and vulnerabilities to protect information assets and the supporting infrastructure from cyberattacks.significant increase in computing power. These laws and regulations are evolving at a rapid pace, remain a focus of regulators globally, may be enforced by private parties or government bodies, and will continue to have a significant impact on all of the Firm’s businesses and operations. For example, the EU’s General Data Protection Regulation (“GDPR”) includes a complex range of obligations and operational requirements for companies that receive or process personal data of persons in the EU and provides for significant penalties for non-compliance. In addition, there are a number of legislative proposals in the EU, the U.S. (at both the federal and state level) as well as other jurisdictions that could impose new obligations or limitations in these areas that could affect the Firm’s businesses.
The Bank Secrecy Act and Economic Sanctions:
The Bank Secrecy Act (“BSA”) requires all financial institutions, including banks and securities broker-dealers, to establish a risk-based system of internal controls reasonably designed to prevent money laundering and the financing of
terrorism. The BSA includes a variety of record-keeping and reporting requirements, as well as due diligence/know-your-customer documentation requirements. The Firm is also subject to the regulations and economic sanctions programs administered by the U.S. Treasury’s Office of Foreign Assets Control (“OFAC”). In addition, the EU hasand the U.K. have adopted various economic sanctions

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programs targeted at entities or individuals that are, or are located in countries that are, involved in terrorism, hostilities, embezzlement or human rights violations.
Anti-Corruption:
The Firm is subject to laws and regulations relating to corrupt and illegal payments to government officials and others in the jurisdictions in which it operates, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act.
Compensation practices:
The Firm’s compensation practices are subject to oversight by the Federal Reserve, as well as other agencies. The Federal Reserve has issued guidance jointly with the FDIC and the OCC that is designed to ensure that incentive compensation paid by banking organizations does not encourage imprudent risk-taking that threatens the organizations’ safety and soundness. The Financial Stability Board (“FSB”) has also established standards covering compensation principles for banks. The Firm’s compensation practices are also subject to regulation and oversight by regulators in other jurisdictions. In Europe,jurisdictions, notably the EU Fourth Capital Requirements Directive (“CRD IV”), which includes compensation-related provisions, and theprovisions. The European Banking Authority has instituted guidelines on compensation policies which in certain countries, such as the U.K., and Germany, are implemented or supplemented by local regulations or guidelines. The Firm expects that the implementation of regulatory guidelines regarding compensation in the U.S. and other countries will continue to evolve, and may affect the manner in which the Firm structures its compensation programs and practices.
SignificantOther significant international regulatory initiatives:
The U.K.’s transition period for its departure from the EU, continueswhich is commonly referred to as “Brexit,” formally ended on December 31, 2020, and accordingly, from January 1, 2021, the U.K. is no longer obligated to implement EU laws.
In preparation for the completion of Brexit, numerous EU laws and regulations were separately adopted into U.K. domestic legislation in order to ensure continuity. However, the U.K. plans to evaluate the extent to which these EU-legacy laws and regulations should change going forward and has already indicated some areas where it may take a different approach from the EU. For example, the U.K. announced it will develop a U.K. settlement discipline regime rather than adopting the EU’s settlement discipline regime which will apply in the EU beginning in February 2022. Additionally, the U.K. will not incorporate into U.K. law the reporting obligation of the EU’s Securities Financing Transactions Regulation for non-financial counterparties, which will apply in the EU beginning in January 2021. The
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full impact of these differences is not yet known as further details have not yet been published.
In the EU, policymakers continue to implement an extensive and complex program of regulatory enhancement relating to address risks associated with global financial institutions. The EU operates a European Systemic Risk Board that monitors financial stability and encourages supervisory convergence acrossservices, several key elements of which are discussed below.
In response to the EU’s member states, and European Supervisory Authorities (“ESAs”) are responsible for adopting and implementing related rules. The EU is currently reviewing the ESA framework andCOVID-19 pandemic, in July 2020, the European Commission (the “EC”(“EC”) has proposed legislation to change the roles and responsibilities of the ESAs. The EU has also created a Single Supervisory Mechanism for the euro-zone, under which the regulation of all banks in the zone are under the auspices of the European Central Bank, together with a Single Resolution Mechanism and Single Resolution Board, which has jurisdiction over the resolution of banks in the zone.
Significant regulatory initiatives affecting the Firm’s businesses in the EU include EMIR and MiFID II. EMIR requires the central clearing of certain standardized derivatives and risk mitigation for uncleared OTC derivatives. EMIR is currently in the process of being amended as part ofpublished a legislative proposal known as “EMIR REFIT,” which will introduce targeted changes to EMIR to makeamending the rules more streamlined and proportionate. There is also a separate EMIR legislative proposal which includes provisions for third-country supervision of CCPs.Markets in Financial Instruments Directive (“MiFID II”). MiFID II
requires that the trading of standardizedshares and certain OTC derivatives be effectedto take place on exchanges or electronic trading platforms,venues, and also significantly enhanced requirements for pre- and post-trade transparency, transaction reporting and investor protection, and introduced a position limits and a reporting regime for commodities. The EC’s proposal included targeted changes to the MiFID II became effective acrossframework intended to reduce the compliance burden on financial services firms as part of the EC’s broader initiative to assist in the EU’s economic recovery from the COVID-19 pandemic. The proposed changes include amendments to the commodity derivatives regime, investor protection rules and rules relating to research on small and medium-sized Enterprises. The proposal is in the final stages of becoming EU member stateslaw and is expected to go into effect in January 2018 and will be subject to2022.The EC has also begun a review byof the EC by March 2020.broader MiFID II framework and is expected to publish a further legislative proposal for changes to MiFID II in 2021. The U.K. is also re-evaluating the MiFID II framework and how the U.K. version of MiFID II will apply going forward.
The EU has also proposed or implemented significant revisions to laws covering securities settlement; mutual funds and pensions; payments; anti-money laundering controls; data security and privacy; transparency and disclosure of securities financing transactions; benchmarks; resolution of banks, investment firms and market infrastructures; and capital and liquidity requirements for banks and investment firms. The EU capital and liquidity legislation for banks and investment firms is implementingimplemented many of the finalized Basel III capital and liquidity standards, including in relation to the leverage ratio, market risk capital, and a net stable funding ratio. These requirements will begin to take effect from June 2021. EU legislation also contemplatesincludes a requirement for certain non-EU banks operating in the EU to establish an intermediate parent undertaking (“IPU”) located in the EU. The full impactIPU rule will allow a second IPU to be established if a single IPU would conflict with “home country” bank separation rules or impede resolvability. The Firm will be required to establish a legal entity structure that complies with the EU’s IPU rule. The U.K. Government has delayed the effective date of the IPU proposal on JPMorgan Chase’s operationsU.K. version of the EU’s legislation relating to changes in Basel III requirements until January 1, 2022. The Basel Committee recently finalized certain changes to the Basel III framework, including revisions to the credit risk and legaloperational risk calculation methods. The Firm’s banking entities in the U.K. and EU will be heavily influencedrequired to comply with these changes when they are implemented in those jurisdictions.
The Prudential Regulatory Authority (“PRA”) and European Central Bank (“ECB”) have published their supervisory expectations applicable to U.K. and EU banks, respectively, for management of financial risks arising from climate change. The supervisory expectations for managing these risks address bank strategy, risk management, scenario analysis and disclosure. U.K. banking entities, including J.P. Morgan Securities plc, will be expected to align their
practices with PRA expectations by the outcomeend of the EU legislative process, including whether any flexibility2021. J.P. Morgan Securities plc is introducedexpanding its risk management framework to the requirement. The “trilogue” negotiations to determine the final legislation have concluded and the agreement is subject to a final votecomply with PRA expectations by the European Council and European Parliament before becoming EU law.
The FSB’s standard relating to total loss-absorbing capacity (“TLAC”), which was issued in November 2015, specified minimum TLAC requirements for global systemically important banks, including at the levelend of their material sub-groups. These requirements are being implemented in the EU in the form of a minimum requirement for own funds and eligible liabilities (“MREL”). The Bank of England published its updated Statement of Policy on its approach to setting MREL in June 2018. This included new requirements on the MREL resources to be held by U.K. material subsidiaries of overseas groups. These rules came into effect, on a transitional basis, from January 1, 2019.
U.K. regulators have adopted a range of policy measures that have significantly changed the markets and prudential regulatory environment in the U.K., and have also introduced measures to enhance accountability of individuals and promote forward-looking conduct risk identification and mitigation. There is significant uncertainty concerning future U.K. policy initiatives in light of the expected departure of the U.K. from the EU, as these initiatives will depend on the future relationship between the EU and U.K. For information concerning the expected departure of the U.K. from the EU, refer to Risk factors on pages 7–28 and Business developments on page 46.

2021.

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Part I
Item 1A. Risk Factors.
The following discussion sets forth the material risk factors that could affect JPMorgan Chase’s financial condition and operations. Readers should not consider any descriptions of these factors to be a complete set of all potential risks that could affect the Firm. Any of the risk factors discussed below could by itself, or combined with other factors, materially and adversely affect JPMorgan Chase’s business, results of operations, financial condition, capital position, liquidity, competitive position or reputation, including by materially increasing expenses or decreasing revenues, which could result in material losses or a decrease in earnings.
Summary
The principal risks that could adversely affect JPMorgan Chase’s business, results of operations, financial condition, capital position, liquidity, competitive position or reputation include:
•Risks related to the COVID-19 pandemic, including the significant harm that the pandemic has caused and is causing to the global economy and the further negative effects that it could have on certain of JPMorgan Chase’s businesses.
•Regulatory risks, including the impact that applicable laws, rules and regulations in the highly-regulated financial services industry, as well as changes to or in the interpretation of those laws, rules and regulations, can have on JPMorgan Chase’s business and operations; the ways in which differences in financial services regulation in different jurisdictions or with respect to certain competitors can disadvantage JPMorgan Chase’s business; the higher compliance costs and potential for operational restrictions due to heightened regulatory scrutiny; risks associated with complying with economic sanctions and anti-corruption and anti-money laundering laws; the ways in which less predictable legal and regulatory frameworks in certain countries can negatively impact JPMorgan Chase’s operations and financial results; the losses that security holders will absorb if JPMorgan Chase were to enter into a resolution; and risks related to the regulatory uncertainties associated with the U.K.’s departure from the EU.
•Political risks, including the potential negative effects on JPMorgan Chase’s businesses due to economic uncertainty or instability caused by political developments.
•Market risks, including the effects that economic and market events and conditions, governmental policies concerning taxation, regulation and other matters, changes in interest rates and credit spreads, and market fluctuations can have on JPMorgan Chase’s consumer and wholesale businesses and its investment and market-making positions.
•Credit risks, including potential negative effects from adverse changes in the financial condition of clients, customers, counterparties, custodians and central
counterparties; and the potential for credit losses due to declines in the value of collateral in stressed market conditions or from concentrations of credit and market risk.
•Liquidity risks, including the risk that JPMorgan Chase’s liquidity could be impaired by market-wide illiquidity or disruption, unforeseen liquidity or capital requirements, the inability to sell assets, default by a significant market participant, unanticipated outflows of cash or collateral, or lack of market or customer confidence in JPMorgan Chase; the dependence of JPMorgan Chase & Co. on the cash flows of its subsidiaries; the adverse effects that any downgrade in any of JPMorgan Chase’s credit ratings may have on its liquidity and cost of funding; and potential negative impacts on JPMorgan Chase’s funding, investments and financial products, as well as litigation risks, associated with the transition from LIBOR and other benchmark rates.
•Capital risks, including the risk that any failure by or inability of JPMorgan Chase to maintain the required level and composition of capital, or unfavorable changes in the capital requirements imposed by banking regulators, could limit JPMorgan Chase’s ability to distribute capital to shareholders or to support its business activities.
•Operational risks, including risks associated with JPMorgan Chase’s dependence on its operational systems and the competence, integrity, health and safety of its employees, as well as the systems and employees of external parties; the potential negative effects of failing to identify and address operational risks related to the introduction of or changes to products, services and delivery platforms; risks from JPMorgan Chase’s exposure to external operational systems; legal and operational risks related to safeguarding personal information; the harm that could be caused by a successful cyber attack affecting JPMorgan Chase or by catastrophes or other events; risks associated with JPMorgan Chase’s risk management framework, its models and estimations and associated judgments used in its financial statements, and controls over disclosure and financial reporting or from changes in accounting standards or policies; and potential adverse effects of failing to comply with heightened regulatory and other standards for the oversight of vendors and other service providers.
•Strategic risks, including the damage to JPMorgan Chase’s competitive standing and results that could occur if management fails to develop and execute effective business strategies; risks associated with the significant and increasing competition that JPMorgan Chase faces; and the potential adverse impacts of climate change on JPMorgan Chase’s business operations, clients and customers.
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•Conduct risks, including the negative impact that can result from the failure of employees to conduct themselves in accordance with JPMorgan Chase’s expectations, policies and practices.
•Reputation risks, including the potential adverse effects on JPMorgan Chase’s relationships with its clients, customers, shareholders, regulators and other stakeholders that could arise from employee misconduct, security breaches, inadequate risk management, compliance or operational failures, litigation and regulatory investigations, failure to satisfy expectations concerning social and environmental concerns or other factors that could damage JPMorgan Chase’s reputation.
•Country risks, including potential impacts on JPMorgan Chase’s businesses from an outbreak of hostilities between countries or within a country or region; and the potential adverse effects of local economic, political, regulatory and social factors on JPMorgan Chase’s business and revenues in certain countries.
•People risks, including the criticality of attracting and retaining qualified and diverse employees; and the potential adverse effects of unfavorable changes in immigration or travel policies on JPMorgan Chase’s workforce.
•Legal risks relating to litigation and regulatory and government investigations.
The above summary is subject in its entirety to the more complete inventory and discussion of the risks facing JPMorgan Chase set forth below.

COVID-19 Pandemic
The COVID-19 pandemic has caused and is causing significant harm to the global economy and could further negatively affect certain of JPMorgan Chase’s businesses.
On March 11, 2020, the World Health Organization declared the outbreak of a strain of novel coronavirus disease, COVID-19, to be a global pandemic. The COVID-19 pandemic and governmental responses to the pandemic led to the institution of social distancing and shelter-in-place requirements in certain areas of the U.S. and other countries resulting in ongoing severe impacts on global economic conditions, including:
•significant disruption and volatility in the financial markets
•significant disruption of global supply chains, and
•closures of many businesses, leading to loss of revenues and increased unemployment.
A prolongation or worsening of the pandemic, or the emergence of other diseases that give rise to similar effects, could deepen the adverse impact on the global economy.
The adverse economic conditions caused by the pandemic have had a negative impact on certain of JPMorgan Chase’s businesses and results of operations, including:
•reduction in demand for certain products and services from JPMorgan Chase’s clients and customers, resulting in lower revenue, and
•increases in the allowance for credit losses.
Certain models used by JPMorgan Chase in connection with the determination of the allowance for credit losses have heightened performance risk in the economic environment precipitated by the effects of the COVID-19 pandemic and government stimulus. There can be no assurance that, even after adjustments have been made to model outputs, JPMorgan Chase will not recognize unexpected losses arising from the model uncertainty that has resulted from these developments.
A prolongation or worsening of the COVID-19 pandemic and the negative economic impacts of the pandemic could have other significant adverse effects on JPMorgan Chase’s businesses, results of operations and financial condition, including:
•recognition of credit losses and further increases in the allowance for credit losses, especially to the extent that businesses remain closed, unemployment continues at elevated levels, clients and customers draw on their lines of credit or significant numbers of people relocate from metropolitan areas
•material impacts on the value of securities, derivatives and other financial instruments which JPMorgan Chase owns or in which it makes markets
•downgrades in JPMorgan Chase’s credit ratings
•constraints on liquidity or capital due to elevated levels of deposits, increases in risk-weighted assets (“RWA”) related to supporting client activities, downgrades in client credit ratings, regulatory actions or other factors, any or all of which could require JPMorgan Chase to take or refrain from taking actions that it otherwise would under its liquidity and capital management strategies, and
•the possibility that significant portions of JPMorgan Chase’s workforce are unable to work effectively, including because of illness, quarantines, shelter-in-place arrangements, government actions or other restrictions in connection with the pandemic.
The extent to which the COVID-19 pandemic negatively affects JPMorgan Chase’s businesses, results of operations and financial condition, as well as its regulatory capital and liquidity ratios, will depend on future developments that are highly uncertain and cannot be predicted, including the ultimate scope and duration of the pandemic, the effectiveness of vaccination programs and actions taken by governmental authorities and other third parties in response to the pandemic. Those negative effects, including the possible recognition of charge-offs, may be delayed
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Part I
because of the impact of prior and potential future government stimulus actions or payment assistance provided to clients and customers.
In addition, JPMorgan Chase’s participation directly or indirectly, including on behalf of customers and clients or by affiliated entities, in U.S. government programs designed to support individuals, households and businesses impacted by the economic disruptions caused by the COVID-19 pandemic could be criticized and subject JPMorgan Chase to:
•increased governmental and regulatory scrutiny
•negative publicity, and
•increased exposure to litigation,
any or all of which could increase JPMorgan Chase’s operational, legal and compliance costs and damage its reputation. To the extent that the COVID-19 pandemic adversely affects JPMorgan Chase’s business, results of operations and financial condition, it may also have the effect of heightening many of the other risks described below.
Regulatory
JPMorgan Chase’s businesses are highly regulated, and theexisting, new or changed laws, rules and regulations that apply to JPMorgan Chase have a significant impact on its business and operations.
JPMorgan Chase is a financial services firm with operations worldwide. JPMorgan Chase must comply with the laws, rules and regulations that apply to its operations in all of the jurisdictions around the world in which it does business. The regulationRegulation of financial services is extensive and comprehensive.
JPMorgan Chase has experienced an extended period of significant change in laws and regulations affecting the financial services industry both withinis extensive.
The regulation and outside the U.S. The supervision of financial services firms alsohas expanded significantly during this period.over an extended period of time. The wave of increased regulation and supervision of JPMorgan Chase has affected the way that it conducts its business and structures its operations. Existing and new laws and regulations and expanded supervisionJPMorgan Chase could require JPMorgan Chasebe required to make further changes to its business and operations.operations in response to expanded supervision, new laws, rules and regulations, and changes to existing laws, rules and regulations. These changes could result in JPMorgan Chase incurring additional costs for complying with laws, rules and regulations and could reduce JPMorgan Chase’sits profitability. More specifically,In response to new and existing and new laws, rules and regulations could requireand expanded supervision, JPMorgan Chase has in the past been and could in the future be, required to:
•limit the products and services that it offers
•reduce the liquidity that it can provide through its market-making activities
stop or discourage it•refrain from engaging in business opportunities that it might otherwise pursue
recognize losses in the value of assets that it holds
•pay higher taxes, assessments, levies or other governmental charges, including in connection with the resolution of tax examinations
•dispose of certain assets, and do so at times or prices that are disadvantageous
•impose restrictions on certain business activities, or
•increase the prices that it charges for products and services, which could reduce the demand for them.

In particular, JPMorgan Chase’s businesses and results of operations could be adversely impacted by changes in laws, rules and regulations, or changes in the application, interpretation or enforcement of laws, rules and regulations, that:
•proscribe or institute more stringent restrictions on certain financial services activities, or
•introduce changes to antitrust or anti-competition laws, rules and regulations that adversely affect the business activities of JPMorgan Chase.
Differences in financial services regulation can be disadvantageous for JPMorgan Chase’s business.
The content and application of laws, rules and regulations affecting financial services firms sometimes vary according to factors such as the size of the firm, the jurisdiction in which it is organized or operates, and other criteria. For example:
•larger firms such as JPMorgan Chase are often subject to more stringent supervision and regulation
•financial technology companies and other non-traditional competitors may not be subject to banking regulation, or may be supervised by a national or state regulatory agency that does not have the same resources or regulatory priorities as the regulatory agencies which supervise more diversified financial services firms, or
•the financial services regulatory framework in a particular jurisdiction may favor financial institutions that are based in that jurisdiction.
These types of differences in the regulatory framework can result in a firm such as JPMorgan Chase losing market share to competitors that are less regulated or not subject to regulation, especially with respect to unregulated financial products.
There can also be significant differences in the ways that similar regulatory initiatives affecting the financial services industry are implemented in the U.S. and in other countries and regions in which JPMorgan Chase does business. For example, when adopting rules that are intended to implement a global regulatory initiative or standard, a national regulator may introduce additional or more restrictive requirements, which can create competitive disadvantages for financial services firms, such as JPMorgan Chase, that may be subject to those enhanced regulations.
Legislative and regulatory initiatives outside the U.S. could require JPMorgan Chase to make significant modifications to its operations and legal entity structure in the relevant
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countries or regions in order to comply with those requirements. These include laws, rules and regulations that have been adopted or proposed relating to:
the resolution of financial institutions
•the establishment of locally-based intermediate holding companies or operating subsidiaries
•requirements to maintain minimum amounts of capital or liquidity in locally-based subsidiaries
•the separation (or “ring fencing”) of core banking products and services from markets activities
•the resolution of financial institutions
•requirements for executing or settling transactions on exchanges or through central counterparties (“CCPs”)
•position limits and reporting rules for derivatives
•governance and accountability regimes
•conduct of business and control requirements, and
•restrictions on compensation.

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These types of differences in financial services regulation, or inconsistencies or conflicts between laws, rules and regulations between different jurisdictions, have required and could in the future require JPMorgan Chase to:
•divest assets or restructure its operations
•absorb increased operational, capital and liquidity costs
•change the prices that it charges for its products and services
•curtail the products and services that it offers to its customers and clients, or
•incur higher costs for complying with different legal and regulatory frameworks.
Any or all of these factors could harm JPMorgan Chase’s ability to compete against other firms that are not subject to the same laws, rules and regulations or supervisory oversight, or harm JPMorgan Chase’s businesses, results of operations and profitability.
Governments in some countries or regions in which JPMorgan Chase does business have adopted laws or regulations which require JPMorgan Chase subsidiaries that operate in those jurisdictions to maintain minimum amounts of capital or liquidity on a stand-alone basis. Some regulators outside the U.S. have also proposed that large banks which conduct certain businesses in their jurisdictions operate through separate subsidiaries located in those jurisdictions. These requirements, and any future laws or regulations that impose restrictions on the way JPMorgan Chase organizes its businesses or increase the capital or liquidity requirements that would apply to JPMorgan Chase subsidiaries, could hinder JPMorgan Chase’s ability to efficiently manage its operations, increase its funding and liquidity costs, and result in lower profitability.
Heightened regulatory scrutiny of JPMorgan Chase’s businesses has increased itscould result in higher compliance costs and could result in restrictions on its operations.
JPMorgan Chase’s operations are subject to heightened oversight and scrutiny from regulatory authorities in many jurisdictions where JPMorgan Chase does business.jurisdictions. JPMorgan Chase has paid significant fines, provided other monetary relief, incurred other penalties and experienced other repercussions in connection with resolving several investigations and enforcement actions by governmental agencies. JPMorgan Chase could become subject to similar regulatory resolutions or other actions in the future, and addressing the requirements of any such resolutions or actions could result in JPMorgan Chase incurring higher operational and compliance costs or needing to comply with other restrictions.
In connection with resolving specific regulatory investigations or enforcement actions, certain regulators have required JPMorgan Chase and other financial institutions to admit wrongdoing with respect to the
activities that gave rise to the resolution. These types of admissions can lead to:
•greater exposure in civil litigation
•damage to reputation
•disqualification from doing business with certain clients or customers, or in specific jurisdictions, or
•other direct and indirect adverse effects.
Furthermore, U.S. government officials have demonstrated a willingness to bring criminal actions against financial institutions and have demandedrequired that institutions plead guilty to criminal offenses or admit other wrongdoing in connection with resolving regulatory investigations or enforcement actions. Resolutions of this type can have significant collateral consequences for the subject financial institution, including:
•loss of clients, customers and business
•restrictions on offering certain products or services, and
•losing permission to operate certain businesses, either temporarily or permanently.
JPMorgan Chase expects that that:
•it and other financial services firms will continue to be subject to heightened regulatory scrutiny and governmental investigations and enforcement actions. JPMorgan Chase also expects that actions
•regulators will continue to insistrequire that financial institutions be penalized for actual or deemed violations of law with formal and punitive enforcement actions, including the imposition of significant monetary and other sanctions, rather than resolving these matters through informal supervisory actions; and
•regulators will be more likely to pursue formal enforcement actions and resolutions against JPMorgan Chase to the extent that it has previously been subject to other governmental investigations or enforcement actions. Furthermore, if
If JPMorgan Chase fails to meet the requirements of any resolution of a governmental investigation or enforcement action, or to maintain risk and control processes that meet the heightened standards established by its regulators, it could be required to:
•enter into further resolutions of investigations or enforcement actions
•pay additional regulatory fines, penalties or judgments, or
•accept material regulatory restrictions on, or changes in the management of, its businesses.
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Part I
In these circumstances, JPMorgan Chase could also become subject to other sanctions, or to prosecution or civil litigation with respect to the conduct that gave rise to an investigation or enforcement action.
The long-term impact of U.S. tax reform legislation is uncertain, and may be affected by regulatory implementation.
The long-term impact of the Tax Cuts & Jobs Acts (“TCJA”) on JPMorgan Chase and the U.S. economy remains uncertain. While the enactment of the TCJA has had, and should continue to have, a positive impact on JPMorgan Chase’s net income, the competitive environment and other

8

factors will influence the extent to which these benefits are retained by JPMorgan Chase over the longer term, and the specific impact on JPMorgan Chase’s businesses, products and geographies may vary. In addition, the Treasury Regulations governing certain TCJA provisions have not been finalized and their ultimate impact on JPMorgan Chase is uncertain.
Complying with economic sanctions and anti-corruption and anti-money laundering laws, rules and regulations can increase JPMorgan Chase’s operational and compliance costs and risks.
JPMorgan Chase must comply with economic sanctions and embargo programs administered by the Office of Foreign Assets Control (“OFAC”) and similar national and multi-national bodies and governmental agencies outside the U.S., as well as anti-corruption and anti-money laundering laws, rules and regulations throughout the world. JPMorgan Chase can incur higher costs and face greater compliance risks in structuring and operating its businesses to comply with these requirements. Furthermore, aCertain governments have enacted laws, which are commonly referred to as “blocking laws,” that are designed to prohibit compliance with some U.S. sanctions and may raise significant conflict of laws issues. A violation of a sanction or embargo program or anti-corruption or anti-money laundering laws, rules and regulations, or enforcement of blocking laws, could subject JPMorgan Chase, and individual employees, to regulatory enforcement actions as well as significant civil and criminal penalties.
JPMorgan Chase’s operations and financial results can be constrainednegatively impacted in countries with less predictable legal and regulatory frameworks.frameworks.
If the legal and regulatory systemJPMorgan Chase conducts business in a particular country is less established or predictable, this can create a more difficult environmentcertain countries in which to conduct business. For example, anythe application of the following could hamper JPMorgan Chase’s operations and reduce its earnings in countriesrule of law is inconsistent or less predictable, including with less established or predictable legal and regulatory regimes:respect to:
•the absence of a statutory or regulatory basis or guidance for engaging in specific types of business or transactions
the adoption of •conflicting or ambiguous laws, rules and regulations, or the inconsistent application or interpretation of existing laws, rules and regulations
•uncertainty concerning the enforceability of contractual, intellectual property or other obligations
•difficulty in competing in economies in which the government controls or protects all or a portion of the local economy or specific businesses, or where graft or corruption may be pervasive, and
•the threat of arbitrary regulatory investigations, civil litigations or criminal prosecutions, the termination of licenses required to operate in the local market or the suspension of business relationships with governmental bodies.
Conducting businessIf the application of the laws, rules and regulations in countries with less-developed legal and regulatory regimes often requiresa particular country is susceptible to producing inconsistent or unexpected outcomes, this can create a more difficult environment in which JPMorgan Chase toconducts its business and could negatively affect JPMorgan Chase’s operations
and reduce its earnings with respect to that country. For example, conducting business could require JPMorgan Chase to devote significant additional resources to understanding, and monitoring changes in, local laws, rules and regulations, as well as structuring its operations to comply with local laws, rules and regulations and implementing and administering related internal policies and procedures.
There can be no assurance that JPMorgan Chase will always be successful in its efforts to fully understand and to conduct its business in compliance with the laws, rules and regulations of all of the jurisdictions in which it operates, and the risk of non-compliance can be greater in countries withthat have less predictable legal and regulatory systems or that JPMorgan Chase will be able to develop effective working relationships with local regulators.systems.
Requirements for the orderly resolution of JPMorgan Chase could result in JPMorgan Chase having to restructure or reorganize its businesses.businesses and could increase its funding or operational costs or curtail its business.
JPMorgan Chase is required under Federal Reserve and FDIC rules to prepare and submit periodically to those agencies a detailed plan for rapid and orderly resolution in bankruptcy, without extraordinary government support, in the event of material financial distress or failure. The agencies’ evaluation of the Firm’sJPMorgan Chase’s resolution plan may change, and the requirements for resolution plans may be modified from time to time. Any such determinations or modifications could result in JPMorgan Chase needing to make changes to its legal entity structure or to certain internal or external activities, which could increase its funding or operational costs.costs, or hamper its ability to serve clients and customers.
If the Federal Reserve and the FDIC were both to determine that a resolution plan submitted by JPMorgan Chase has deficiencies, they could jointly impose more stringent capital, leverage or liquidity requirements or restrictions on JPMorgan Chase’s growth, activities or operations. After two years, if the deficiencies are not cured, theThe agencies could also require that JPMorgan Chase restructure, reorganize or divest assets or businesses in ways that could materially and adversely affect JPMorgan Chase’s operations and strategy.
Holders of JPMorgan Chase & Co.’s debt and equity securities will absorb losses if it were to enter into a resolution.
Federal Reserve rules require that JPMorgan Chase & Co. (the “Parent Company”) maintain minimum levels of unsecured external long-term debt and other loss-absorbing capacity with specific terms (“eligible LTD”) for purposes of recapitalizing JPMorgan Chase’s operating subsidiaries if the Parent Company were to enter into a resolution either:
•in a bankruptcy proceeding under Chapter 11 of the U.S. Bankruptcy Code, or
•in a receivership administered by the FDIC under Title II of the Dodd-Frank Act (“Title II”).
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in a bankruptcy proceeding under Chapter 11 of the U.S. Bankruptcy Code, or
•
in a receivership administered by the FDIC under Title II of the Dodd-Frank Act (“Title II”).

If the Parent Company were to enter into a resolution, holders of eligible LTD and other debt and equity securities of the Parent Company will absorb the losses of the Parent Company and its subsidiaries.

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Part I

The preferred “single point of entry” strategy under JPMorgan Chase’s resolution plan contemplates that only the Parent Company would enter bankruptcy proceedings. JPMorgan Chase’s subsidiaries would be recapitalized, as needed, so that they could continue normal operations or subsequently be divested or wound down in an orderly manner. As a result, the Parent Company’s losses and any losses incurred by its subsidiaries would be imposed first on holders of the Parent Company’s equity securities and thereafter on its unsecured creditors, including holders of eligible LTD and other debt securities. Claims of holders of those securities would have a junior position to the claims of creditors of JPMorgan Chase’s subsidiaries and to the claims of priority (as determined by statute) and secured creditors of the Parent Company.
Accordingly, in a resolution of the Parent Company in bankruptcy, holders of eligible LTD and other debt securities of the Parent Company would realize value only to the extent available to the Parent Company as a shareholder of JPMorgan Chase Bank, N.A. and its other subsidiaries, and only after any claims of priority and secured creditors of the Parent Company have been fully repaid.
The FDIC has similarly indicated that a single point of entry recapitalization model could be a desirable strategy to resolve a systemically important financial institution, such as the Parent Company, under Title II. However, the FDIC has not formally adopted a single point of entry resolution strategy.
If the Parent Company were to approach, or enter into, a resolution, none of the Parent Company, the Federal Reserve or the FDIC is obligated to follow JPMorgan Chase’s preferred resolution strategy, and losses to holders of eligible LTD and other debt and equity securities of the Parent Company, under whatever strategy is ultimately followed, could be greater than they might have been under JPMorgan Chase’s preferred strategy.
Political
The expected departure ofRegulatory uncertainties associated with the U.K.’s departure from the EU could negatively affect JPMorgan Chase’s business, results of operations and operating model.
It remains highly uncertain how the expectedThe U.K.’s departure of the U.K. from the EU, which is commonly referred to as “Brexit,” will affect financial services firms such as JPMorgan Chase that conduct substantial operations in the EU from legal entities that are organized in or operating from the U.K. It is possible that the U.K. will depart from the EU in March 2019 without any agreement having been reachedwas completed on December 31, 2020. The Trade and Cooperation Agreement entered into between the U.K. and the EU concerning whether orin December 2020 included very limited provisions relating to what extent U.K.-based firms maythe conduct of financial services activities within the EU. It is also possible that any agreement reached between the U.K. and the EU. Accordingly, unless or until the U.K. and the EU may, depending onenter into further agreements relating to financial services, the final outcomeregulatory environment for financial services in the aftermath of the ongoing negotiations and related legislative developments:Brexit can be expected to:
impede
•significantly limit the ability of U.K.-based financial services firms to conduct business in the EU,
and vice versa
•prolong uncertainty concerning the levels of market access for trading venues, which could result in a reduction or fragmentation of market liquidity, and
fail to address significant unresolved issues relating to the cross-border conduct of•prolong ongoing uncertainties concerning optimal business models for firms providing financial services, activities, orespecially given that any changes in the regulation of such services by the U.K. may not benefit from equivalence determinations by the EU.
apply only temporarily.As a result of these limitations and uncertainties, JPMorgan Chase:
JPMorgan Chase •has been making the necessary modificationsmade and is continuing to make appropriate changes to its legal entity structure and operations in the EU, the locations in which it operatesU.K. and the staffing in those locationsEU to address the expected departure of the U.K. from the EU, including the possibilityregulatory environment
•is now maintaining, and expects that the U.K. may depart from the EU in March 2019 without a withdrawal agreement in place. If the U.K. departs from the EU with no withdrawal agreement having been reached, the types of structural and operational changes that JPMorgan Chase is in the process of making to its European operationsit will result in JPMorgan Chase havingbe required to sustain, a more fragmented operating model across its U.K., and EU and other operating entities. Dueentities, and
•expects that, due to considerations such as operating expenses, liquidity, leverage and capital, thethis modified European operating framework will be more complex, less efficient and more costly than would otherwise have been the case. JPMorgan Chase may experience these types of inefficiencies in its business
In addition, the COVID-19 pandemic and operations even if a withdrawal agreement is reached, for example in the event that during the transition period contemplated by such an agreement, theEU and U.K. and the EU fail to reach further agreement on future trade relationships between the U.K. and the EU, or if any other outcome persists that does not assure ongoing access for U.K.-based financial services firmsgovernment responses to the EU market.
A disorderly departurepandemic, including travel restrictions and lock-downs, have introduced delays and uncertainties into JPMorgan Chase’s implementation of the U.K. from the EU, or the unexpected consequencesits plans for maintaining continuity of any departure, could have significant and immediate destabilizing effects on cross-border financial services activities, depending on circumstances that may exist following such a withdrawal, including:
the possibility that clients and counterparties of financial institutions are not positioned to continue to do business through EU-based legal entities
reduction or fragmentation of market liquidity that may be caused if trading venues or CCPs currently based in the U.K. have not completed arrangements to conduct operations from the EU either immediately or, if authorized to continue to operate from the U.K. on a transitional basis, after any transitional relief has expired
uncertainties concerning the application and interpretation of laws and regulations relating to cross-border financial services activities
inability to engage in certain capital markets activities through EU-based legal entities to the extent that licenses or temporary permission to engage in such activities have not been granted timely by local regulators, and

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lack of legal certainty concerning the treatment of existing transactions.service for its clients.
Any or all of the above factors could have an adverse effect on the overall operation of the European financial services market across the U.K. and the EU as well as JPMorgan Chase’s business, operations and earnings in the U.K., the EU and globally.
Political
Economic uncertainty or instability caused by political developments can hurt JPMorgan Chase’s businesses.
The economic environment and market conditions in which JPMorgan Chase operates continue to be uncertain due to political developments in the U.S. and other countries. Certain monetary, fiscal and other policy initiatives and proposals could cause a contraction in U.S. and global economic growth and higher volatility in the financial markets, including:including:
inability•monetary policies and actions taken by the Federal Reserve and other central banks or governmental authorities, including any sustained large-scale asset purchases or any suspension or reversal of those actions
•fiscal policies, including with respect to reach political consensustaxation
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Part I
•actions that governments take or fail to keeptake in response to the U.S. government open and fundedeffects of the COVID-19 pandemic, as well as the effectiveness of any actions taken
•isolationist foreign policies
•the introductionimplementation of tariffs and other protectionist trade policies, or
the possible withdrawal or reduction of government support for the Federal National Mortgage Association•political and the Federal Home Loan Mortgage Corporation (together, the “GSEs”).social pressures with respect to governmental policies and actions.
These types of political developments, and uncertainty about the possible outcomes of these developments, could:
•erode investor confidence in the U.S. economy and financial markets, which could potentially undermine the status of the U.S. dollar as a safe haven currency
•provoke retaliatory countermeasures by other countries and otherwise heighten tensions in diplomatic relations
•lead to the withdrawal of government support for agencies and enterprises such as the U.S. Federal National Mortgage Association and the U.S. Federal Home Loan Mortgage Corporation (together, the “U.S. GSEs”)
•increase concerns about whether the U.S. government will be funded, and its outstanding debt serviced, at any particular time and
•result in periodic shutdowns of the U.S. government or governments in other countries.countries, and
•increase investor reliance on actions by the Federal Reserve or other central banks, or investor perceptions concerning government support of sectors of the economy or the economy as a whole.
These factors could lead to:
•slower growth rates, rising inflation or recession
•greater market volatility
•a contraction of available credit and the widening of credit spreads
•erosion of adequate risk premium on certain financial assets
•diminished investor and consumer confidence
•lower investment growth
•large-scale sales of government debt and other debt and equity securities in the U.S. and other countries
•reduced commercial activity among trading partners
•the wideningpotential for a currency redenomination by a particular country
•the possible departure of credit spreadsa country from, or the dissolution of, a political or economic alliance or treaty
inflationary pressures•potential expropriation or nationalization of assets, or
lower investment growth, and
•other market dislocations.dislocations, including the spread of unfavorable economic conditions from a particular country or region to other countries or regions.
Any of these potential outcomes could cause JPMorgan Chase to suffer losses on its market-making positions or in its investment securities portfolio, reduce its liquidity and capital levels, hamper its ability to deliver products and
services to its clients and customers, and weaken its results of operations and financial condition.

Market
JPMorgan Chase’s businesses are materially affected by economicEconomic and market events and conditions.conditions can materially affect JPMorgan Chase’s businesses and investment and market-making positions.
JPMorgan Chase’s results of operations can be negatively affected by adverse changes in any of the following:
•investor, consumer and business sentiment
•events that reduce confidence in the financial markets
•inflation or deflation
•high unemployment or, conversely, a tightening labor market
•the availability and cost of capital, liquidity and credit
monetary•levels and fiscal policiesvolatility of interest rates, credit spreads and actions taken bymarket prices for currencies, equities and commodities, and the Federal Reserve and other central banksduration of any changes in levels or governmental authorities, including any suspension or reversal of large-scale asset purchasesvolatility
trade policies implemented by governmental authorities
•the economic effects of natural disasters, severe weather conditions, health emergencies or pandemics, cyberattacks, outbreaks of hostilities, terrorism or other geopolitical instabilities, cyber attacks, climate change, natural disasters, severe weather conditions, health emergencies, the spread of infectious diseases or pandemics, and
•the health of the U.S. and global economies.
All of these are affected by global economic, market and political events and conditions, as well as regulatory restrictions.
In addition, JPMorgan Chase’s investment portfolio and market-making businesses can suffer losses due to unanticipated market events, including:
•severe declines in asset values
•unexpected credit events
•unforeseen events or conditions that may cause previously uncorrelated factors to become correlated (and vice versa)
•the inability to effectively hedge market and other risks related to market-making and investment portfolio positions, or
•other market risks that may not have been appropriately taken into account in the development, structuring or pricing of a financial instrument.
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If JPMorgan Chase experiences significant losses in its investment portfolio or from market-making activities, this could reduce JPMorgan Chase’s profitability and its liquidity and capital levels, and thereby constrain the growth of its businesses.
JPMorgan Chase’s consumer businesses can be negatively affected by adverse economic conditions.
JPMorgan Chase’s consumer businesses are particularly affected by U.S. and global economic conditions, including:
•personal and household income distribution
•unemployment or underemployment
•prolonged periods of exceptionally low interest rates
the rates of inflation and unemployment
•housing prices
the level of •consumer and small business confidence levels
•changes in consumer spending or in the level of consumer debt, and
•the number of personal bankruptcies.
A rapid increaseHeightened levels of unemployment or underemployment that result in interest ratesreduced personal and household income could negatively affect consumer credit performance to the extent that consumers are less able to service their debts. SustainedIn addition, sustained low growth, low or negative interest rates, inflationary pressures or recessionary conditions could diminish customer demand for the products and services offered by JPMorgan Chase’s consumer businesses. These conditions could also increase the cost to provide those products and services.
Adverse economic conditions could also lead to an increase in delinquencies, additions to the allowance for credit losses and higher net charge-offs, which can reduce JPMorgan Chase’s earnings. These consequences could be significantly worse in certain geographies and industry segments where high levels of unemploymenteconomic restrictions and shutdowns have resulted fromoccurred related to the COVID-19 pandemic, declining industrial or manufacturing activity

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Part I

that has resulted in or could result in higher levels of unemployment, or where high levels of consumer debt, such as outstanding student loans, could impair the ability of customers to pay their other consumer loan obligations.
JPMorgan Chase’s earnings from its consumer businesses could also be adversely affected by governmental policies and actions that affect consumers, including:
•policies and initiatives relating to medical insurance, education, immigration, and employment status and housing, and
the inability to reach political consensus to keep the U.S. government open and funded, and
•policies aimed at the economy more broadly, such as infrastructure spendinghigher taxes and global trade,increased regulation which could result in higher inflation or reductions in consumer disposable income.
In addition, governmental proposals to permit student loan obligations to be discharged in bankruptcy proceedings could, if enacted into law, encourage certain of JPMorgan Chase’s customers to declare personal bankruptcy and
thereby trigger defaults and charge-offs of credit card and other consumer loans extended to those customers.
Unfavorable market and economic conditions can have an adverse effect on JPMorgan Chase’s wholesale businesses.
In JPMorgan Chase’s wholesale businesses, market and economic factors can affect the volume of transactions that JPMorgan Chase executes for its clients or for which it advises clients, and, therefore, the revenue that JPMorgan Chase receives from those transactions. These factors can also influence the willingness of other financial institutions and investors to participate in capital markets transactions that JPMorgan Chase manages, such as loan syndications or securities underwritings. Furthermore, if a significant and sustained deterioration in market conditions were to occur, the profitability of JPMorgan Chase’s capital markets businesses, including its loan syndication, securities underwriting and leveraged lending activities, could be reduced to the extent that those businesses:
•earn less fee revenue due to lower transaction volumes, including when clients are unwilling or unable to refinance their outstanding debt obligations in unfavorable market conditions, or
•dispose of portions of credit commitments such as loan syndications or securities underwritings, at a loss, or
hold larger residual positions in credit commitments that cannot be sold at favorable prices.
An adverse change in market conditions in particular segments of the economy, such as a sudden and severe downturn in oil and gas prices or an increase in commodity prices, could have a material adverse effect on clients of JPMorgan Chase whose operations or financial condition are directly or indirectly dependent on the health or stability of those market segments, as well as clients that are engaged in related businesses. JPMorgan Chase could incur losses on its loans and other credit commitments to clients that operate in, or are dependent on, any sector of the economy that is under stress.
The fees that JPMorgan Chase earns from managing client assets or holding assets under custody for clients could be diminished by declining asset values or other adverse macroeconomic conditions. For example, higher interest rates or a downturn in financial markets could affect the valuations of client assets that JPMorgan Chase manages or holds under custody, which, in turn, could affect JPMorgan Chase’s revenue from fees that are based on the amount of assets under management or custody. Similarly, adverse macroeconomic or market conditions could prompt outflows from JPMorgan Chase funds or accounts, or cause clients to invest in products that generate lower revenue. Substantial and unexpected withdrawals from a JPMorgan Chase fund can also hamper the investment performance of the fund, particularly if the outflows create the need for the fund to dispose of fund assets at disadvantageous times or prices, and could lead to further withdrawals based on the weaker investment performance.
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Part I
An economic downturn that results in lower consumer and business spending could also have a negative impact on certain of JPMorgan Chase’s wholesale clients, and thereby diminish JPMorgan Chase’s earnings from its wholesale operations. For example, the businesses of certain of JPMorgan Chase’s wholesale clients are dependent on consistent streams of rental income from commercial real estate properties which are owned or being built by those clients. Severe and sustained adverse economic conditions, including higher unemployment caused by the COVID-19 pandemic and governmental actions taken in response to the pandemic, could reduceresult in reductions in the rental cash flows that owners or developers receive from those propertiestheir tenants which, in turn, could depress the values of the properties and impair the ability of borrowers to service or refinance their commercial real estate loans. These consequences could result in JPMorgan Chase experiencing higher delinquencies, defaults and write-offs within its commercial real estate loan portfolio and incurring higher costs for servicing a larger volume of delinquent loans in that portfolio, thereby reducing JPMorgan Chase’s earnings from its wholesale businesses.
JPMorgan Chase’s investment securities portfolio and market-making positions can suffer losses due to adverse economic, market and political events and conditions.
JPMorgan Chase generally maintains positions in various fixed income instruments in its investment securities portfolio, and positions in various fixed income, currency, commodity, credit and equity instruments as part of its market-making activities. Market-making positions are intended to facilitate demand from JPMorgan Chase’s clients for these instruments and to provide liquidity for clients. The value of the positions that JPMorgan Chase holds can be significantly affected by factors such as:
JPMorgan Chase’s ability to effectively hedge market and other risks on its positions
changes in the levels and volatility of interest rates, credit spreads, and market prices for currencies, equities and commodities, and the duration of any changes in levels or volatility, and

12

the availability of liquidity in the capital markets.
All of these are affected by global economic, market and political events and conditions, as well as regulatory restrictions on market-making activities.
JPMorgan Chase’s investment securities portfolio and market-making businesses can also suffer losses due to unanticipated market events, including:
severe declines in asset values
unexpected credit events
unforeseen events or conditions that may cause previously uncorrelated factors to become correlated (and vice versa), or
other market risks that may not have been appropriately taken into account in the development, structuring or pricing of a financial instrument.
If JPMorgan Chase experiences significant losses in its investment securities portfolio or from market-making activities, this could reduce JPMorgan Chase’s profitability and its liquidity and capital levels, and thereby constrain the growth of its businesses.
Changes in interest rates and credit spreads can adversely affect certain of JPMorgan Chase’s revenue and income streams.streams related to the Firm’s traditional banking and funding activities.
In general, a low or negative interest rate environment may cause:
•net interest margins to be compressed, which could reduce the amounts that JPMorgan Chase earns on its investment securities portfolio to the extent that it is unable to reinvest contemporaneously in higher-yielding instruments
•unanticipated or adverse changes in depositor behavior, which could negatively affect JPMorgan Chase’s broader asset and liability management strategy
•JPMorgan Chase to reduce the amount of deposits that it accepts from customers and clients, which could result in lower revenues, and
•a reduction in the value of JPMorgan Chase’s mortgage servicing rights (“MSRs”) asset, thereby decreasing revenues.
When credit spreads widen, it becomes more expensive for JPMorgan Chase to borrow. JPMorgan Chase’s credit spreads may widen or narrow not only in response to events and circumstances that are specific to JPMorgan Chase but also as a result of general economic and geopolitical events and conditions. Changes in JPMorgan Chase’s credit spreads will affect, positively or negatively, JPMorgan Chase’s earnings on certain liabilities, such as derivatives, that are recorded at fair value.
When interest rates are increasing, JPMorgan Chase can generally be expected to earn higher net interest income when interest rates are increasing.income. However, higher interest rates can also lead to:
•fewer originations of commercial and residential real estate loans
•losses on underwriting exposures
lower returns on JPMorgan Chase’s investment securities portfolio
•the loss of deposits, toincluding in the extentevent that JPMorgan Chase makes incorrect assumptions about depositor behavior
•lower net interest income if central banks introduce interest rate increases more quickly than anticipated and this results in a misalignment in the pricing of short-term and long-term borrowings and
•less liquidity in the financial markets, and
•higher funding costs.
All of these outcomes could adversely affect JPMorgan Chase’s revenues and its liquidity and capital levels. Higher interest rates can also negatively affect the payment performance on loans within JPMorgan Chase’s consumer and wholesale loan portfolios that are linked to variable interest rates. If borrowers of variable rate loans are unable to afford higher interest payments, those borrowers may reduce or stop making payments, thereby causing JPMorgan Chase to incur losses and increased operational costs related to servicing a higher volume of delinquent loans.
On the other hand, a low interest rate environment may cause:
net interest margins to be compressed, which could reduce the amounts that JPMorgan Chase earns on its investment securities portfolio to the extent that it is unable to reinvest contemporaneously in higher-yielding instruments, and
a reduction in the value of JPMorgan Chase’s mortgage servicing rights (“MSRs”) asset, thereby decreasing revenues.
When credit spreads widen, it becomes more expensive for JPMorgan Chase to borrow. JPMorgan Chase’s credit spreads may widen or narrow not only in response to events and circumstances that are specific to JPMorgan Chase but also as a result of general economic and geopolitical events and conditions. Changes in JPMorgan Chase’s credit spreads will affect, positively or negatively, JPMorgan Chase’s earnings on certain liabilities, such as derivatives, that are recorded at fair value.
JPMorgan Chase’s results may be materially affected by market fluctuations and significant changes in the value of financial instruments.
The value of securities, derivatives and other financial instruments which JPMorgan Chase owns or in which it makes markets can be materially affected by market fluctuations. Market volatility, illiquid market conditions and other disruptions in the financial markets may make it extremely difficult to value certain financial instruments, particularly during periods of market displacement.instruments. Subsequent valuations of financial instruments in future periods, in light of factors then prevailing, may result in significant changes in the value of these instruments. In addition, at the time of any disposition of these financial instruments, the price that JPMorgan Chase ultimately realizes will depend on the demand and liquidity in the market at that time and may be materially lower than their current fair value. Any of these factors could cause a decline in the value of JPMorgan Chase’s financial instruments which JPMorgan Chase owns or in which it makes markets, which may have an adverse effect on JPMorgan Chase’s results of operations.
UnderJPMorgan Chase’s risk management and monitoring processes, including its stress testing framework, seek to quantify and control JPMorgan Chase’s exposure to more extreme market conditions,moves. However, JPMorgan Chase’s hedging and other risk management strategies may not be as effective, at mitigating losses as they would be under more normal market conditions. Furthermore, under these conditions, market participants are particularly exposed to trading strategies employed by many market participants simultaneously and on a large scale. JPMorgan Chase’s risk management and monitoring processes seek to quantify and mitigate risk to more extreme market moves. However, severe market events have historically been difficult to predict and JPMorgan Chaseit could realizeincur significant losses, if extreme market events were to occur.

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Part I

Credit
JPMorgan Chase can be adverselynegatively affected by adverse changes in the financial condition of clients, counterparties, custodians and CCPs.
JPMorgan Chase routinely executes transactions with brokersclients and dealers, commercial and investment banks, mutual andcounterparties such as corporations, financial institutions, asset managers, hedge funds, investment managersexchanges and other types of financial institutions.government entities within and outside the U.S. Many of these transactions expose JPMorgan Chase to the credit risk of its clients and counterparties, and can involve JPMorgan Chase in disputes and litigation in the event thatif a client or counterparty defaults. JPMorgan Chase can also be subject to losses or liability where a financial institution that it has appointed to provide custodial services for client assets or funds becomes insolvent as a result of fraud or the failure to abide by existing laws and obligations, including under the EU Alternative Investment Fund Managers Directive.

A default by, or the financial or operational failure of, a CCP through which JPMorgan Chase executes contracts would require JPMorgan Chase to replace those contracts, thereby increasing its operational costs and potentially resulting in losses. JPMorgan Chase can also be exposed to losses if a member of a CCP in which JPMorgan Chase is also a member defaults on its obligations to the CCP because of requirements that each member of the CCP absorb a portion of those losses.
Disputes may arise with counterparties to derivatives contracts with regard to the terms, the settlement procedures or the value of underlying collateral. The disposition of those disputes could cause JPMorgan Chase to incur unexpected transaction, operational and legal costs, or result in credit losses. These consequences can also impair JPMorgan Chase’s ability to effectively manage its credit risk exposure from its market activities, or cause harm to JPMorgan Chase’s reputation.
JPMorgan Chase’s businesses can be harmed by the insolvency of a significant market participant.
The failure of a significant market participant, such as a major financial institution or a CCP, or concerns about the creditworthiness of such a market participant, can have a cascading effect within the financial markets. JPMorgan Chase’s businesses could be significantly disrupted by such an event, particularly if it leads to other market participants incurring significant losses, experiencing liquidity issues or defaulting. These risks could be magnified in the event of the default, insolvency or resolution of a major global financial counterparty, as JPMorgan Chase is likely to have significant interrelationships with, and credit exposure to, such a counterparty, and would seek to unwind or hedge positions in securities, derivatives and other obligations in multiple jurisdictions during a period of heightened market volatility.
JPMorgan Chase’s clearing services business is exposed to the risk of client or counterparty default.
As part of its clearing services activities, JPMorgan Chase is a member of several CCPs. In the event that another member of such an organization defaults on its obligations to the CCP, JPMorgan Chase may be required to pay a portion of any losses incurred by the CCP as a result of that default. As a clearing member, JPMorgan Chase is also exposed to the risk of nonperformance by its clients, which it seeks to mitigate by requiring clients to provide adequate collateral. JPMorgan Chase is also exposed to intra-day credit risk of its clients in connection with providing cash management, clearing, custodial and other transaction services to those clients. If a client for which JPMorgan Chase provides these services becomes bankrupt or insolvent, JPMorgan Chase may incur losses, become involved in disputes and litigation with one or more CCPs, the client’s bankruptcy estate and other creditors, or be subject to regulatory investigations. All of the foregoing events can increase JPMorgan Chase’s operational and litigation costs, and JPMorgan Chase may suffer losses to the extent that any collateral that it has received is insufficient to cover those losses. JPMorgan Chase can also be subject to bearing its share of nondefaultnon-default losses incurred by a CCP, including losses from custodial, settlement or investment activities or due to cyber or other security breaches.
Transactions with government entities, including national, state, provincial, municipal and local authorities, can expose JPMorgan Chase to enhanced sovereign, credit, operational and reputation risks. Government entities may, among other things, claim that actions taken by government officials were beyond the legal authority of those officials or repudiate transactions authorized by a previous incumbent government. These types of actions have in the past caused, and could in the future cause, JPMorgan Chase to suffer losses or hamper its ability to conduct business in the relevant jurisdiction.
In addition, local laws, rules and regulations could limit JPMorgan Chase’s ability to resolve disputes and litigation in the event of a counterparty default or unwillingness to make previously agreed-upon payments, which could subject JPMorgan Chase to losses.
Disputes may arise with counterparties to derivatives contracts with regard to the terms, the settlement procedures or the value of underlying collateral. The disposition of those disputes could cause JPMorgan Chase to incur unexpected transaction, operational and legal costs, or result in credit losses. These consequences can also impair JPMorgan Chase’s ability to effectively manage its credit risk exposure from its market activities, or cause harm to JPMorgan Chase’s reputation.
The financial or operational failure affecting the CCP, including due toof a cyberattack, litigation, fraudsignificant market participant, such as a major financial institution or a systems failure.CCP, or concerns about the creditworthiness of such a market participant, can have a cascading effect within the financial markets. JPMorgan Chase’s businesses could be significantly disrupted by such an event, particularly if it leads to other market participants incurring significant losses, experiencing liquidity issues or defaulting, and JPMorgan Chase is likely to have significant interrelationships with, and credit exposure to, such a significant market participant.
JPMorgan Chase may suffer losses if the value of collateral declines in stressed market conditions.
During periods of market stress or illiquidity, JPMorgan Chase’s credit risk may be further increased when when:
•JPMorgan Chase cannot realize the fair value of the collateral held by it or when holds
•collateral is liquidated at prices that are not sufficient to recover the full amount of the loan, derivativeowed to it, or
•counterparties are unable to post collateral, whether for operational or other exposure due to it. reasons.
Furthermore, disputes with counterparties concerning the valuation of collateral may increase in times of significant market stress, volatility or illiquidity, and JPMorgan Chase could suffer losses during these periods if it is unable to realize the fair value of collateral or to manage declines in the value of collateral.
JPMorgan Chase could incur significant losses arising from concentrations of credit and market risk.
JPMorgan Chase is exposed to greater credit and market risk to the extent that groupings of its clients or counterparties:
•engage in similar or related businesses, or in businesses in related industries
•do business in the same geographic region, or
•have business profiles, models or strategies that could cause their ability to meet their obligations to be similarly affected by changes in economic conditions.
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For example, a significant deterioration in the credit quality of one of JPMorgan Chase’s borrowers or counterparties could lead to concerns about the creditworthiness of other

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borrowers or counterparties in similar, related or dependent industries. This type of interrelationship could exacerbate JPMorgan Chase’s credit, liquidity and market risk exposure and potentially cause it to incur losses, including fair value losses in its market-making businesses.businesses and investment portfolios. In addition, JPMorgan Chase may be required to recognize higher allowances for credit losses with respect to certain clients or industries in order to align with directives or expectations of its banking regulators.
Similarly, challenging economic conditions that affect a particular industry or geographic area could lead to concerns about the credit quality of JPMorgan Chase’s borrowers or counterparties not only in that particular industry or geography but in related or dependent industries, wherever located. These conditions could also heighten concerns about the ability of customers of JPMorgan Chase’s consumer businesses who live in those areas or work in those affected industries or related or dependent industries to meet their obligations to JPMorgan Chase. JPMorgan Chase regularly monitors various segments of its credit and market risk exposures to assess the potential risks of concentration or contagion, but its efforts to diversify or hedge its exposures against those risks may not be successful.
JPMorgan Chase’s consumer businesses can also be harmed by an excessive expansion of consumer credit by bank or non-bank competitors. Heightened competition for certain types of consumer loans could prompt industry-wide reactions such as significant reductions in the pricing or margins of those loans or the making of loans to less-creditworthy borrowers. If large numbers of consumers subsequently default on their loans, whether due to weak credit profiles, an economic downturn or other factors, this could impair their ability to repay obligations owed to JPMorgan Chase and result in higher charge-offs and other credit-related losses. More broadly, widespread defaults on consumer debt could lead to recessionary conditions in the U.S. economy, and JPMorgan Chase’s consumer businesses may earn lower revenues in such an environment.
Disruptions in the liquidity or transparency of the financial markets could cause JPMorgan Chase to be unable to sell, syndicate or realize the value of its positions in various debt instruments, loans, derivatives and other obligations, and thereby lead to increased risk concentrations. If JPMorgan Chase is unable to reduce positions effectively during a market dislocation, this can increase both the market and credit risks associated with those positions and the level of risk-weighted assets (“RWA”)RWA that JPMorgan Chase holds on its balance sheet. These factors could increaseadversely affect JPMorgan Chase’s capital requirements andposition, funding costs and adversely affect the profitability of JPMorgan Chase’sits businesses.
Liquidity
Liquidity is critical to JPMorgan Chase’s ability to fund and operate its businesses.businesses could be impaired if its liquidity is constrained.
JPMorgan Chase’s liquidity could be impaired at any given time by factors such as:
•market-wide illiquidity or disruption
•unforeseen cashliquidity or capital requirements,
including as a result of changes in laws, rules and regulations
•inability to sell assets, or to sell assets at favorable times or prices
•default by a CCP or other significant market participant
•unanticipated outflows of cash or collateral
•unexpected loss of consumer deposits, caused by changes in consumer behavior, and
•lack of market or customer confidence in JPMorgan Chase or financial institutions in general.
A diminution ofreduction in JPMorgan Chase’s liquidity may be caused by events over which it has little or no control. For example, during the 2008-2009 financial crisis, periods of market stress, low investor confidence and significant market illiquidity resultedcould result in higher funding costs for JPMorgan Chase and limitedcould limit its access to some of its traditional sources of liquidity, including securitized debt issuances. There is no assurance that severe conditions of this type will not occur in the future.liquidity.
JPMorgan Chase may need to raise funding from alternative sources if its access to stable and lower-cost sources of funding, such as deposits and borrowings from Federal Home Loan Banks, is reduced. Alternative sources of funding could be more expensive or limited in availability. JPMorgan Chase’s funding costs could also be negatively affected by actions that JPMorgan Chase may take in order to:
•satisfy applicable liquidity coverage ratio and net stable funding ratio requirements
•address obligations under its resolution plan, or
•satisfy regulatory requirements in jurisdictions outside the U.S. relating to the pre-positioning of liquidity in subsidiaries that are material legal entities.
More generally, if JPMorgan Chase fails to effectively manage its liquidity, this could constrain its ability to fund or invest in its businesses and subsidiaries (including, in particular, its broker-dealer subsidiaries), and thereby adversely affect its results of operations.
JPMorgan Chase & Co. is a holding company and depends on the cash flows of its subsidiaries to make payments on its outstanding securities.
JPMorgan Chase & Co. is a holding company that holds the stock of JPMorgan Chase Bank, N.A. and an intermediate holding company, JPMorgan Chase Holdings LLC (the “IHC”). The IHC in turn holds the stock of substantially all of JPMorgan Chase’s subsidiaries other than JPMorgan Chase Bank, N.A. and its subsidiaries. The IHC also owns other assets and owes intercompany indebtedness owing to the holding company.
The holding company is obligated to contribute to the IHC substantially all the net proceeds received from securities issuances (including issuances of senior and subordinated debt securities and of preferred and common stock).
The ability of JPMorgan Chase Bank, N.A. and the IHC to make payments to the holding company is also

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limited. JPMorgan Chase Bank, N.A. is subject to restrictions
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on its dividend distributions, as well as capital adequacy requirements, such as the Supplementary Leverage Ratio (“SLR”), and liquidity requirements and other regulatory restrictions on its ability to make payments to the holding company. The IHC is prohibited from paying dividends or extending credit to the holding company if certain capital or liquidity “thresholds”thresholds are breached or if limits are otherwise imposed by JPMorgan Chase’s management or Board of Directors.
As a result of these arrangements, the ability of the holding company to make various payments is dependent on its receiving dividends from JPMorgan Chase Bank, N.A. and dividends and extensions of credit from the IHC. These limitations could affect the holding company’s ability to:
•pay interest on its debt securities
•pay dividends on its equity securities
•redeem or repurchase outstanding securities, and
•fulfill its other payment obligations.
These regulatory restrictions and limitations could also result in the holding company seeking protection under bankruptcy laws at a time earlier than would have been the case absent the existence of the capital and liquidity thresholds to which the IHC is subject.
Reductions in JPMorgan Chase’s credit ratings may adversely affect its liquidity and cost of funding.
JPMorgan Chase & Co. and certain of its principal subsidiaries are rated by credit rating agencies. Rating agencies evaluate both general and firm-specific and industry-specific factors when determining credit ratings for a particular financial institution, including:
•expected future profitability
•risk management practices
•legal expenses
•ratings differentials between bank holding companies and their bank and non-bank subsidiaries
•regulatory developments
•assumptions about government support, and
•economic and geopolitical trendstrends.
JPMorgan Chase closely monitors and manages, to the extent that it is able, factors that could influence its credit ratings. However, there is no assurance that JPMorgan Chase’s credit ratings will not be lowered in the future. Furthermore, any such downgrade could occur at times of broader market instability when JPMorgan Chase’s options for responding to events may be more limited and general investor confidence is low.
A reduction in JPMorgan Chase’s credit ratings could curtail JPMorgan Chase’s business activities and reduce its profitability in a number of ways, including:
•reducing its access to capital markets
•materially increasing its cost of issuing and servicing securities
•triggering additional collateral or funding requirements, and
•decreasing the number of investors and counterparties that are willing or permitted to do business with or lend to JPMorgan Chase.
Any rating reduction could also increase the credit spreads charged by the market for taking credit risk on JPMorgan Chase & Co. and its subsidiaries. This could, in turn, adversely affect the value of debt and other obligations of JPMorgan Chase & Co. and its subsidiaries.
The regulation, reform and replacement of benchmark rates could have adverse consequences onadversely affect JPMorgan Chase’s securities issuancesfunding, investments and its capital marketsfinancial products, and investment activities.expose it to litigation and other disputes.
Interest rate, equity, foreign exchange rate and other types of indices which are deemed to be “benchmarks,” including those in widespread and long-standinglongstanding use, have been the subject of ongoing international, national and other regulatory scrutiny and initiatives and proposals for reform. Some of these reforms are already effective while others are still to be implemented or are under consideration. These reforms may cause certain benchmarks to perform differently than in the past, or to disappear entirely, or have other consequences which cannot be fully anticipated.
Any of the benchmark reforms which have been proposed or implemented, or the general increased regulatory scrutiny of benchmarks, could also increase the costs and risks of administering or otherwise participating in the setting of benchmarks and complying with regulations or requirements relating to benchmarks. Such factors may have the effect of discouraging market participants from continuing to administer or contribute to certain benchmarks, trigger changes in the rules or methodologies used in certain benchmarks or lead to the disappearance of certain benchmarks.
Any of these developments, and any future initiatives to regulate, reform or change the administration of benchmarks, could result in adverse consequences to the return on, value of and market for loans, mortgages, securities, derivatives and other financial instruments whose returns are linked to any such benchmark, including those issued, funded, serviced or held by JPMorgan Chase.
Various regulators, industry bodies and other market participants in the U.S. and other countries are engaged in initiatives to develop, introduce and encourage the use of alternative rates to replace certain benchmarks. There is no assurance that these new rates will be accepted or widely used by market participants, or that the characteristics of any of these new rates will be similar to, or produce the economic equivalent of, the benchmarks that they seek to replace. If a particular benchmark were to be discontinued and an alternative rate has not been successfully introduced to replace that benchmark, this could result in widespread

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dislocation in the financial markets, engender volatility in the pricing of securities, derivatives and other instruments, and suppress capital markets activities, all of which could have adverse effects on JPMorgan Chase’s results of operations. In addition,
To the extent that any guidance provided by accounting standard setters concerning the transition of a particularfrom benchmark rates is not comprehensive, fails to a replacement rate could provide the expected relief or the ability to elect or implement that guidance is constrained in any significant respect, the transition could:
•affect hedge accounting relationships between financial instruments linked to thata particular benchmark and any related derivatives, which could adversely affect JPMorgan Chase’s results.results of operations, or
On July 27, 2017,•increase JPMorgan Chase’s operational costs with respect to the Chief Executivedetermination of whether the transition has resulted in the modification or extinguishment of specific contracts for accounting purposes.
ICE Benchmark Administration, the administrator of LIBOR, has announced that it will consult on its intention to:
•cease publication of (i) all tenors of the U.K. Financial Conduct Authority (the “FCA”), which regulateseuro, sterling, Swiss franc and yen LIBORs and (ii) the London interbank offered rate (“LIBOR”), announcedone week and two month tenors of U.S. dollar LIBOR, in each case, after December 31, 2021, and
•cease publication of all remaining tenors of U.S. dollar LIBOR after June 30, 2023.
These announcements indicate that the FCA will no longer persuade or compel banks to submit rates for the calculationit is highly likely that various tenors of the LIBOR benchmark after 2021. This announcement indicates that the continuation of LIBOR on the current basis cannot be guaranteed after 2021, and there is a substantial risk that LIBOR will be discontinued on or modified by 2021.about the timeframes mentioned above. Vast amounts of loans, mortgages, securities, derivatives and other financial instruments are linked to the LIBOR benchmark, and any failure byinability of market participants and regulators to successfully introduce benchmark rates to replace LIBOR and implement effective transitional arrangements to address the discontinuation of LIBOR could as noted above, result in disruption in the financial markets and suppress capital markets activities, and give rise to litigation claims, all of which could have a negative impact on JPMorgan Chase’s results of operations and on LIBOR-linked securities, credit or other instruments which are issued, funded, serviced or held by JPMorgan Chase.
JPMorgan Chase could also become involved in litigation and other types of disputes with clients, customers, counterparties and investors as a consequence of the transition from LIBOR and other benchmark rates to replacement rates, including claims that JPMorgan Chase has:
•treated clients, customers, counterparties or investors unfairly, or caused them to experience losses, higher financing costs or lower returns on investments
•failed to appropriately communicate the effects of the transition from benchmark rates on the products that JPMorgan Chase has sold to its clients and customers, or failed to disclose purported conflicts of interest
•made inappropriate product recommendations to or investments on behalf of its clients, or sold products that did not serve their intended purpose, in connection with the transition from benchmark rates
•engaged in anti-competitive behavior, or in the manipulation of markets or specific benchmarks, in connection with the discontinuation of or transition from benchmark rates, or
•disadvantaged clients, customers, counterparties or investors when interpreting or making determinations under the terms of agreements or financial instruments.
These types of claims could subject JPMorgan Chase to higher legal expenses and operational costs, require it to pay significant amounts in connection with resolving litigation and other disputes, and harm its reputation.
Capital
Maintaining the required level and composition of capital may impact JPMorgan Chase’s ability to support business activities, meet evolving regulatory requirements and distribute capital to shareholders.
JPMorgan Chase is subject to various regulatory capital requirements, including leverage- and risk-based capital requirements, that can change due to actions by banking regulators. JPMorgan Chase’s adherence to these requirements can also evolve dynamically in response to changes in the composition of its balance sheet or other factors. It is possible that these changing requirements, including meeting or exceeding various capital ratio thresholds, could limit JPMorgan Chase’s ability to support its businesses and make capital distributions to its shareholders.
Actions by the Federal Reserve and the U.S. government in response to the economic effects of the COVID-19 pandemic have led to an expansion of the Federal Reserve's balance sheet, growth in deposit balances held by JPMorgan Chase and other U.S. financial institutions and, consequently, an increase in JPMorgan Chase's leverage exposure. If these trends were to continue, JPMorgan Chase may be required to hold more capital or take other actions in order to satisfy the leverage-based capital requirements applicable to it.
JPMorgan Chase is required to submit, at least annually, a capital plan describing proposed dividend payments to shareholders, redemptions and repurchases of its outstanding securities and other capital actions that it intends to take. JPMorgan Chase considers various factors in managing capital, including the impact of stress on its capital levels, as determined by both internal modeling and the Federal Reserve’s modeling of JPMorgan Chase’s capital position in supervisory stress tests. Because the Federal Reserve and JPMorgan Chase use different forecasting models and methodologies when determining stress test results, there can be significant differences between the estimates of stress loss as determined by the Federal Reserve and JPMorgan Chase, respectively. The Federal
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Reserve may require modifications to JPMorgan Chase’s capital plan, and may change the Stress Capital Buffer (“SCB”) applicable to JPMorgan Chase, from time to time.
Any failure by or inability of JPMorgan Chase to maintain the required level and composition of capital, or unfavorable changes in the capital requirements imposed by banking regulators, could have an adverse impact on JPMorgan Chase’s shareholders, such as:
•reducing the amount of common stock that JPMorgan Chase is permitted to repurchase
•requiring the issuance of, or prohibiting the redemption of, capital instruments in a manner inconsistent with JPMorgan Chase’s capital management strategy
•constraining the amount of dividends that may be paid on common stock, or
•curtailing JPMorgan Chase’s business activities or operations.
Operational
JPMorgan Chase’s businesses are highly dependent on the effectiveness of its operational systems and those of other market participants.
JPMorgan Chase’s businesses rely comprehensively on the ability of JPMorgan Chase’s financial, accounting, transaction execution, data processing and other operational systems to process, record, monitor and report a large number of transactions on a continuous basis, and to do so accurately, quickly and securely. In addition to proper design, installation, maintenance and training, the effective functioning of JPMorgan Chase’s operational systems depends on:
•the quality of the information contained in those systems, as inaccurate, outdated or corrupted data can significantly compromise the functionality or reliability of a particular system and other systems to which it transmits or from which it receives information, and
•JPMorgan Chase’s ability to appropriately maintain and upgrade its systems on a regular basis, and to ensure that any changes introduced to its systems are managed carefully to ensure security and operational continuity and adhere to all applicable legal and regulatory requirements.
JPMorgan Chase also depends on its ability to access and use the operational systems of its vendors, custodians and
other market participants, including clearing and payment systems, CCPs, securities exchanges and data processing, security and technology companies.
The ineffectiveness, failure or other disruption of operational systems upon which JPMorgan Chase depends, including due to a systems malfunction, cyberbreach or other systems failure, could result in unfavorable ripple effects in the financial markets and for JPMorgan Chase and its clients and customers, including:
•delays or other disruptions in providing information, services and liquidity to clients and customers
•the inability to settle transactions or obtain access to funds and other assets, including those for which physical settlement and delivery is required
•failure to timely settle or confirm transactions
•the possibility that funds transfers, capital markets trades or other transactions are executed erroneously, illegallyas a result of illegal conduct or with unintended consequences
•financial losses, including due to loss-sharing requirements of CCPs, payment systems or other market infrastructures, or as possible restitution to clients and customers
•higher operational costs associated with replacing services provided by a system that is unavailable
•client or customer dissatisfaction with JPMorgan Chase’s products and services
•regulatory fines, penalties, or other sanctions against JPMorgan Chase
•loss of confidence in the ability of JPMorgan Chase, or financial institutions generally, to protect against and withstand operational disruptions, or
•harm to JPMorgan Chase’s reputation.
As the speed, frequency, volume, interconnectivity and complexity of transactions continuescontinue to increase, it becomescan become more challenging to effectively maintain and upgrade JPMorgan Chase’s operational systems and infrastructure, especially due to the heightened risks that:
•attempts by third parties to defraud JPMorgan Chase or its clients and customers may increase, evolve or become more complex, particularly during periods of market disruption or economic uncertainty
•errors made by JPMorgan Chase or another market participant, whether inadvertent or malicious, cause widespread system disruption
•isolated or seemingly insignificant errors in operational systems compound, or migrate to other systems over time, to become larger issues
•failures in synchronization or encryption software, or degraded performance of microprocessors due to design flaws, could cause disruptions in operational systems, or the inability of systems to communicate with each other, and
•third parties may attempt to block the use of key technology solutions by claiming that the use infringes on their intellectual property rights.
If JPMorgan Chase’s operational systems, or those of external parties on which JPMorgan Chase’s businesses depend, are unable to meet the demanding standardsrequirements of JPMorgan Chase’s businesses and operations or if they failbank regulatory

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standards, or if they fail or have other significant shortcomings, JPMorgan Chase could be materially and adversely affected.
A successful cyber attack affecting JPMorgan Chase could cause significant harm to JPMorgan Chase and its clients and customers.
JPMorgan Chase experiences numerous attempted cyber attacks on its computer systems, software, networks and other technology assets on a daily basis from various actors, including groups acting on behalf of hostile countries, cyber-criminals, “hacktivists” (i.e., individuals or groups that use technology to promote a political agenda or social change) and others. These cyber attacks can take many forms, including attempts to introduce computer viruses or malicious code, which is commonly referred to as “malware,” into JPMorgan Chase’s systems. These attacks are typically designed to:
•obtain unauthorized access to confidential information belonging to JPMorgan Chase or its clients, customers, counterparties or employees
•manipulate data
•destroy data or systems with the aim of rendering services unavailable
•disrupt, sabotage or degrade service on JPMorgan Chase’s systems
•steal money, or
•extort money through the use of so-called “ransomware.”
JPMorgan Chase has also experienced significant distributed denial-of-service attacks which are intended to disrupt online banking services.
JPMorgan Chase has experienced security breaches due to cyber attacks in the past, and it is inevitable that additional breaches will occur in the future. Any such breach could result in serious and harmful consequences for JPMorgan Chase or its clients and customers.
A principal reason that JPMorgan Chase cannot provide absolute security against cyber attacks is that it may not always be possible to anticipate, detect or recognize threats to JPMorgan Chase’s systems, or to implement effective preventive measures against all breaches. This is because:
•the techniques used in cyber attacks change frequently and are increasingly sophisticated, and therefore may not be recognized until launched
•cyber attacks can originate from a wide variety of sources, including JPMorgan Chase’s own employees, cyber-criminals, hacktivists, groups linked to terrorist organizations or hostile countries, or third parties whose objective is to disrupt the operations of financial institutions more generally
•JPMorgan Chase does not have control over the cybersecurity of the systems of the large number of
clients, customers, counterparties and third-party service providers with which it does business, and
•it is possible that a third party, after establishing a foothold on an internal network without being detected, might obtain access to other networks and systems.
The risk of a security breach due to a cyber attack could increase in the future as JPMorgan Chase continues to expand its mobile banking and other internet-based product offerings and its internal use of internet-based products and applications. Furthermore, increased use of remote access and third party video conferencing solutions during the COVID-19 pandemic, to facilitate work-from-home arrangements for employees, could increase JPMorgan Chase’s exposure to cyber attacks. In addition, a third party could misappropriate confidential information obtained by intercepting signals or communications from mobile devices used by JPMorgan Chase’s employees.
A successful penetration or circumvention of the security of JPMorgan Chase’s systems or the systems of a vendor, governmental body or another market participant could cause serious negative consequences, including:
•significant disruption of JPMorgan Chase’s operations and those of its clients, customers and counterparties, including losing access to operational systems
•misappropriation of confidential information of JPMorgan Chase or that of its clients, customers, counterparties, employees or regulators
•disruption of or damage to JPMorgan Chase’s systems and those of its clients, customers and counterparties
•the inability, or extended delays in the ability, to fully recover and restore data that has been stolen, manipulated or destroyed, or the inability to prevent systems from processing fraudulent transactions
•violations by JPMorgan Chase of applicable privacy and other laws
•financial loss to JPMorgan Chase or to its clients, customers, counterparties or employees
•loss of confidence in JPMorgan Chase’s cybersecurity and business resiliency measures
•dissatisfaction among JPMorgan Chase’s clients, customers or counterparties
•significant exposure to litigation and regulatory fines, penalties or other sanctions, and
•harm to JPMorgan Chase’s reputation.
The extent of a particular cyber attack and the steps that JPMorgan Chase may need to take to investigate the attack may not be immediately clear, and it may take a significant amount of time before such an investigation can be completed. While such an investigation is ongoing, JPMorgan Chase may not necessarily know the full extent of the harm caused by the cyber attack, and that damage may
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continue to spread. These factors may inhibit JPMorgan Chase’s ability to provide rapid, full and reliable information about the cyber attack to its clients, customers, counterparties and regulators, as well as the public. Furthermore, it may not be clear how best to contain and remediate the harm caused by the cyber attack, and certain errors or actions could be repeated or compounded before they are discovered and remediated. Any or all of these factors could further increase the costs and consequences of a cyber attack.
JPMorgan Chase can be negatively affected if it fails to identify and address operational risks associated with the introduction of or changes to products, services and delivery platforms.
When JPMorgan Chase launches a new product or service, introduces a new platform for the delivery or distribution of products or services (including mobile connectivity, electronic trading and cloud computing), or makes changes to an existing product, service or delivery platform, it may not fully appreciate or identify new operational risks that may arise from those changes, or may fail to implement adequate controls to mitigate the risks associated with those changes. For example, ineffective controls over newly-developed electronic trading platforms could inadvertently permit the rapid build-up of unexpected, abnormal or unusually large positions in securities or other financial instruments, or fail to anticipate or address a downturn in market liquidity which leads to sudden or severe changes in asset prices. Any significant failure to identify and mitigate operational risks associated with new products or services or new platforms for delivering or distributing products or services, or changes to existing products, services or delivery platforms,in this regard could diminish JPMorgan Chase’s ability to operate one or more of its businesses or result in:
•potential liability to clients, counterparties and customers
•increased operating expenses
•higher litigation costs, including regulatory fines, penalties and other sanctions
•damage to JPMorgan Chase’s reputation
•impairment of JPMorgan Chase’s liquidity
•regulatory intervention, or
•weaker competitive standing.
Any of the foregoing consequences could materially and adversely affect JPMorgan Chase’s businesses and results of operations.
JPMorgan Chase’s connections tooperational costs and customer satisfaction could be adversely affected by the failure of an external operational systems expose it to greater operational risks.system.
External operational systems with which JPMorgan is connected, whether directly or indirectly, can be sources of operational risk to JPMorgan Chase. JPMorgan Chase may be exposed not only to a systems failure or cyber attack that may be experienced by a vendor or market infrastructure with which JPMorgan Chase is directly connected, but also to a systems breakdown ofor cyber attack involving another party to which such a vendor or infrastructure is connected. Similarly, retailers, data aggregators and other external parties with which JPMorgan Chase’s customers do business can increase JPMorgan Chase’s operational risk. This is particularly the case where activities of customers or those parties are
beyond JPMorgan Chase’s security and control systems,
including through the use of the internet, cloud computing services and personal smart phones and other mobile devices or services.
If an external party obtains access to customer account data on JPMorgan Chase’s systems, and that party experiences a cyberbreach of its own systems or misappropriates that data, this could result in a variety of negative outcomes for JPMorgan Chase and its clients and customers, including:
•heightened risk that external parties will be able to execute fraudulent transactions using JPMorgan Chase’s systems
•losses from fraudulent transactions, as well as potential liability for losses that exceed thresholds established in consumer protection laws, rules and regulations
•increased operational costs to remediate the consequences of the external party’s security breach, and
•harm to reputation arising from the perception that JPMorgan Chase’s systems may not be secure.
As JPMorgan Chase’s interconnectivity with clients, customers and other external parties expands,continues to expand, JPMorgan Chase increasingly faces the risk of operational failure or cyber attacks with respect to the systems of those parties. Security breaches affecting JPMorgan Chase’s clients or customers, or systems breakdowns or failures, security breaches or human error or misconduct affecting other external parties, may require JPMorgan Chase to take steps to protect the integrity of its own operational systems or to safeguard confidential information, including restricting the access of customers to their accounts. These actions can increase JPMorgan Chase’s operational costs and potentially diminish customer satisfaction.satisfaction and confidence in JPMorgan Chase.
Furthermore, the widespread and expanding interconnectivity among financial institutions, central agents, CCPs, payment processors, securities exchanges, clearing houses and other financial market infrastructures increases the risk that an operational failure ator cyber attack involving one institution or entity may cause an industry-wide operational failuredisruptions that could materially affect JPMorgan Chase’s ability to conduct business.
JPMorgan Chase’s operations depend on the competence and integrity ofcould be impaired if its employees, andor those of external parties.parties, are not competent and trustworthy, or if measures to protect their health and safety are ineffective.
JPMorgan Chase’s ability to operate its businesses efficiently and profitably, and to offer products and services that meet the expectations of its clients and customers, and to maintain an effective risk management framework is highly dependent on the competence and trustworthinessintegrity of its employees, as well as employees of other parties on which JPMorgan Chase’s operations rely, including vendors, custodians and financial markets infrastructures. JPMorgan
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Chase’s businesses could be materially and adversely affected by by:
•the ineffective implementation of business decisions
•any failure to institute controls that appropriately address risks associated with business activities, or to appropriately train employees with respect to those risks and controls
•a significant operational breakdown or failure, theft, fraud or other unlawful conduct, or
•other negative outcomes caused by human error or misconduct by an

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employee of JPMorgan Chase or of another party on which JPMorgan Chase’s operations depend.
JPMorgan Chase’s operations could also be impaired if the measures taken by it or by governmental authorities to help ensure the health and safety of its employees are ineffective, or if any external party on which JPMorgan Chase relies fails to take appropriate and effective actions to protect the health and safety of its employees.
JPMorgan Chase faces substantial legal and operational risks in safeguarding personal information.
JPMorgan Chase’s businesses are subject to complex and evolving laws, rules and regulations, both within and outside the U.S., governing the privacy and protection of personal information of individuals. The protected parties can include:
•JPMorgan Chase’s clients and customers, and prospective clients and customers
•clients and customers of JPMorgan Chase’s clients and customers
•employees and prospective employees, and
•employees of JPMorgan Chase’s vendors, counterparties and other external parties.
Ensuring that JPMorgan Chase’s collection, use, transfer and storage of personal information comply with all applicable laws, rules and regulations in all relevant jurisdictions, including where the laws of different jurisdictions are in conflict, can:
•increase JPMorgan Chase’s compliance and operating costs
•hinder the development of new products or services, curtail the offering of existing products or services, or affect how products and services are offered to clients and customers
•demand significant oversight by JPMorgan Chase’s management, and
•require JPMorgan Chase to structure its businesses, operations and systems in less efficient ways.
Furthermore, JPMorgan Chase cannot ensure thatNot all of itsJPMorgan Chase’s clients, and customers, vendors, counterparties and other external parties may have appropriate controls in place to protect the confidentiality
of the information exchanged between them and JPMorgan Chase, particularly where information is transmitted by electronic means. JPMorgan Chase could be exposed to litigation or regulatory fines, penalties or other sanctions if personal, confidential or proprietary information of clients, customers, employees or others were to be mishandled or misused, such as situations where such information is:
•erroneously provided to parties who are not permitted to have the information, or
•intercepted or otherwise compromised by third parties.
Concerns regarding the effectiveness of JPMorgan Chase’s measures to safeguard personal information, or even the perception that those measures are inadequate, could cause JPMorgan Chase to lose existing or potential clients and customers, and thereby reduce JPMorgan Chase’s revenues. Furthermore, any failure or perceived failure by JPMorgan Chase to comply with applicable privacy or data protection
laws, rules and regulations may subject it to inquiries, examinations and investigations that could result in requirements to modify or cease certain operations or practices, significant liabilities or regulatory fines, penalties or other sanctions. Any of these could damage JPMorgan Chase’s reputation and otherwise adversely affect its businesses.
Recent,In recent years, well-publicized allegations involving the misuse or inappropriate sharing of personal information have led to expanded governmental scrutiny of practices relating to the safeguarding of personal information and the use or sharing of personal data by companies in the U.S. and other countries. That scrutiny has in some cases resulted in, and could in the future lead to, the adoption of stricter laws, rules and regulations relating to the use and sharing of personal information. These types of laws and regulations could prohibit or significantly restrict financial services firms such as JPMorgan Chase from sharing information among affiliates or with third parties such as vendors, and thereby increase compliance costs, or could restrict JPMorgan Chase’s use of personal data when developing or offering products or services to customers. These restrictions could also inhibit JPMorgan Chase’s development or marketing of certain products or services, or increase the costs of offering them to customers.
A successful cyberattack against JPMorgan Chase could cause significant harm to JPMorgan Chase or its clients and customers.
JPMorgan Chase experiences numerous cyberattacks on its computer systems, software, networks and other technology assets on a daily basis. These cyberattacks can take many forms, but a common objective of many of these attacks is to introduce computer viruses or malware into JPMorgan Chase’s systems. These viruses or malicious code are typically designed to:
obtain unauthorized access to confidential information belonging to JPMorgan Chase or its clients, customers, counterparties or employees
manipulate or destroy data
disrupt, sabotage or degrade service on JPMorgan Chase’s systems, or
steal money.
JPMorgan Chase has also experienced significant distributed denial-of-service attacks which are intended to disrupt online banking services.
JPMorgan Chase devotes significant resources to maintain and regularly upgrade its systems to protect them against cyberattacks. However, JPMorgan Chase has experienced security breaches due to cyberattacks in the past, and it is inevitable that additional breaches will occur in the future. Any such breach could result in serious and harmful consequences for JPMorgan Chase or its clients and customers.

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A principal reason that JPMorgan Chase cannot provide absolute security against cyberattacks is that it may not always be possible to anticipate, detect or recognize threats to JPMorgan Chase’s systems, or to implement effective preventive measures against all breaches. This is because:
the techniques used in cyberattacks change frequently and may not be recognized until launched
cyberattacks can originate from a wide variety of sources, including third parties who are or may be involved in organized crime or linked to terrorist organizations or hostile countries, or whose objective is to disrupt the operations of financial institutions more generally, and
third parties may seek to gain access to JPMorgan Chase’s systems either directly or using equipment or security passwords belonging to employees, customers, third-party service providers or other users of JPMorgan Chase’s systems.
The risk of a security breach due to a cyberattack could increase in the future as JPMorgan Chase continues to expand its mobile-payments and other internet-based product offerings and its internal use of web-based products and applications.
A successful penetration or circumvention of the security of JPMorgan Chase’s systems or the systems of a vendor, governmental body or another market participant could cause serious negative consequences, including:
significant disruption of JPMorgan Chase’s operations and those of its clients, customers and counterparties, including losing access to operational systems
misappropriation of confidential information of JPMorgan Chase or that of its clients, customers, counterparties, employees or regulators
damage to computers or systems of JPMorgan Chase and those of its clients, customers and counterparties
inability to fully recover and restore data that has been stolen, manipulated or destroyed, or to prevent systems from processing fraudulent transactions
violations by JPMorgan Chase of applicable privacy and other laws
financial loss to JPMorgan Chase or to its clients, customers, counterparties or employees
loss of confidence in JPMorgan Chase’s cybersecurity measures
dissatisfaction among JPMorgan Chase’s clients, customers or counterparties
significant exposure to litigation and regulatory fines, penalties or other sanctions, and
harm to JPMorgan Chase’s reputation.
JPMorgan Chase could also suffer some of the above consequences if a third party were to misappropriate
confidential information obtained by intercepting signals or communications from mobile devices used by JPMorgan Chase’s employees.
JPMorgan Chase may not be able to immediately address the consequences of a security breach due to a cyberattack.
A successful breach of JPMorgan Chase’s computer systems, software, networks or other technology assets due to a cyberattack could occur and persist for an extended period of time before being detected due to:
the breadth of JPMorgan Chase’s operations and the high volume of transactions that it processes
the large number of customers, counterparties and third-party service providers with which JPMorgan Chase does business
the proliferation and increasing sophistication of cyberattacks, and
the possibility that a third party, after establishing a foothold on an internal network without being detected, might obtain access to other networks and systems.
The extent of a particular cyberattack and the steps that JPMorgan Chase may need to take to investigate the attack may not be immediately clear, and it may take a significant amount of time before such an investigation can be completed and full and reliable information about the attack is known. While such an investigation is ongoing, JPMorgan Chase may not necessarily know the full extent of the harm caused by the cyberattack, and that damage may continue to spread. Furthermore, it may not be clear how best to contain and remediate the harm caused by the cyberattack, and certain errors or actions could be repeated or compounded before they are discovered and remediated. Any or all of these factors could further increase the costs and consequences of a cyberattack.
JPMorgan Chase’s operations, results and reputation could be harmed by catastrophes or other events.
JPMorgan Chase’s business and operational systems could be seriously disrupted, and its reputation could be harmed, by events or contributing factors that are wholly or partially beyond its control, including:
•cyberbreaches or breaches of physical premises, including data centers
•power, telecommunications or internet outages
•failures of, or loss of access to, operational systems, including computer systems, servers, networks and other technology assets
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•damage to or loss of property or assets of JPMorgan Chase or third parties, and any consequent injuries, including in connection with any construction projects undertaken by JPMorgan Chase
•effects of climate change
•natural disasters or severe weather conditions

•accidents such as explosions or structural failures
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•health emergencies, the spread of infectious diseases or pandemics, or
•events arising from local or larger-scale political events, including outbreaks of hostilities or terrorist acts.
JPMorgan Chase maintains a firm-wideFirmwide resiliency and crisis management program that is intended to ensure the abilityenable it to recover critical business functions and supporting assets, including staff, technology and facilities, in the event of a business interruption. There can be no assurance that JPMorgan Chase’s resiliency plans will fully mitigate all potential business continuity risks to JPMorgan Chase or its clients and customers. Furthermore,customers or that its resiliency plans will be adequate to address the effects of simultaneous occurrences of multiple catastrophes or other business interruption events. In addition, JPMorgan Chase’s ability to respond effectively to a business interruption could be hampered to the extent that the members of its workforce, physical assets or systems and other support infrastructure needed to address the event are geographically dispersed, or conversely, if a catastrophic event occurs in an area in which a critical segment of JPMorgan Chase’s workforce, physical assets or systems and other support infrastructure is concentrated. Further, should emergency or catastrophic events such as severe or abnormal weather conditions or health emergencies, the spread of infectious diseases or pandemics become more chronic, the disruptive effects of those events on JPMorgan Chase’s business and operations, and on its clients, customers, counterparties and employees, could become more significant and long-lasting.
Any significant failure or disruption of JPMorgan Chase’s operations or operational systems, or any catastrophic event, could:
•hinder JPMorgan Chase’s ability to provide services to its clients and customers or to transact with its counterparties
•require it to expend significant resources to correct the failure or disruption
•cause it to incur losses or liabilities, including from loss of revenue, damage to or loss of property, or injuries
•expose it to litigation or regulatory fines, penalties or other sanctions, and
•harm its reputation.
Furthermore, JPMorgan Chase may incur costs in connection with disposing of certain excess properties,
premises and facilities, and those costs may be material to its results of operations in a given period.
Enhanced regulatory and other standards for the oversight of vendors and other service providers can result in higher costs and other potential exposures.
JPMorgan Chase must comply with enhanced regulatory and other standards associated with doing business with vendors and other service providers, including standards relating to the outsourcing of functions as well as the performance of significant banking and other functions by subsidiaries. JPMorgan Chase incurs significant costs and expenses in connection with its initiatives to address the risks associated with oversight of its internal and external service providers. JPMorgan Chase’s failure to appropriately assess and manage these relationships, especially those involving significant banking functions, shared services or other critical activities, could materially adversely affect JPMorgan Chase. Specifically, any such failure could result in:
•potential liability to clients and customers
•regulatory fines, penalties or other sanctions
•lower revenues, and the opportunity cost from lost revenues
•increased operational costs, or
•harm to JPMorgan Chase’s reputation.
JPMorgan Chase’s risk management framework and procedures may not be effective in identifying and mitigating every risk to JPMorgan Chase.
JPMorgan Chase’s risk management framework is intended to mitigate risk and loss. The framework includes both the “first line of defense,” consisting of each line of business and Treasury and the Chief Investment Office, including their aligned Operations, Technology and Control Management groups, and the “second line of defense,” consisting of Independent Risk Management.JPMorgan Chase has established processes and procedures to identify, measure, monitor, report and analyze the types of risk to which it is subject. However, there are inherent limitations to risk management strategies because there may be existing or future risks that JPMorgan Chase has not appropriately anticipated or identified.
Any inadequacy or lapse in JPMorgan Chase’s risk management framework, governance structure, procedures and practices, models or reporting systems could expose it to unexpected losses, and its financial condition or results of operations could be materially and adversely affected. In addition, anyAny such inadequacy or lapse could:
•hinder the timely escalation of material risk issues to JPMorgan Chase’s senior management and the Board of Directors
•lead to business decisions that have negative outcomes for JPMorgan Chase
•require significant resources and time to remediate
•lead to non-compliance with laws, rules and regulations
•attract heightened regulatory scrutiny
•expose JPMorgan Chase to regulatory investigations or legal proceedings
•subject it to litigation or regulatory fines, penalties or other sanctions
•harm its reputation, or
•otherwise diminish confidence in JPMorgan Chase.
JPMorgan Chase relies on data to assess its various risk exposures. Any deficiencies in the quality or effectiveness of
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JPMorgan Chase’s data gathering, analysis and validation processes could result in ineffective risk management practices. These deficiencies could also result in inaccurate risk reporting.
JPMorgan Chase establishes allowances for probable credit losses that are inherent in its credit exposures. It then employs stress testing and other techniques to determine the capital and liquidity necessary in the event of adverse economic or market events. These processes are critical to JPMorgan Chase’s results of operations and financial condition. They require difficult, subjective and complex judgments, including forecasts of how economic conditions might impair the ability of JPMorgan Chase’s borrowers and counterparties to repay their loans or other obligations. It is possible that JPMorgan Chase will fail to identify the proper factors or that it will fail to accurately estimate the impact of factors that it identifies. 
Many of JPMorgan Chase’s risk management strategies and techniques consider historical market behavior.  These strategies and techniques are based to some degree on management’s subjective judgment. For example, many models used by JPMorgan Chase are based on assumptions regarding historical correlations among prices of various asset classes or other market indicators. In times of market stress, including difficult or less liquid market environments, or in the event of other unforeseen circumstances, previously uncorrelated indicators may become correlated. Conversely, previously-correlated indicators may make unrelated movements at those times. Sudden market movements and unanticipated or unidentified market or economic movements could, in some circumstances, limit the effectiveness of JPMorgan Chase’s risk management strategies, causing it to incur losses.
JPMorgan Chase could incur significantrecognize unexpected losses, its capital levels could be reduced and it could face greater regulatory scrutiny if its models, estimations or estimationsjudgments, including those used in its financial statements, prove to be inadequate.inadequate or incorrect.
JPMorgan Chase has developed and uses a variety of models and other analytical and judgment-based estimations to assessmeasure, monitor and implement mitigating controls over its market, credit, capital, liquidity, operational and other risks. These models and estimations are based on a variety of assumptions and historical trends, and are periodically reviewed and modified as necessary. The models and estimations that JPMorgan Chase uses may not be effective in all cases to

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identify, observe and mitigate risk due to a variety of factors, such as:
•reliance on historical trends that may not accurately predict future events, including assumptions underlying the models and estimations which predict correlation among certain market indicators or asset prices
•inherent limitations associated with forecasting uncertain economic and financial outcomes
•historical trend information may be incomplete, or may not anticipate severely negative market conditions such as extreme volatility, dislocation or lack of liquidity
•technology that is introduced to run models or estimations may not perform as expected, or may not be well understood by the personnel using the technology
•models and estimations may contain erroneous data, valuations, formulas or algorithms, and
•review processes may fail to detect flaws in models and estimations.
Some of the models and other analytical and judgment-based estimations used by JPMorgan Chase in managing
risks are subject to review by, and require the approval of, JPMorgan Chase’s regulators. These reviews are required before JPMorgan Chase may use those models and estimations in connection with calculating market risk RWA, credit risk RWA and operational risk RWA under Basel III. If JPMorgan Chase’s models or estimations are not approved by its regulators, it may be subject to higher capital charges, which could adversely affect its financial results or limit the ability to expand its businesses. JPMorgan Chase also uses internal models in connection with its stress testing. JPMorgan Chase’s capital actions may require regulatory approval and could also be constrained if a CCAR submission is not approved by its banking regulators object to a capital plan or require the resubmission of a capital plan due to the perceived inadequacy of its models or estimations.
Enhanced standards for vendor risk management can result in higher costs and other potential exposures.
JPMorgan Chase must comply with enhanced standards for the assessment and management of risks associated with doing business with vendors and other third-party service providers. These requirements are contained both in bank regulatory regulations and guidance and in certain consent orders to which JPMorgan Chase has been subject. JPMorgan Chase incurs significant costs and expenses in connection with its initiatives to address the risks associated with oversight of its third party relationships. JPMorgan Chase’s failure to appropriately assess and manage third-party relationships, especially those involving significant banking functions, shared servicesmodels, estimations or other critical activities, could materially adversely affect JPMorgan Chase. Specifically, any such failure could result in:
potential liability to clients and customers
regulatory fines, penalties or other sanctions
increased operational costs, or
harm to JPMorgan Chase’s reputation.
Requirements for physical settlement and delivery in trading agreements could expose JPMorgan Chase to operational and other risks.
Certain of JPMorgan Chase’s markets transactions require the physical settlement by delivery of securities or other obligations that JPMorgan Chase does not own. If JPMorgan Chase is unable to obtain the obligations within the required timeframe, JPMorgan Chase could forfeit payments otherwise due. Failures could also result in settlement delays, which could damage JPMorgan Chase’s reputation and ability to transact business. Failure to timely settle and confirm transactions could also subject JPMorgan Chase to heightened credit and operational risk, and losses in the event of a default.
JPMorgan Chase could incur unexpected losses if estimates and judgments underlying its financial statements are incorrect.factors.
Under U.S. generally accepted accounting principles (“U.S. GAAP”), JPMorgan Chase is required to use estimates and apply judgments in preparing its financial statements, including in determining allowancesthe allowance for credit losses, and reserves related to litigation.litigation and the credit card rewards liability. Certain financial instruments require a determination of their fair value in order to prepare JPMorgan Chase’s financial statements, including:
•trading assets and liabilities
•instruments in the investment securities portfolio
•certain loans
•MSRs
•structured notes, and
•certain repurchase and resale agreements.
Where quoted market prices are not available for these types of financial instruments, JPMorgan Chase may make fair value determinations based on internally developed models or other means which ultimately rely to some degree on management estimates and judgment. Suddenjudgment, and these types of estimates and judgments may not prove to be accurate due to a variety of factors, as noted above. In addition, sudden illiquidity in markets or declines in prices of certain loans and securities may make it more difficult to value certain financial instruments, which could lead to valuations being subsequently changed or adjusted. If estimates or judgments underlying JPMorgan Chase’s financial statements prove to have been incorrect, JPMorgan Chase may experience material losses.
JPMorgan Chase establishes an allowance for expected credit losses that are inherent in its credit exposures. It then employs stress testing and other techniques to determine the amounts of capital and liquidity that would be needed in the event of adverse economic or market events. These processes are critical to JPMorgan Chase’s results of operations and financial condition. They require difficult, subjective and complex judgments, including forecasts of how economic conditions might impair the ability of JPMorgan Chase’s borrowers and counterparties to repay their loans or other obligations. It is possible that
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JPMorgan Chase will fail to identify the proper factors or that it will fail to accurately estimate the impact of factors that it identifies.
Certain models used by JPMorgan Chase in connection with the determination of the allowance for credit losses have heightened performance risk in the economic environment precipitated by the effects of the COVID-19 pandemic and government stimulus. For example, at times certain macroeconomic variables employed in these models remained well outside the range of historical data used to train the models for some stress scenarios. In addition, the historical relationships between these macroeconomic variables and consumer and wholesale credit losses have deteriorated, in part due to the effects of the CARES Act and government stimulus actions. As a result, there continues to be significant uncertainty about the reliability of the projections produced by the models. To compensate for this uncertainty, JPMorgan Chase has made, and may continue to make, significant adjustments to the quantitative results of model calculations to take into consideration model imprecision, emerging risks, trends and other factors that are not yet reflected in those calculations. There can be no assurance that, even after adjustments have been made to model outputs, JPMorgan Chase will not recognize unexpected losses arising from the model uncertainty that has resulted from these developments.
Lapses in controls over disclosure or financial reporting could materially affect JPMorgan Chase’s profitability or reputation.
There can be no assurance that JPMorgan Chase’s disclosure controls and procedures will be effective in every circumstance, or that a material weakness or significant deficiency in internal control over financial reporting will not occur. Any such lapses or deficiencies could:

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•materially and adversely affect JPMorgan Chase’s business and results of operations or financial condition
•restrict its ability to access the capital markets
•require it to expend significant resources to correct the lapses or deficiencies
•expose it to litigation or regulatory fines, penalties or other sanctions
•harm its reputation, or
•otherwise diminish investor confidence in JPMorgan Chase.
JPMorgan Chase could be adversely affected by changes in accounting standards or policies.
The preparation of JPMorgan Chase’s financial statements is based on accounting standards established by the Financial Accounting Standards Board and the Securities and Exchange Commission, as well as more detailed accounting policies established by JPMorgan Chase’s management. From time to time these accounting standards or
accounting policies may change, and in some cases these changes could have a materialsignificant effect on JPMorgan Chase’s financial statements and may adversely affect its financial results or investor perceptions of those results.
For example, onAs of January 1, 2020, JPMorgan Chase and other U.S. companies will be required to implementimplemented a new accounting standard, commonly referred to as the Current Expected Credit Losses (“CECL”) framework, which will requirerequires earlier recognition of expected credit losses on loans and certain other instruments, replacing the incurred loss model that is currently in use. JPMorgan Chase expects that under CECL, it will need to, among other things, increase theinstruments. The allowance for credit losses related to itscertain of JPMorgan Chase’s loans and other lending-related commitments portfolios increased upon implementation of CECL, which may havehas had a negative impact on itsJPMorgan Chase’s capital levels.
This new accounting standard mayThe ongoing impact of the adoption of CECL could include the following, each of which could result in diminished investor confidence:
•greater volatility ofin JPMorgan Chase’s earnings and capital levels over economic cycles and could potentially affect JPMorgan Chase’s
•potential reductions in its capital distribution plans, depending upon final guidance fromdistributions, or
•increases in the regulators. allowance for credit losses.
In addition, JPMorgan Chase could be adversely impacted by associated changes in the competitive environment in which it operates, including changes in the availability or pricing of loan products, particularly during periods of economic stress, as well as changes related to non-U.S. financial institutions or other competitors that are not subject to this new accounting standard.
Strategic
If JPMorgan Chase’s management fails to develop and execute effective business strategies, and to anticipate changes affecting those strategies, JPMorgan Chase’s competitive standing and results could suffer.
JPMorgan Chase’s business strategies significantly affect its competitive standing and results of operations. These strategies relate to:
•the products and services that JPMorgan Chase offers
•the geographies in which it operates
•the types of clients and customers that it serves
•the counterparties with which it does business, and
•the methods and distribution channels by which it offers products and services.
If management makes choices about these strategies and goals that prove to be incorrect, do not accurately assess the competitive landscape and industry trends, or fail to address changing regulatory and market environments or the expectations of clients, customers, investors, employees and other stakeholders, then the franchise values and growth prospects of JPMorgan Chase’s businesses may suffer and its earnings could decline.
JPMorgan Chase’s growth and prospects also depend on management’s ability to develop and execute effective
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business plans to address these strategic priorities, both in the near term and over longer time horizons. Management’s effectiveness in this regard will affect JPMorgan Chase’s ability to develop and enhance its resources, control expenses and return capital to shareholders. Each of these objectives could be adversely affected by any failure on the part of management to:
•devise effective business plans and strategies
effectively implement business decisions, including minimizing bureaucratic processes
institute controls that appropriately address the risks associated with business activities and any changes in those activities
•offer products and services that are appropriately priced, meet the changing expectations of clients and customers and are delivered in ways that enhance client and customer satisfaction
•allocate capital in a manner that promotes long-term stability to enable JPMorgan Chase to build and invest in market-leading businesses, even in a highly stressed environment
•allocate capital appropriately due to imprecise modeling or subjective judgments made in connection with those allocations
adequately respond to regulatory requirements
•appropriately address shareholder concerns
of clients, customers, investors, employees and other stakeholders, including with respect to social and sustainability matters

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•react quickly to changes in market conditions or market structures, or
•develop and enhance the operational, technology, risk, financial and managerial resources necessary to grow and manage JPMorgan Chase’s businesses.
Additionally,JPMorgan Chase faces significant and increasing competition in the rapidly evolving financial services industry.
JPMorgan Chase operates in a highly competitive environment in which it must evolve and adapt to the significant changes as a result of changes in financial regulation, technological advances, increased public scrutiny and changes in economic conditions. JPMorgan Chase expects that competition in the U.S. and global financial services industry will continue to be intense. Competitors include:
•other banks and financial institutions
•trading, advisory and investment management firms
•finance companies
•technology companies, and
•other nonbank firms that are engaged in providing similar products and services.
JPMorgan Chase cannot provide assurance that the significant competition in the financial services industry will not materially and adversely affect its future results of operations.
New competitors in the financial services industry continue to emerge. For example, technological advances and the growth of e-commerce have made it possible for non-depository institutions to offer products and services that traditionally were banking products. These advances have
also allowed financial institutions and other companies to provide electronic and internet-based financial solutions, including electronic securities trading, payments processing and online automated algorithmic-based investment advice. Furthermore, both financial institutions and their non-banking competitors face the risk that payments processing and other services could be significantly disrupted by technologies, such as cryptocurrencies, that require no intermediation. New technologies have required and could require JPMorgan Chase to spend more to modify or adapt its products to attract and retain clients and customers or to match products and services offered by its competitors, including technology companies. In addition, new technologies may be used by customers, or breached or infiltrated by third parties, in unexpected ways, which can increase JPMorgan Chase’s Boardcosts for complying with laws, rules and regulations that apply to the offering of Directors plays an important roleproducts and services through those technologies and reduce the income that JPMorgan Chase earns from providing products and services through those new technologies.
Ongoing or increased competition may put pressure on the pricing for JPMorgan Chase’s products and services or may cause JPMorgan Chase to lose market share, particularly with respect to traditional banking products such as deposits and bank accounts. This competition may be on the basis of quality and variety of products and services offered, transaction execution, innovation, reputation and price. The failure of any of JPMorgan Chase’s businesses to meet the expectations of clients and customers, whether due to general market conditions, under-performance, a decision not to offer a particular product or service, changes in exercising appropriate oversightclient and customer expectations or other factors, could affect JPMorgan Chase’s ability to attract or retain clients and customers. Any such impact could, in turn, reduce JPMorgan Chase’s revenues. Increased competition also may require JPMorgan Chase to make additional capital investments in its businesses, or to extend more of management’s strategic decisions,its capital on behalf of its clients in order to remain competitive.
Climate change manifesting as physical or transition risks could have a material adverse impact on JPMorgan Chase’s business operations, clients and customers.
JPMorgan Chase operates in many regions, countries and communities around the world where its businesses, and the activities of its clients and customers, could be impacted by climate change. Climate change could manifest as a failurefinancial risk to JPMorgan Chase either through changes in the physical climate or from the process of transitioning to a low-carbon economy, including changes in climate policy or in the regulation of financial institutions with respect to risks posed by climate change.
Climate-related physical risks include both acute weather events and chronic shifts in the climate. Potential physical risks from climate change may include altered distribution and intensity of rainfall, prolonged droughts or flooding, increased frequency of wildfires, rising sea levels, or a rising heat index.
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Transition risks arise from the process of adjusting to a low-carbon economy. In addition to possible changes in climate policy and financial regulation, potential transition risks may include economic and other changes engendered by the Boarddevelopment of low-carbon technological advances (e.g., electric vehicles and renewable energy) and/or changes in consumer preferences towards low-carbon goods and services. Transition risks could be further accelerated by the occurrence of changes in the physical climate.
These climate-related physical risks and transition risks could have a financial impact on JPMorgan Chase both directly on its business and operations and as a result of material adverse impacts to perform this function could also impair JPMorgan Chase’s resultsits clients and customers, including:
•declines in asset values
•reduced availability of operations.insurance
•significant interruptions to business operations, and
•negative consequences to business models, and the need to make changes in response to those consequences.
Conduct
Conduct failure by JPMorgan Chase employees can harm clients and customers, impact market integrity, damage JPMorgan Chase’s reputation and trigger litigation and regulatory action.
JPMorgan Chase’s employees interact with clients, customers and counterparties, and with each other, every day. All employees are expected to demonstrate values and exhibit the behaviors that are an integral part of JPMorgan Chase’s How We Do Business Principles, including JPMorgan Chase’s commitment to “do first class business in a first class way.” JPMorgan Chase endeavors to embed conduct risk management throughout an employee’s life cycle, including recruiting, onboarding, training and development, and performance management. Conduct risk management is also an integral component of JPMorgan Chase’s promotion and compensation processes.
Notwithstanding these expectations, policies and practices, certain employees have in the past engaged in improper or illegal conduct, and these instances of misconduct have resulted in litigation as well as resolutions of governmental investigations or enforcement actions involving consent orders, deferred prosecution agreements, non-prosecution agreements and other civil or criminal sanctions. There is no assurance that further inappropriate or unlawful actions by employees will not occur, lead to a violation of the terms of these resolutions (and associated consequences), or that any such actions will always be detected, deterred or prevented.
JPMorgan Chase’s reputation could be harmed, and collateral consequences could result, from a failure by one or more employees to act consistently with JPMorgan Chase’s expectations, policies and practices, including by acting in ways that harm clients, customers, other market
participants or other employees. Some examples of this include:
•improperly selling and marketing JPMorgan Chase’s products or services
•engaging in insider trading, market manipulation or unauthorized trading
•engaging in improper or fraudulent behavior in connection with government relief programs
•facilitating illegala transaction where a material objective is to achieve a particular tax, accounting or aggressive tax-motivated transactions,financial disclosure treatment that may be subject to scrutiny by governmental or transactions designed to circumventregulatory authorities, or where the proposed treatment is unclear or may not reflect the economic sanction programssubstance of the transaction
•failing to fulfill fiduciary obligations or other duties owed to clients or customers
•violating anti-trustantitrust or anti-competition laws by colluding with other market participants to manipulate markets, prices or indices
•engaging in discriminatory behavior or harassment with respect to clients, customers or employees, or acting contrary to JPMorgan Chase’s goal of fostering a diverse and inclusive workplace
making risk decisions•managing or reporting risks in ways that subordinate JPMorgan Chase’s risk appetite to business performance goals or employee compensation objectives, and
•misappropriating property, confidential or proprietary information, or technology assets belonging to JPMorgan Chase, its clients and customers or third parties.
The consequences of any failure by employees to act consistently with JPMorgan Chase’s expectations, policies or practices could include litigation, or regulatory or other governmental investigations or enforcement actions. Any of these proceedings or actions could result in judgments, settlements, fines, penalties or other sanctions, or lead to:
•financial losses
•increased operational and compliance costs
•greater regulatory scrutiny by regulators and other parties
•regulatory actions that require JPMorgan Chase to restructure, curtail or cease certain of its activities
•the need for significant oversight by JPMorgan Chase’s management
•loss of clients or customers, and
•harm to JPMorgan Chase’s reputation.
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Reputation
Damage to JPMorgan Chase’s reputation could harm its businesses.
Maintaining trust in JPMorgan Chase is critical to its ability to attract and retain clients, customers, investors and employees. Damage to JPMorgan Chase’s reputation can therefore cause significant harm to JPMorgan Chase’s business and prospects. Harm to JPMorgan Chase’s reputationprospects, and can arise from numerous sources, including:
•employee misconduct, including discriminatory behavior or harassment with respect to clients, customers or employees, or actions that are contrary to JPMorgan Chase’s goal of fostering a diverse and inclusive workplace
•security breaches, including cyberattacksas a result of cyber attacks
•failure to safeguard client, customer or customeremployee information
not appropriately managing social and environmental•failure to manage risk issues associated with its business activities or those of its clients, including failure to fully discharge publicly-announced commitments to support social and sustainability initiatives
•compliance or operational failures
•litigation or regulatory fines, penalties or other sanctions and
•regulatory investigations or enforcement actions, or resolutions of these matters.
matters, and

24

JPMorgan Chase’s reputation could also be harmed by the •failure or perceived failure of certain thirdclients, customers, counterparties or other parties to comply with laws, rules or regulations, including companies in which JPMorgan Chase has made principal investments, parties to joint ventures with JPMorgan Chase, and vendors and other third parties with which JPMorgan Chase does business.
JPMorgan Chase’s reputation or prospects may be significantly damaged by adverse publicity or negative information regarding JPMorgan Chase, whether or not true, that may be published or broadcast by the media or posted on social media, non-mainstream news services or other parts of the internet, and thisinternet. This latter risk can be magnified by the speed and pervasiveness with which information is disseminated through those channels.
Social and environmental activists are increasingly targeting financial services firms such as JPMorgan Chase with public criticism for their relationships with clients that are engaged in certain sensitive industries, including businesses whose products are or are perceived to be harmful to thehuman health, of consumers, or whose activities negatively affect or are perceived to negatively affect the environment, workers’ rights or communities. Activists have also engaged in public protests at JPMorgan Chase’s headquarters and other properties. Activist criticism of JPMorgan Chase’s relationships with clients in sensitive industries could potentially engender dissatisfaction among
clients, customers, investors and employees with how JPMorgan Chase addresses social and environmentalsustainability concerns in its business activities. Alternatively, yielding to activism targeted at certain sensitive industries could damage JPMorgan Chase’s relationships with clients and customers, and with governmental or regulatory bodies in jurisdictions in which JPMorgan Chase does business, whose views are not aligned with those of social and environmental activists. In either case, the resulting harm to JPMorgan Chase’s reputation could:
•cause certain clients and customers to cease doing business with JPMorgan Chase
•impair JPMorgan Chase’s ability to attract new clients and customers, or to expand its relationships with existing clients and customers
•diminish JPMorgan Chase’s ability to hire or retain employees or
•prompt JPMorgan Chase to cease doing business with certain clients.clients or customers.
Any•cause certain investors to divest from investments in securities of the above factors could negatively affect JPMorgan Chase’s results of operations and its ability to maintain its competitive standing.Chase, or
•attract scrutiny from governmental or regulatory bodies.
Actions by the financial services industry generally or by certain members of or individuals in the industry can also affect JPMorgan Chase’s reputation. For example, the reputation of the industry as a whole can be damaged by concerns that that:
•consumers have been treated unfairly by a financial institution, or that
•a financial institution has acted inappropriately with respect to the methods used to offer products to customers can damage the reputation of the industry as a whole.
If JPMorgan Chase is perceived to have
engaged in these types of behaviors, the measures needed to address the associated reputational issuesthis could increase JPMorgan Chase’s operational and compliance costs and negatively affectweaken its earnings.reputation among clients or customers.
Failure to effectively manage potential conflicts of interest can result in litigation and enforcement actions, as well as damage JPMorgan Chase’s reputation.
JPMorgan Chase’s ability to manage potential conflicts of interest has become increasinglyis highly complex asdue to the broad range of its business activities which encompass morea variety of transactions, obligations and interests with and among JPMorgan Chase’s clients and customers. JPMorgan Chase can become subject to litigation and enforcement actions, and its reputation can be damaged, by the failure or perceived failure to:
•adequately address or appropriately disclose conflicts of interest, including potential conflicts of interest that may arise in connection with providing multiple products and services in, or having one or more investments related to, the same transaction
•deliver appropriate standards of service and quality
30

•treat clients and customers with the appropriate standard of care
•use client and customer data responsibly and in a manner that meets legal requirements and regulatory expectations
•provide fiduciary products or services in accordance with the applicable legal and regulatory standards, or
•handle or use confidential information of customers or clients appropriately or in compliance with applicable data protection and privacy laws, rules and regulations.
In the future, aA failure or perceived failure to appropriately address conflicts of interest or fiduciary obligations could result in customer dissatisfaction, litigation and regulatory fines, penalties or other sanctions, and heightened regulatory scrutiny and enforcement actions, all of which can lead to lost revenue and higher operating costs and cause serious harm to JPMorgan Chase’s reputation.
Country
Adverse economic and political developments in a country or region, or globally, can have a negative impact on JPMorgan Chase’s businesses.
JPMorgan Chase’s businesses and earnings can be affected by the monetary, fiscal and other policies adopted by regulatory authorities and agencies in the countries in which JPMorgan Chase operates. Changes in fiscal policies by central banks or regulatory authorities, and the manner in which those policies are executed, are beyond JPMorgan Chase’s control and may be difficult to predict. Consequently, unanticipated changes in these policies or the ways in which they are implemented could have a negative impact on JPMorgan Chase’s businesses and results of operations.
Some countries or regions in which JPMorgan Chase operates or invests, or in which JPMorgan Chase may do business in the future, have in the past experienced severe

25
Part I

economic disruptions particular to those countries or regions. Concerns regarding the fiscal condition of one or more countries, or the possibility that a particular country may decide to depart from a trade, monetary or political pact, can result in a deterioration of economic and market conditions within the affected countries or regions, including:
slowing growth rates, rising inflation or recessionary economic conditions
a contraction of available credit
diminished investor and consumer confidence, including loss of confidence in local banking systems
increased market volatility
reduced commercial activity among trading partners, or
the potential for currency redenomination or the dissolution of a political or economic alliance or treaty.
Any or all of these factors could have a negative impact on JPMorgan Chase’s business and results of operations in the affected country or region.
These developments can also lead to a contagion which causes similar conditions to arise in other countries in the same region or beyond. Furthermore, governments in particular countries or regions in which JPMorgan Chase or its clients do business may choose to adopt protectionist economic or trade policies in response to concerns about domestic economic conditions or as countermeasures to policies or actions taken by other countries or regions. Any or all of these developments could lead to diminished cross-border trade and financing activity within that country or region, all of which could negatively affect JPMorgan Chase’s business and earnings in those jurisdictions and increase its operational costs. If JPMorgan Chase takes steps to reduce its market and credit risk exposure within a particular country or region that is experiencing economic or political disruption, it may incur losses that are higher than expected because it will be disposing of assets when market conditions are likely to be highly unfavorable.
An outbreak of hostilities between countries or within a country or region could have a material adverse effect on the global economy and on JPMorgan Chase’s businesses within the affected region or globally.
Aggressive actions by hostile governments or groups, including armed conflict or intensified cyberattacks,cyber attacks, could expand in unpredictable ways by drawing in other countries or escalating into full-scale war with potentially catastrophic consequences, particularly if one or more of the combatants possess nuclear weapons. Depending on the scope of the conflict, the hostilities could result in:
•worldwide economic disruption
•heightened volatility in financial markets
•severe declines in asset values, accompanied by widespread sell-offs of investments
•substantial depreciation of local currencies, potentially leading to defaults by borrowers and counterparties in the affected region
•disruption of global trade, and
•diminished consumer, business and investor confidence.
Any of the above consequences could have significant negative effects on JPMorgan Chase’s operations and earnings, both in the countries or regionregions directly affected by the hostilities or globally. Further, if the U.S. were to become directly involved in such a conflict, this could lead to a curtailment of any operations that JPMorgan Chase may have in the affected countries or region, as well as in any nation that is aligned against the U.S. in the hostilities. JPMorgan Chase could also experience more numerous and aggressive cyberattackscyber attacks launched by or under the sponsorship of one or more of the adversaries in such a conflict.
JPMorgan Chase’s business activities with governmental entities can pose an enhanced risk of loss.
Several of JPMorgan Chase’s businesses engage in transactions with, or trade in obligations of, governmental entities, including national, state, provincial, municipal and local authorities, both within and outside the U.S. These activities can expose JPMorgan Chase to enhanced sovereign, credit-related, operational and reputation risks, including the risks that a governmental entity may:
default on or restructure its obligations
claim that actions taken by government officials were beyond the legal authority of those officials, or
repudiate transactions authorized by a previous incumbent government.
Any or all of these actions could adversely affect JPMorgan Chase’s financial condition and results of operations and could hurt its reputation, particularly if JPMorgan Chase pursues claims against a government obligor in a jurisdiction in which it has significant business relationships with clients or customers.
JPMorgan Chase’s business and revenuesoperations in emerging marketscertain countries can be hamperedadversely affected by local economic, political, regulatory and social factors.
Some of the countries in which JPMorgan Chase conducts business have economies or markets that are less developed and more volatile andor may have political, legal and regulatory regimes that are less established or predictable than the U.S. and other developed marketscountries in which JPMorgan Chase operates. In addition, in some jurisdictions in which JPMorgan Chase conducts business, the local economy and business activity are subject to substantial government influence or control. Some of these countries have in the past experienced severe economic disruptions, including:
•extreme currency fluctuations

26

•high inflation
•low or negative growth, and
•defaults or potential defaults onreduced ability to service sovereign debt.
The governments in these countries have sometimes reacted to these developments by imposing restrictive policies that adversely affect the local and regional business environment, including:
•price, capital or exchange controls, including imposition of punitive transfer and convertibility restrictions or forced currency exchange
•expropriation or nationalization of assets or confiscation of property, including intellectual property, and
•changes in laws, rules and regulations.
The impact of these actions could be accentuated in trading markets that are smaller, less liquid and more volatile than more-developed markets. These types of government actions can negatively affect JPMorgan Chase’s operations in the relevant country, either directly or by suppressing the business activities of local clients or multi-national clients that conduct business in the jurisdiction. For example, some or all of these governmental actions can result in funds belonging to JPMorgan Chase, or that it places with a local custodian on behalf of a client, being effectively trapped in a country. In addition to the ultimate risk of losing the funds entirely, JPMorgan Chase could be exposed for an extended period of time to the credit risk of a local custodian that is now operating in a deteriorating domestic economy.
In addition, emerging markets countries, as well as certain more developed countries, have been susceptible to unfavorable social developments arising from poor economic conditions and relatedor governmental actions, including:
social•widespread demonstrations or civil unrest
•general strikes and demonstrations
•crime and corruption
•security and personal safety issues
•outbreaks of hostilities
•overthrow of incumbent governments
•terrorist attacks, and
•other forms of internal discord.
These economic, political, regulatory and social developments have in the past resulted in, and in the future
31
Part I
could lead to, conditions that can adversely affect JPMorgan Chase’s operations in those countries and impair the revenues, growth and profitability of those operations. In addition, any of these events or circumstances in one country can affect JPMorgan Chase’s operations and investments in another country or countries, including in the U.S.
Competition
The financial services industry is highly competitive, and JPMorgan Chase’s results of operations will suffer if it is not a strong, effective and forward-looking competitor.
JPMorgan Chase operates in a highly competitive environment and expects that competition in the U.S. and global financial services industry will continue to be intense. Competitors include:
other banks and financial institutions
trading, advisory and investment management firms
finance companies and technology companies, and
other nonbank firms that are engaged in providing similar products and services.
JPMorgan Chase cannot provide assurance that the significant competition in the financial services industry will not materially and adversely affect its future results of operations.
New competitors in the financial services industry continue to emerge. For example, technological advances and the growth of e-commerce have made it possible for non-depository institutions to offer products and services that traditionally were banking products. These advances have also allowed financial institutions and other companies to provide electronic and internet-based financial solutions, including electronic securities trading, payments processing and online automated algorithmic-based investment advice. Furthermore, both financial institutions and their non-banking competitors face the risk that payments processing and other services could be significantly disrupted by technologies, such as cryptocurrencies, that require no intermediation. New technologies have required and could require JPMorgan Chase to spend more to modify or adapt its products to attract and retain clients and customers or to match products and services offered by its competitors, including technology companies. In addition, new technologies may be used by customers, or breached or infiltrated by third parties, in unexpected ways, which can increase JPMorgan Chase’s costs for complying with laws and regulations that apply to the offering of products and services through those technologies and reduce the income that JPMorgan Chase earns from providing products and services through those new technologies.
Ongoing or increased competition may put pressure on the pricing for JPMorgan Chase’s products and services or may cause JPMorgan Chase to lose market share, particularly with respect to traditional banking products such as deposits and bank accounts. This competition may be on the basis of quality and variety of products and services offered, transaction execution, innovation, reputation and price. The failure of any of JPMorgan Chase’s businesses to meet the expectations of clients and customers, whether due to general market conditions, under-performance, a decision not to offer a particular product or service, changes in client and customer expectations or other

27
Part I

factors, could affect JPMorgan Chase’s ability to attract or retain clients and customers. Any such impact could, in turn, reduce JPMorgan Chase’s revenues. Increased competition also may require JPMorgan Chase to make additional capital investments in its businesses, or to extend more of its capital on behalf of its clients in order to remain competitive.
Non-U.S. competitors of JPMorgan Chase’s wholesale businesses outside the U.S. are typically subject to different, and in some cases, less stringent, legislative and regulatory regimes. The more restrictive laws and regulations applicable to JPMorgan Chase and other U.S. financial services institutions can put JPMorgan Chase and those firms at a competitive disadvantage to non-U.S. competitors. This could reduce the revenue and profitability of JPMorgan Chase’s wholesale businesses, resulting from:
prohibitions on engaging in certain transactions
higher capital and liquidity requirements
making JPMorgan Chase’s pricing of certain transactions more expensive for clients, and
adversely affecting JPMorgan Chase’s cost structure for providing certain products.
People
JPMorgan Chase’s ability to attract and retain qualified and diverse employees is critical to its success.
JPMorgan Chase’s employees are its most important resource, and in many areas of the financial services industry, competition for qualified personnel is intense. JPMorgan Chase endeavors to attract talented and diverse new employees and retain, develop and motivate its existing employees. If JPMorgan Chase were unable to continue to attract or retain qualified and diverse employees, including successors to the Chief Executive Officer or members of the Operating Committee, JPMorgan Chase’s performance, including its competitive position, could be materially and adversely affected.
Unfavorable changes in immigration or travel policies could adversely affect the quality of JPMorgan Chase’s businesses and operations.
JPMorgan Chase relies on the skills, knowledge and expertise of employees located throughout the world. Changes in immigration or travel policies in the U.S. and other countries that unduly restrict or otherwise make it more difficult for employees or their family members to work in, or travel to or transfer among,between, jurisdictions in which JPMorgan Chase has operations or conducts its business could inhibit JPMorgan Chase’s ability to attract and retain qualified employees, and thereby dilute the quality of its workforce, or could prompt JPMorgan Chase to make structural changes to its worldwide or regional operating modelmodels that arecause its operations to be less efficient or more costly.


Legal
JPMorgan Chase faces significant legal risks from private actionslitigation and formal and informal regulatory and government investigations.
JPMorgan Chase is named as a defendant or is otherwise involved in many legal proceedings, including class actions and other litigation or disputes with third parties. Actions currently pending against JPMorgan Chase may result in judgments, settlements, fines, penalties or other sanctions adverse to JPMorgan Chase. Any of these matters could materially and adversely affect JPMorgan Chase’s business, financial condition or results of operations, or cause serious reputational harm. As a participant in the financial services industry, it is likely that JPMorgan Chase will continue to experience a high level of litigation and regulatory and government investigations related to its businesses and operations.
Regulators and other government agencies conduct examinations of JPMorgan Chase and its subsidiaries both on a routine basis and in targeted exams, and JPMorgan Chase’s businesses and operations are subject to heightened regulatory oversight. This heightened regulatory scrutiny, or the results of such an investigation or examination, may lead to additional regulatory investigations or enforcement actions. There is no assurance that those actions will not result in resolutions or other enforcement actions against JPMorgan Chase. Furthermore, a single event involving a potential violation of law or regulation may give rise to numerous and overlapping investigations and proceedings, either by multiple federal, state or local agencies and officials in the U.S. or, in some instances, regulators and other governmental officials in non-U.S. jurisdictions.
If another financial institution violates a law or regulation relating to a particular business activity or practice, this will often give rise to an investigation by regulators and other governmental agencies of the same or similar activity or practice by JPMorgan Chase.
These and other initiatives by U.S. and non-U.S. governmental authorities may subject JPMorgan Chase to judgments, settlements, fines, penalties or other sanctions, and may require JPMorgan Chase to restructure its operations and activities or to cease offering certain products or services. All of these potential outcomes could harm JPMorgan Chase’s reputation or lead to higher operational costs, thereby reducing JPMorgan Chase’s profitability, or result in collateral consequences. In addition, the extent of JPMorgan Chase’s exposure to legal and regulatory matters can be unpredictable and could, in some cases, exceed the amount of reserves that JPMorgan Chase has established for those matters.



32

Item 1B. Unresolved Staff Comments.
None.

28

Item 2. Properties.
JPMorgan Chase’s headquarters is located in New York City at 383 Madison Avenue, a 47-story office building that it owns. The Firm has commenced a project to demolishis demolishing its former headquarters at 270 Park Avenue in New York City and to buildis building a new headquarters on the same site. Demolition is targeted to be completed in 2021 and construction of the new building has commenced.
The Firm owned or leased facilities in the following locations at December 31, 2018.
2020.
December 31, 2018
2020
(in millions)
Approximate square footage
United States(a)
New York City, New York
383 Madison Avenue, New York, New York1.1
All other New York City locations9.78.0 
Total New York City, New York10.89.1
Other U.S. locations
Columbus/Westerville, Ohio3.73.8 
Chicago, Illinois2.82.7 
Phoenix/Tempe, Arizona2.52.4 
Wilmington/Newark, Delaware2.2
Houston, Texas2.01.9 
Jersey City, New Jersey1.7
Dallas/Plano, Texas1.41.6 
All other U.S. locations34.634.8 
Total United States61.760.2
Europe, the Middle East and Africa (“EMEA”)
25 Bank Street, London, U.K.1.4
All other U.K. locations3.12.9 
All other EMEA locations1.4
Total EMEA5.95.7
Asia Pacific,Asia-Pacific, Latin America and Canada
India3.44.7 
All other locations3.93.8 
Total Asia Pacific,Asia-Pacific, Latin America and Canada7.38.5
Total74.974.4
(a)At December 31, 2018, the Firm owned or leased 5,036 retail branches in 27 states and the District of Columbia.
(a)At December 31, 2020, the Firm owned or leased 4,908 retail branches in 38 states and Washington D.C.
The premises and facilities occupied by JPMorgan Chase are used across all of the Firm’s business segments and for corporate purposes. JPMorgan Chase continues to evaluate its current and projected space requirements and may determine from time to time that certain of its properties (including the premises and facilities noted above) are no longer necessary for its operations. There is no assurance that the Firm will be able to dispose of any such excess properties, premises, or facilities or that it will not incur costs in connection with such dispositions. Such disposition costs may be material to the Firm’s results of operations in a given period. For information on occupancy expense, referRefer to the Consolidated Results of
Operations on pages 48–51.54-56 for information on occupancy expense.

Item 3. Legal Proceedings.
ForRefer to Note 30 for a description of the Firm’s material legal proceedings, refer to Note 29.proceedings.
Item 4. Mine Safety Disclosures.
Not applicable.

2933
Part II


Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market for registrant’s common equity
JPMorgan Chase’s common stock is listed and traded on the New York Stock Exchange. ForRefer to “Five-year stock performance,” on page 45 for a comparison of the cumulative total return for JPMorgan Chase common stock with the comparable total return of the S&P 500 Index, the KBW Bank Index and the S&P Financial Index over the five-year period ended December 31, 2018, refer to “Five-year stock performance,” on page 41.2020.

For information on the common dividend payout ratio, referRefer to Capital actions in the Capital Risk Management section of Management’s discussion and analysis on pages 91-92. Forpage 99 for information on the common dividend payout ratio. Refer to Note 21 for a discussion of restrictions on dividend payments, refer to Note 20 and Note 25.payments. On January 31, 2019,2021, there were 195,417199,515 holders of record of JPMorgan Chase common stock. ForRefer to Part III, Item 12 on page 37 for information regarding securities authorized for issuance under the Firm’s employee share-based incentive plans, refer to Part III, Item 12 on page 33.plans.
Repurchases under the common equityshare repurchase program
For information regarding repurchases under the Firm’s common equity repurchase program, referRefer to Capital actions in the Capital Risk Management section of Management’s discussion and analysis on pages 91-92.page 99 for information regarding repurchases under the Firm’s common share repurchase program.

On March 15, 2020, in response to the economic disruptions caused by the COVID-19 pandemic, the Firm temporarily suspended repurchases of its common stock. Subsequently, the Federal Reserve directed all large banks, including the Firm, to discontinue net share repurchases through the end of 2020. On December 18, 2020, the Federal Reserve announced that all large banks, including the Firm, could resume share repurchases commencing in the first quarter of 2021, subject to certain restrictions. The Firm's Board of Directors has authorized a new common share repurchase program for up to $30 billion.
Shares repurchased on a settlement-date basis, pursuant to the prior common equityshare repurchase program during 20182020 were as follows.
Year ended December 31, 2020Total number of shares of common stock repurchased
Average price paid per share of common stock(a)
Aggregate purchase price of common stock repurchases (in millions)(a)
Dollar value
of remaining
authorized
repurchase
(in millions)(a)
First quarter50,003,062 $127.92 $6,397 $9,183 (b)
Second quarter— — — 9,183 (b)
Third quarter— — — — 
October— — — — 
November— — — — 
December— — — — 
Fourth quarter— — — — 
Year-to-date50,003,062 $127.92 $6,397 $— 
(a)Excludes commissions cost.
(b)The remaining $9.2 billion unused portion under the prior $29.4 billion repurchase program expired on June 30, 2020.
Year ended December 31, 2018 Total shares of common stock repurchased 
Average price paid per share of common stock(a)
 
Aggregate repurchases of common equity (in millions)(a)
 
Dollar value
of remaining
authorized
repurchase
(in millions)(a)
 
First quarter 41,419,035
 $112.78
 $4,671
 $5,156
 
Second quarter 45,299,370
 109.67
 4,968
 188
(b) 
Third quarter 39,282,276
 112.41
 4,416
 16,309
 
October 22,697,641
 108.97
 2,474
 13,836
 
November 15,389,818
 109.25
 1,681
 12,155
 
December 17,416,343
 101.81
 1,773
 10,381
 
Fourth quarter 55,503,802
 106.80
 5,928
 10,381
 
Year-to-date 181,504,483
 $110.09
 $19,983
 $10,381
(c) 
(a)Excludes commissions cost.
(b)The $188 million unused portion under the prior Board authorization was canceled when the $20.7 billion repurchase program was authorized by the Board of Directors on June 28, 2018.
(c)Represents the amount remaining under the $20.7 billion repurchase program.

Item 6. Selected Financial Data.
For five-year selected financial data, referRefer to “Five-year summary of consolidated financial highlights (unaudited)” on page 40.44 for five-year selected financial data.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Management’s discussion and analysis of financial condition and results of operations, entitled “Management’s discussion and analysis,” appears on pages 42–147.46-157. Such information should be read in conjunction with the Consolidated Financial Statements and Notes thereto, which appear on pages 150-286.162-298.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
For a discussion of quantitative and qualitative disclosures about market risk, referRefer to the Market Risk Management section of Management’s discussion and analysis on pages 124–131.135–142 for a discussion of quantitative and qualitative disclosures about market risk.
Item 8. Financial Statements and Supplementary Data.
The Consolidated Financial Statements, together with the Notes thereto and the report thereon dated February 26, 2019,23, 2021, of PricewaterhouseCoopers LLP, the Firm’s independent registered public accounting firm, appear on pages 149-286.159-298.
Supplementary financial data for each quarter within the two years ended December 31, 2018,2020, are included on page 287299 in the table entitled “Selected quarterly financial data
34

(unaudited).” Also included is a “Glossary of Terms and Acronyms’’ on pages 293–299.
305-311.

30

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.

Item 9A. Controls and Procedures.
The internal control framework promulgated by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), “Internal Control — Integrated Framework” (“COSO 2013”), provides guidance for designing, implementing and conducting internal control and assessing its effectiveness. The Firm used the COSO 2013 framework to assess the effectiveness of the Firm’s internal control over financial reporting as of December 31, 2018.2020. Refer to “Management’s report on internal control over financial reporting” on page 148.158.
As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of the Firm’s management, including its Chairman and Chief Executive Officer and its Chief Financial Officer, of the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, the Chairman and Chief Executive Officer and the Chief Financial Officer concluded that these disclosure controls and procedures were effective. Refer to Exhibits 31.1 and 31.2 for the Certifications furnished by the Chairman and Chief Executive Officer and Chief Financial Officer, respectively.
The Firm is committed to maintaining high standards of internal control over financial reporting. Nevertheless, because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. In addition, in a firm as large and complex as JPMorgan Chase,Deficiencies or lapses or deficiencies in internal controls may occur from time to time, and there can be no assurance that any such deficiencies will not result in significant deficiencies or material weaknesses in internal control in the future and collateral consequences therefrom. For further information, referRefer to “Management’s report on internal control over financial reporting” on page 148.158 for further information. There was no change in the Firm’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that occurred during the three months ended December 31, 2018,2020, that has materially affected, or is reasonably likely to materially affect, the Firm’s internal control over financial reporting.

Item 9B. Other Information.
None.

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Part III



Item 10. Directors, Executive Officers and Corporate Governance.
Executive officers of the registrant
Age
Name(at December 31, 2018)2020)Positions and offices
James Dimon6264Chairman of the Board and Chief Executive Officer; he had been President from July 2004 until January 2018.
Ashley Bacon4951Chief Risk Officer since June 2013.
Lori A. Beer5153Chief Information Officer since September 2017, prior to which she had been Chief Information Officer of the Corporate & Investment Bank since June 2016. She was Global Head of Banking Technology from January 2014 until May 2016. Prior to joining JPMorgan Chase in 2014, she was Executive Vice President of Specialty Businesses and Information Technology for Anthem, Inc.
Mary Callahan Erdoes5153Chief Executive Officer of Asset & Wealth Management since September 2009.
Stacey Friedman5052General Counsel since January 2016, prior to which she was Deputy General Counsel since July 2015 and General Counsel for the Corporate & Investment Bank since August 2012.
Marianne Lake4951Chief Executive Officer of Consumer Lending and Card Services since May 2019, prior to which she had been Chief Financial Officer since January 2013.
Robin Leopold5456Head of Human Resources since January 2018, prior to which she had been Head of Human Resources for the Corporate & Investment Bank since August 2012.
Douglas B. Petno5355Chief Executive Officer of Commercial Banking since January 2012.
Jennifer Piepszak50Chief Financial Officer since May 2019, prior to which she had been the Chief Executive Officer for Card Services since 2017. She was Chief Executive Officer of Business Banking from 2015 to 2017.
Daniel E. Pinto5658Co-President and Co-Chief Operating Officer since January 2018, Chief Executive Officer of the Corporate & Investment Bank since March 2014, and Chief Executive Officer of Europe, the Middle East and Africa since June 2011. He had been Co-Chief Executive Officer of the Corporate & Investment Bank from July 2012 until March 2014.
Peter Scher

5759
Head of Corporate Responsibility since 2011 and Chairman of the Mid-Atlantic Region since 2015.

Gordon A. Smith6062Co-President and Co-Chief Operating Officer since January 2018, and Chief Executive Officer of Consumer & Community Banking since December 2012.
Unless otherwise noted, during the five fiscal years ended December 31, 2018,2020, all of JPMorgan Chase’s above-named executive officers have continuously held senior-level positions with JPMorgan Chase. There are no family relationships among the foregoing executive officers. Information to be provided in Items 10, 11, 12, 13 and 14 of the Form 10-K and not otherwise included herein is incorporated by reference to the Firm’s Definitive Proxy Statement for its 20192021 Annual Meeting of Stockholders to be held on May 21, 2019,18, 2021, which will be filed with the SEC within 120 days of the end of the Firm’s fiscal year ended December 31, 2018.2020.



3236



Item 11. Executive Compensation.
Refer to Item 10.


Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
ForRefer to Item 10 for security ownership of certain beneficial owners and management, refer to Item 10.management.
The following table sets forth the total number of shares available for issuance under JPMorgan Chase’s employee share-based incentive plans (including shares available for issuance to non-employee directors). The Firm is not authorized to grant share-based incentive awards to non-employees, other than to non-employee directors.
December 31, 2020Number of shares to be issued upon exercise of outstanding options/stock appreciation rightsWeighted-average
exercise price of
outstanding
options/stock appreciation rights		Number of shares remaining available for future issuance under stock incentive plans
Plan category
Employee share-based incentive plans approved by shareholders3,124,739 (a)$41.25 66,621,995 (b)
Total3,124,739 $41.25 66,621,995 
December 31, 2018Number of shares to be issued upon exercise of outstanding options/stock appreciation rights 
Weighted-average
exercise price of
outstanding
options/stock appreciation rights
 Number of shares remaining available for future issuance under stock incentive plans
Plan category        
Employee share-based incentive plans approved by shareholders12,462,572
(a) 
 $41.46
  85,860,463
(b) 
Total12,462,572
  $41.46
  85,860,463
 
(a)Does not include restricted stock units or performance stock units granted under the shareholder-approved Long-Term Incentive Plan (“LTIP”), as amended and restated effective May 15, 2018. Refer to Note 9 for further discussion.
(a)Does not include restricted stock units or performance stock units granted under the shareholder-approved Long-Term Incentive Plan (“LTIP”), as amended and restated effective May 15, 2018. For further discussion, refer to Note 9.
(b)Represents shares available for future issuance under the shareholder-approved LTIP.
(b)Represents shares available for future issuance under the shareholder-approved LTIP.

All shares available for future issuance will be issued under the shareholder-approved LTIP. For further discussion, referRefer to Note 9.9 for further discussion.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Refer to Item 10.
Item 14. Principal Accounting Fees and Services.
Refer to Item 10.

3337
Part IV



Item 15. Exhibits, Financial Statement Schedules.
1Financial statements
1Financial statements
The Consolidated Financial Statements, the Notes thereto and the report of the Independent Registered Public Accounting Firm thereon listed in Item 8 are set forth commencing on page 149.159.
2Financial statement schedules
3Exhibits
3.1
3.2
3.3
3.4
3.4
3.5
Certificate of Designations for Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series Q (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of JPMorgan Chase & Co. (File No. 1-5805) filed April 23, 2013)..
3.63.5
3.73.6
3.83.7
3.9
Certificate of Designations for Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series U (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of JPMorgan Chase & Co. (File No. 1-5805) filed on March 10, 2014).
3.103.8
3.113.9
3.12
Certificate of Designations for Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series X (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of JPMorgan Chase & Co. (File No. 1-5805) filed on September 23, 2014).
3.13
Certificate of Designations for 6.125% Non-Cumulative Preferred Stock, Series Y (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of JPMorgan Chase & Co. (File No. 1-5805) filed February 17, 2015).
3.10
3.14
3.153.11
3.163.12
3.173.13

34

3.14
3.18

3.19
3.15

3.20
3.16
3.17
38

3.18
3.19
3.20
4.1(a)
4.1(a)
4.1(b)
4.2(a)
4.2(b)
4.3(a)
4.3(b)
4.3(b)
4.4
4.5
4.6
Other instruments defining the rights of holders of long-term debt securities of JPMorgan Chase & Co. and its subsidiaries are omitted pursuant to Section (b)(4)(iii)(A) of Item 601 of Regulation S-K. JPMorgan Chase & Co. agrees to furnish copies of these instruments to the SEC upon request.
10.1
10.2
10.3
10.4

10.539
Part IV

10.5

35
Part IV


10.6
10.6
10.7
10.8
10.9
Form of JPMorgan Chase & Co. Long-Term Incentive Plan Terms and Conditions for stock appreciation rights, dated as of January 20, 2009 (incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2008).(a)
10.9
10.10
10.11
Forms of JPMorgan Chase & Co. Long-Term Incentive Plan Terms and Conditions for stock appreciation rights and restricted stock units, dated as of January 18, 2012 (incorporated by reference to Exhibit 10.25 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2011).(a)
10.1210.10
10.13
Forms of JPMorgan Chase & Co. Long-Term Incentive Plan Terms & Conditions for restricted stock units for Operating Committee members (U.S., E.U. and U.K.), dated as of January 20, 2015 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of JPMorgan Chase & Co. (File No. 1-5805) for the quarter ended March 31, 2015).(a)
10.1410.11
10.15
Form of JPMorgan Chase & Co. Long-Term Incentive Plan Terms and Conditions for performance share units for Operating Committee members, dated as of January 19, 2016 (incorporated by reference to Exhibit 10.22 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2015).(a)
10.16
Forms of JPMorgan Chase & Co. Long-Term Incentive Plan Terms and Conditions for performance share units and restricted stock units for Operating Committee members (U.S. and U.K.), dated as of January 17, 2017 (incorporated by reference to Exhibit 10.23 to the Annual Report on Form 10-K of JPMorgan Chase & Co. (File No. 1-5805) for the year ended December 31, 2016).(a)
10.1710.12
10.1810.13

10.1910.14
10.15
10.16
10.17
10.18
10.2010.19
10.2110.20

10.22
Plea Agreement dated May 20, 2015 between JPMorgan Chase & Co. and the U.S. Department of Justice2019 (incorporated by reference to Exhibit 99.310.1 to the CurrentQuarterly Report on Form 8-K10-Q of JPMorgan Chase & Co. (File No. 1-5805) filed May 20, 2015)for the quarter ended September 30, 2019).
21

36

22.1
22Annual Report on Form 11-K of The JPMorgan Chase 401(k) Savings Plan for the year ended December 31, 20182019 (to be filed pursuant to Rule 15d-21 under the Securities Exchange Act of 1934).
2322.2
40

23
31.1
Certification.Certification.(b)
31.2
Certification.Certification.(b)
32
101.INS
The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inlineInline XBRL document.(d)
101.SCH
XBRL Taxonomy Extension Schema
Document.(b)
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document.(b)
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document.(b)
101.LAB
XBRL Taxonomy Extension Label Linkbase Document.(b)
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document.(b)
(a)104This exhibit is a management contract or compensatory plan or arrangement.Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).
(b)Filed herewith.
(c)Furnished herewith. This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
(d)Pursuant to Rule 405 of Regulation S-T, includes the following financial information included in the Firm’s Form 10-K for the year ended December 31, 2018, formatted in XBRL (eXtensible Business Reporting Language) interactive data files: (i) the Consolidated statements of income for the years ended December 31, 2018, 2017 and 2016, (ii) the Consolidated statements of comprehensive income for the years ended December 31, 2018, 2017 and 2016, (iii) the Consolidated balance sheets as of December 31, 2018 and 2017, (iv) the Consolidated statements of changes in stockholders’ equity for the years ended December 31, 2018, 2017 and 2016, (v) the Consolidated statements of cash flows for the years ended December 31, 2018, 2017 and 2016, and (vi) the Notes to Consolidated Financial Statements.
(a)    This exhibit is a management contract or compensatory plan or arrangement.
(b)    Filed herewith.

(c)    Furnished herewith. This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

(d)    Pursuant to Rule 405 of Regulation S-T, includes the following financial information included in the Firm’s Form 10-K for the year ended December 31, 2020, formatted in XBRL (eXtensible Business Reporting Language) interactive data files: (i) the Consolidated statements of income for the years ended December 31, 2020, 2019 and 2018, (ii) the Consolidated statements of comprehensive income for the years ended December 31, 2020, 2019 and 2018, (iii) the Consolidated balance sheets as of December 31, 2020 and 2019, (iv) the Consolidated statements of changes in stockholders’ equity for the years ended December 31, 2020, 2019 and 2018, (v) the Consolidated statements of cash flows for the years ended December 31, 2020, 2019 and 2018, and (vi) the Notes to Consolidated Financial Statements.







3741
Part IV






























page 3842 not used


3842
Table of contents



Financial:    
       
40 
Five-Year Summary of Consolidated Financial Highlights
 Audited financial statements:
       
41 
Five-Year Stock Performance
 148 
Management’s Report on Internal Control Over Financial Reporting
       
Management’s discussion and analysis: 149 
Report of Independent Registered Public Accounting Firm
       
42 
Introduction
 150 
Consolidated Financial Statements
       
43 
Executive Overview
 155 
Notes to Consolidated Financial Statements
       
48 
Consolidated Results of Operations
  
       
52 
Consolidated Balance Sheets and Cash Flows Analysis
    
       
55 
Off–Balance Sheet Arrangements and Contractual Cash Obligations
    
       
57 
Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures
 Supplementary information:
       
60 
Business Segment Results
 287 
Selected quarterly financial data (unaudited)
       
79 
Enterprise-wide Risk Management
 288 
Distribution of assets, liabilities and stockholders’ equity; interest rates and interest differentials
      
       
84 
Strategic Risk Management
 293 
Glossary of Terms and Acronyms
       
102 
Credit and Investment Risk Management
    
       
124 
Market Risk Management
    
       
132 
Country Risk Management
    
       
134 
Operational Risk Management
    
       
141 
Critical Accounting Estimates Used by the Firm
    
       
144 
Accounting and Reporting Developments
    
       
147 
Forward-Looking Statements
    
       
Financial:
44Audited financial statements:
45158
Management’s Report on Internal Control Over Financial Reporting
Management’s discussion and analysis:159
Report of Independent Registered Public Accounting Firm
46162
47167
54
57
Consolidated Balance Sheets and Cash Flows Analysis
60
Off–Balance Sheet Arrangements and Contractual Cash Obligations
62Supplementary information:
65299
85300
Distribution of assets, liabilities and stockholders’ equity; interest rates and interest differentials
90305
91
102
110
135
143
145
152
156
157


JPMorgan Chase & Co./20182020 Form 10-K3943
Financial

FIVE-YEAR SUMMARY OF CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

As of or for the year ended December 31,
(in millions, except per share, ratio, headcount data and where otherwise noted)
    
As of or for the year ended December 31,
(in millions, except per share, ratio, headcount data and where otherwise noted)
20182017 20162015201420202019201820172016
Selected income statement data    Selected income statement data
Total net revenue $109,029
$100,705
 $96,569
$94,440
$95,994
Total noninterest expense 63,394
59,515
 56,672
59,911
62,156
Pre-provision profit 45,635
41,190
 39,897
34,529
33,838
Total net revenue(a)
Total net revenue(a)
$119,543 $115,399 $108,783 $100,460 $96,275 
Total noninterest expense(a)
Total noninterest expense(a)
66,656 65,269 63,148 59,270 56,378 
Pre-provision profit(b)
Pre-provision profit(b)
52,887 50,130 45,635 41,190 39,897 
Provision for credit losses 4,871
5,290
 5,361
3,827
3,139
Provision for credit losses17,480 5,585 4,871 5,290 5,361 
Income before income tax expense 40,764
35,900
 34,536
30,702
30,699
Income before income tax expense35,407 44,545 40,764 35,900 34,536 
Income tax expense 8,290
11,459
 9,803
6,260
8,954
Income tax expense6,276 8,114 8,290 11,459 9,803 
Net income $32,474
$24,441
(f) 
$24,733
$24,442
$21,745
Net income$29,131 $36,431 $32,474 $24,441 (h)$24,733 
Earnings per share data    Earnings per share data
Net income: Basic $9.04
$6.35
 $6.24
$6.05
$5.33
Net income: Basic$8.89 $10.75 $9.04 $6.35 $6.24 
Diluted 9.00
6.31
 6.19
6.00
5.29
 Diluted8.88 10.72 9.00 6.31 6.19 
Average shares: Basic 3,396.4
3,551.6
 3,658.8
3,741.2
3,808.3
Average shares: Basic3,082.4 3,221.5 3,396.4 3,551.6 3,658.8 
Diluted 3,414.0
3,576.8
 3,690.0
3,773.6
3,842.3
 Diluted3,087.4 3,230.4 3,414.0 3,576.8 3,690.0 
Market and per common share data    Market and per common share data
Market capitalization $319,780
$366,301
 $307,295
$241,899
$232,472
Market capitalization$387,492 $429,913 $319,780 $366,301 $307,295 
Common shares at period-end 3,275.8
3,425.3
 3,561.2
3,663.5
3,714.8
Common shares at period-end3,049.4 3,084.0 3,275.8 3,425.3 3,561.2 
Book value per share 70.35
67.04
 64.06
60.46
56.98
Book value per share81.75 75.98 70.35 67.04 64.06 
Tangible book value per share (“TBVPS”)(a)
 56.33
53.56
 51.44
48.13
44.60
Tangible book value per share (“TBVPS”)(b)
Tangible book value per share (“TBVPS”)(b)
66.11 60.98 56.33 53.56 51.44 
Cash dividends declared per share 2.72
2.12
 1.88
1.72
1.58
Cash dividends declared per share3.60 3.40 2.72 2.12 1.88 
Selected ratios and metrics    Selected ratios and metrics
Return on common equity (“ROE”) 13%10% 10%11%10%
Return on tangible common equity (“ROTCE”)(a)
 17
12
 13
13
13
Return on assets (“ROA”) 1.24
0.96
 1.00
0.99
0.89
Return on common equity (“ROE”)(c)
Return on common equity (“ROE”)(c)
12 %15 %13 %10 %10 %
Return on tangible common equity (“ROTCE”)(b)(c)
Return on tangible common equity (“ROTCE”)(b)(c)
14 19 17 12 13 
Return on assets (“ROA”)(b)
Return on assets (“ROA”)(b)
0.91 1.33 1.24 0.96 1.00 
Overhead ratio 58
59
 59
63
65
Overhead ratio56 57 58 59 59 
Loans-to-deposits ratio 67
64
 65
65
56
Liquidity coverage ratio (“LCR”) (average)(b)
 113
119
 N/A
N/A
N/A
Loans-to-deposits ratio(d)
Loans-to-deposits ratio(d)
47 64 69 66 67 
Firm Liquidity coverage ratio (“LCR”) (average)(e)
Firm Liquidity coverage ratio (“LCR”) (average)(e)
110 116 113 119 NA
JPMorgan Chase Bank, N.A. LCR (average)(e)
JPMorgan Chase Bank, N.A. LCR (average)(e)
160 116 111 108 NA
Common equity tier 1 (“CET1”) capital ratio(c)(g)
 12.0
12.2
 12.3
11.8
10.2
13.1 12.4 12.0 12.2 12.3 
Tier 1 capital ratio(c)(g)
 13.7
13.9
 14.0
13.5
11.6
15.0 14.1 13.7 13.9 14.0 
Total capital ratio(c)(g)
 15.5
15.9
 15.5
15.1
13.1
17.3 16.0 15.5 15.9 15.5 
Tier 1 leverage ratio(c)(g)
 8.1
8.3
 8.4
8.5
7.6
7.0 7.9 8.1 8.3 8.4 
Supplementary leverage ratio (“SLR”)(d)(g)
 6.4%6.5% 6.5%6.5%N/A
6.9 %6.3 %6.4 %6.5 %6.5 %
Selected balance sheet data (period-end)    Selected balance sheet data (period-end)
Trading assets(d) $413,714
$381,844
 $372,130
$343,839
$398,988
$503,126 $369,687 $378,551 $349,053 $342,436 
Investment securities 261,828
249,958
 289,059
290,827
348,004
Investment securities, net of allowance for credit lossesInvestment securities, net of allowance for credit losses589,999 398,239 261,828 249,958 289,059 
Loans(d) 984,554
930,697
 894,765
837,299
757,336
1,012,853 997,620 1,015,760 959,429 922,831 
Core Loans 931,856
863,683
 806,152
732,093
628,785
Average core loans 885,221
829,558
 769,385
670,757
596,823
Total assets 2,622,532
2,533,600
 2,490,972
2,351,698
2,572,274
Total assets3,386,071 2,687,379 2,622,532 2,533,600 2,490,972 
Deposits 1,470,666
1,443,982
 1,375,179
1,279,715
1,363,427
Deposits2,144,257 1,562,431 1,470,666 1,443,982 1,375,179 
Long-term debt 282,031
284,080
 295,245
288,651
276,379
Long-term debt281,685 291,498 282,031 284,080 295,245 
Common stockholders’ equity 230,447
229,625
 228,122
221,505
211,664
Common stockholders’ equity249,291 234,337 230,447 229,625 228,122 
Total stockholders’ equity 256,515
255,693
 254,190
247,573
231,727
Total stockholders’ equity279,354 261,330 256,515 255,693 254,190 
Headcount 256,105
252,539
 243,355
234,598
241,359
Headcount255,351 256,981 256,105 252,539 243,355 
Credit quality metrics    Credit quality metrics
Allowance for credit losses $14,500
$14,672
 $14,854
$14,341
$14,807
Allowances for loan losses and lending-related commitmentsAllowances for loan losses and lending-related commitments$30,737 $14,314 $14,500 $14,672 $14,854 
Allowance for loan losses to total retained loans 1.39%1.47% 1.55%1.63%1.90%Allowance for loan losses to total retained loans2.95 %1.39 %1.39 %1.47 %1.55 %
Allowance for loan losses to retained loans excluding purchased credit-impaired loans(e)
 1.23
1.27
 1.34
1.37
1.55
Nonperforming assets(d) $5,190
$6,426
 $7,535
$7,034
$7,967
$10,906 $5,054 $5,901 $7,119 $7,754 
Net charge-offs 4,856
5,387
 4,692
4,086
4,759
Net charge-offs5,259 5,629 4,856 5,387 4,692 
Net charge-off rate 0.52%0.60%
(g) 
0.54%0.52%0.65%Net charge-off rate0.55 %0.60 %0.52 %0.60 %(i)0.54 %
Effective January 1, 2018,2020, the Firm adopted several newthe Financial Instruments – Credit Losses (“CECL”) accounting standards. Certainguidance. Refer to Note 1 for further information.
(a)In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
(b)Pre-provision profit, TBVPS and ROTCE are each non-GAAP financial measures. Tangible common equity (“TCE”) is also a non-GAAP financial measure. Refer to Explanation and Reconciliation of the new accounting standards were applied retrospectivelyFirm’s Use of Non-GAAP Financial Measures on pages 62–64 for a further discussion of these measures.
(c)Quarterly ratios are based upon annualized amounts.
(d)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans and accordingly, prior periodother assets. Prior-period amounts were revised. have been revised to conform with the current presentation.
(e)For the years ended December 31, 2020, 2019, 2018 and 2017, the percentage represents average LCR for the three months ended December 31, 2020, 2019, 2018 and 2017. The U.S. LCR public disclosure requirements for the Firm became effective in 2017. Refer to Liquidity Risk Management on pages 102–108 for additional information referon the LCR results.
(f)As of December 31, 2020, the capital metrics reflect the relief provided by the Federal Reserve Board in response to Note 1.the COVID-19 pandemic, including the CECL capital transition provisions that became effective in the first quarter of 2020. As of December 31, 2020, the SLR reflects the temporary exclusions of U.S. Treasury securities and deposits at Federal Reserve Banks that became effective in the second quarter of 2020. Refer to Regulatory Developments Relating to the COVID-19 Pandemic on pages 52-53 and Capital Risk Management on pages 91-101 for additional information.
(g)The Basel III capital rules became fully phased-in effective January 1, 2019, and for the SLR became fully phased-in effective January 1, 2018. Prior to these dates, the required capital metrics were subject to the transitional rules. As of December 31, 2018, the risk-based capital metrics were the same on a fully phased-in and transitional basis. Refer to Capital Risk Management on pages 91-101 for additional information on these capital metrics.
(a)TBVPS and ROTCE are non-GAAP financial measures. For a further discussion of these measures, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 57-59.
(b)For the years ended December 31, 2018 and 2017, the percentage represents the Firm’s reported average LCR for the three months ended December 31, 2018 and 2017, per the U.S. LCR public disclosure requirements which became effective April 1, 2017. Refer to Liquidity Risk Management on pages 95–100 for additional information on the Firm’s LCR.
(c)Ratios presented are calculated under the Basel III Transitional capital rules and for the capital ratios represent the lower of the Standardized or Advanced approach. As of December 31, 2018, the Firm’s capital ratios were equivalent whether calculated on a transitional or fully phased-in basis. Refer to Capital Risk Management on pages 85-94 for additional information on Basel III.
(d)Effective January 1, 2018, the SLR was fully phased-in under Basel III. The SLR is defined as Tier 1 capital divided by the Firm’s total leverage exposure. Ratios prior to 2018 were calculated under the Basel III Transitional rules, per the SLR public disclosure requirements which became effective January 1, 2015.
(e)Excluded the impact of residential real estate purchased credit-impaired (“PCI”) loans, a non-GAAP financial measure. For further discussion of these measures, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 57-59, and the Allowance for credit losses on pages 120–122.
(f)On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was signed into law. The Firm’s results for the year ended December 31, 2017 included a $2.4 billion decrease to net income as a result of the enactment of the TCJA. For additional information related to the impact of the TCJA, refer to Note 24.
(g)Excluding net charge-offs of $467 million related to the student loan portfolio sale, the net charge-off rate for the year ended December 31, 2017 would have been 0.55%.

(h)In December 2017, the Tax Cuts and Jobs Act (“TCJA”) was signed into law. The Firm’s results for the year ended December 31, 2017 included a $2.4 billion decrease to net income as a result of the enactment of the TCJA.
(i)Excluding net charge-offs of $467 million related to the student loan portfolio sale, the net charge-off rate for the year ended December 31, 2017 would have been 0.55%.
4044JPMorgan Chase & Co./20182020 Form 10-K



FIVE-YEAR STOCK PERFORMANCE
The following table and graph compare the five-year cumulative total return for JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”) common stock with the cumulative return of the S&P 500 Index, the KBW Bank Index and the S&P FinancialFinancials Index. The S&P 500 Index is a commonly referenced equity benchmark in the United States of America (“U.S.”), consisting of leading companies from different economic sectors. The KBW Bank Index seeks to reflect the performance of banks and thrifts that are publicly traded in the U.S. and is composed of leading national money center and regional banks and thrifts. The S&P FinancialFinancials Index is an index of financial companies, all of which are components of the S&P 500. The Firm is a component of all three industry indices.
The following table and graph assume simultaneous investments of $100 on December 31, 2013,2015, in JPMorgan Chase common stock and in each of the above indices. The comparison assumes that all dividends arewere reinvested.
December 31,
(in dollars)		201520162017201820192020
JPMorgan Chase$100.00 $134.57 $170.54 $159.20 $234.46 $221.52 
KBW Bank Index100.00 128.51 152.41 125.42 170.72 153.12 
S&P Financials Index100.00 122.75 149.92 130.37 172.21 169.19 
S&P 500 Index100.00 111.95 136.38 130.39 171.44 202.96 
December 31,
(in dollars)
2013
 2014
 2015
 2016
 2017
 2018
JPMorgan Chase$100.00
 $109.88
 $119.07
 $160.23
 $203.07
 $189.57
KBW Bank Index100.00
 109.36
 109.90
 141.23
 167.49
 137.82
S&P Financial Index100.00
 115.18
 113.38
 139.17
 169.98
 147.82
S&P 500 Index100.00
 113.68
 115.24
 129.02
 157.17
 150.27

December 31,
(in dollars)
chart-1931d6dd6fc358f3bd2.jpg
jpm-20201231_g1.jpg

JPMorgan Chase & Co./20182020 Form 10-K4145
Management’s discussion and analysis

The following is Management’s discussion and analysis of the financial condition and results of operations (“MD&A”) of JPMorgan Chase for the year ended December 31, 2018.2020. The MD&A is included in both JPMorgan Chase’s Annual Report for the year ended December 31, 20182020 (“Annual Report”) and its Annual Report on Form 10-K for the year ended December 31, 20182020 (“20182020 Form 10-K”) filed with the Securities and Exchange Commission (“SEC”). Refer to the Glossary of terms and acronyms on pages 293–299305-311 for definitions of terms and acronyms used throughout the Annual Report and the 20182020 Form 10-K.

The MD&A contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. ForRefer to Forward-looking Statements on page 157) and Part 1, Item 1A: Risk factors in the 2020 Form 10-K on pages 8-32 for a discussion of certain of those risks and uncertainties and the factors that could cause JPMorgan Chase’s actual results to differ materially because of those risks and uncertainties, refer to Forward-looking Statements on page 147) and Part I, Item 1A: Risk factors in the 2018 Form 10-K.uncertainties.

INTRODUCTION
JPMorgan Chase & Co. (NYSE: JPM), a financial holding company incorporated under Delaware law in 1968, is a leading global financial services firm and one of the largest banking institutionsbased in the United States of America (“U.S.”), withand has operations worldwide; JPMorgan Chase had $2.6$3.4 trillion in assets and $256.5$279.4 billion in stockholders’ equity as of December 31, 2018.2020. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the U.S. and globally many of the world’s most prominent corporate, institutional and government clients.
JPMorgan Chase’s principal bank subsidiaries aresubsidiary is JPMorgan Chase Bank, National Association (“JPMorgan Chase Bank, N.A.”), a national banking association with U.S. branches in 2738 states and the District of ColumbiaWashington, D.C. as of December 31, 2018, and Chase Bank USA, National Association (“Chase Bank USA, N.A.”), a national banking association that is the Firm’s principal credit card-issuing bank. In January 2019, the OCC approved an application of merger which was filed by JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. in December 2018 and which contemplates that Chase Bank USA, N.A. will merge with and into JPMorgan Chase Bank, N.A., with JPMorgan Chase Bank, N.A. as the surviving bank. For additional information refer to Supervision and Regulation on pages 1-6 in the 2018 Form 10-K.2020. JPMorgan Chase’s principal nonbank subsidiary is J.P. Morgan Securities LLC (“J.P. Morgan Securities”), a U.S. broker-dealer. The bank and non-bank subsidiaries of JPMorgan Chase operate nationally as well as through overseas branches and subsidiaries, representative offices and subsidiary foreign banks. The Firm’s principal operating subsidiary inoutside the U.K.U.S. is J.P. Morgan Securities plc, a U.K.-based subsidiary of JPMorgan Chase Bank, N.A.
For management reporting purposes, the Firm’s activities are organized into four major reportable business segments, as well as a Corporate segment. The Firm’s consumer business is the Consumer & Community Banking (“CCB”) segment. The Firm’s wholesale business segments are the Corporate & Investment Bank (“CIB”), Commercial Banking (“CB”), and Asset & Wealth Management (“AWM”). ForRefer to Business Segment Results on pages 65–84, and Note 32 for a description of the Firm’s business segments, and the products and services they provide to their respective client bases, refer to Business Segment Results on pages 60-78, and Note 31.bases.


42JPMorgan Chase & Co./2018 Form 10-K


46JPMorgan Chase & Co./2020 Form 10-K

EXECUTIVE OVERVIEW
This executive overview of the MD&A highlights selected information and does not contain all of the information that is important to readers of this 20182020 Form 10-K. For a complete description of the trends and uncertainties, as well as the risks and critical accounting estimates, affecting the Firm and its various lines of business,LOBs, this 20182020 Form 10-K should be read in its entirety.
Effective January 1, 2018,2020, the Firm adopted several newthe CECL accounting standards,guidance. Refer to Note 1 for further information.
Financial performance of JPMorgan Chase
Year ended December 31,
(in millions, except per share data and ratios)
20202019Change
Selected income statement data
Total net revenue(a)
$119,543 $115,399 4 %
Total noninterest expense(a)
66,656 65,269 2 
Pre-provision profit52,887 50,130 5 
Provision for credit losses17,480 5,585 213 
Net income29,131 36,431 (20)
Diluted earnings per share8.88 10.72 (17)
Selected ratios and metrics
Return on common equity12 %15 %
Return on tangible common equity14 19 
Book value per share$81.75 $75.98 8 
Tangible book value per share66.11 60.98 8 
Capital ratios(b)
CET113.1 %12.4 %
Tier 1 capital15.0 14.1 
Total capital17.3 16.0 
(a)    In the second quarter of which2020, the most significantFirm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
(b)    As of December 31, 2020, the capital metrics reflect the relief provided by the Federal Reserve Board in response to the Firm wasCOVID-19 pandemic, including the guidance related to revenue recognition, and recognition and measurement of financial assets. The revenue recognition guidance requires gross presentation of certain costsCECL capital transition provisions that were previously offset against revenue. This change was adopted retrospectively and, accordingly, prior period amounts were revised, resulting in both total net revenue and total noninterest expense increasing with no impact to net income. The adoption of the recognition and measurement guidance resulted in $505 million of fair value gainsbecame effective in the first quarter of 2018, recorded in total net revenue,2020. Refer to Regulatory Developments relating to the COVID-19 Pandemic on certain equity investments that were previously held at cost. Forpages 52-53 and Capital Risk Management on pages 91-101 for additional information, refer to Note 1.information.
Financial performance of JPMorgan Chase  
Year ended December 31,
(in millions, except per share data and ratios)
    
20182017 Change
Selected income statement data    
Total net revenue$109,029
$100,705
 8 %
Total noninterest expense63,394
59,515
 7
Pre-provision profit45,635
41,190
 11
Provision for credit losses4,871
5,290
 (8)
Net income32,474
24,441
 33
Diluted earnings per share9.00
6.31
 43
Selected ratios and metrics    
Return on common equity13%10%  
Return on tangible common equity17
12
  
Book value per share$70.35
$67.04
 5
Tangible book value per share56.33
53.56
 5
Capital ratios(a)
    
CET112.0%12.2%  
Tier 1 capital13.7
13.9
  
Total capital15.5
15.9
  
(a)Ratios presented are calculated under the Basel III Transitional rules. As of December 31, 2018, the Firm’s capital ratios were equivalent whether calculated on a transitional or fully phased-in basis. Refer to Capital Risk Management on pages 85-94 for additional information on Basel III.
Comparisons noted in the sections below are for the full year of 20182020 versus the full year of 2017,2019, unless otherwise specified.
Firmwide overview
JPMorgan Chase reported strong results for 2018, with record net income and EPS of $32.5$29.1 billion and $9.00for 2020, or $8.88 per share, respectively, on net revenue of $109.0$119.5 billion. Excluding the impact of the Tax Cuts & Jobs Acts (“TCJA”), net income and EPS were still records for a full year. The Firm reported ROE of 13%12% and ROTCE of 17%14%. For additional information relatedThe Firm's results for 2020 included net additions to the impactallowance for credit losses of the TCJA, refer to the Consolidated Results$12.2 billion and Firmwide legal expense of Operations on pages 48–51 and Note 24.
$1.1 billion.
•The Firm had net income of $29.1 billion, down 20%.
Net income increased 33%, reflecting higher net revenue and the impact of the lower U.S. federal statutory income tax rate as a result of the TCJA, partially offset by an increase in noninterest expense.
•Total net revenue increased 8%was up 4%. Noninterest revenue was $65.0 billion, up 12%, driven by higher CIB Markets revenue, Investment Banking fees and net production revenue in Home Lending. Net interest income was $55.1$54.6 billion, up 10%down 5%, driven by the impact of lower rates,
predominantly offset by higher rates, loan growthnet interest income in CIB Markets as well as balance sheet growth.
•Noninterest expense was $66.7 billion, up 2%, driven by higher volume- and Card margin expansion,revenue-related expense, legal expense and continued investments in the businesses, partially offset by lower CIB Markets net interest income. Noninterest revenue was $54.0 billion, up 7%, largely driven by higher CIB Markets noninterest revenue and auto lease income, partially offset by markdowns on certain legacy private equity investments and the impact of higher funding spreads on derivatives.structural expense.
Noninterest expense was $63.4 billion, up 7%, predominantly driven by investments in the business, including technology, marketing, higher compensation expense on increased headcount, and real estate, as well as higher revenue-related costs, including auto lease depreciation and volume-related transaction costs.
•The provision for credit losses was $4.9$17.5 billion, downup $11.9 billion from $5.3 billion in the prior year, reflecting a decrease in the consumer provision driven by a lower addition to the credit card allowance for credit losses and lower net charge-offs. The lower net charge-offs were primarily driven by recoveries from loan sales in the residential real estate portfolio, predominantly offset by higher net charge-offs in the credit card portfolio, as anticipated. The prior year also included a net $218 million write-down recorded in connection with the sale of the student loan portfolio. The decrease in the consumer provision was partially offset by an increase in the wholesale provision, reflecting additions to the allowance for loancredit losses from select client downgrades.of $12.2 billion due to the deterioration and increased uncertainty in the macroeconomic environment as a result of the impact of the COVID-19 pandemic.
•The total allowance for credit losses was $14.5$30.8 billion at December 31, 2018, and the2020. The Firm had aan allowance for loan losslosses to retained loans coverage ratio excluding the PCI portfolio, of 1.23%2.95%, compared with 1.27%1.39% in the prior year. year; the increase from the prior year was driven by the additions to the allowance for credit losses and the adoption of CECL.
•The Firm’s nonperforming assets totaled $5.2$10.9 billion at December 31, 2018, a decrease2020, an increase of $5.9 billion from $6.4 billion in the prior year, primarily reflecting improvedclient credit performancedeterioration across multiple industries in the wholesale portfolio; and in the consumer portfolio, and reductionsloans placed on nonaccrual status related to the impact of the COVID-19 pandemic, as well as the adoption of CECL, as the purchased credit deteriorated loans in the mortgage portfolio became subject to nonaccrual loan treatment. In the fourth quarter of 2020, nonperforming assets decreased $556 million from the prior quarter, reflecting some credit improvement in the wholesale portfolio. The consumer portfolio including repayments and loanremained relatively flat, as the increase in loans placed on nonaccrual status in Home Lending related to the impact of the COVID-19 pandemic was predominantly offset by lower loans at fair value in CIB, largely due to sales.
•Firmwide average core loans of $1.0 trillion were up 1%, driven by higher loan balances in AWM and coreCIB, as well as loans excluding CIB both increased 7%.originated under the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”), predominantly offset by lower loan balances in Home Lending and Card.
•Firmwide average deposits of $1.9 trillion were up 25%, reflecting significant inflows across the Firm, primarily driven by the impact of the COVID-19 pandemic and the related effect of certain government actions.
•As of December 31, 2020, the Firm had average eligible High Quality Liquid Assets (“HQLA”) of approximately $697 billion and unencumbered marketable securities with a fair value of approximately $740 billion, resulting in approximately $1.4 trillion of liquidity sources. Refer to Liquidity Risk Management on pages 102–108 for additional information.

JPMorgan Chase & Co./2020 Form 10-K47
Management’s discussion and analysis
Selected capital-related metrics
•The Firm’s Basel III Fully Phased-In CET1 capital was $183.5$205 billion, and the Standardized and Advanced CET1 ratios were 12.0%13.1% and 12.9%13.8%, respectively.
•The Firm’s Fully Phased-In supplementary leverage ratio (“SLR”)SLR was 6.4%6.9%. The SLR reflects the temporary exclusions of U.S. Treasury securities and deposits at Federal Reserve Banks, as required by the Federal Reserve’s interim final rule issued on April 1, 2020. The Firm’s SLR excluding the temporary relief was 5.8%.
•The Firm continued to grow tangible book value per share (“TBVPS”),grew TBVPS, ending 20182020 at $56.33,$66.11, up 5%.8% versus the prior year.
Pre-provision profit, ROTCE and TBVPS are each non-GAAP financial measures. Core loans and each of the Fully Phased-In capital and certain leverage measures are all considered key performance measures. For a further discussion of each of these measures, referRefer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 57-59,62–64, and Capital Risk Management on pages 85-94.
91-101 for a further discussion of each of these measures.

JPMorgan Chase & Co./2018 Form 10-K43
Management’s discussion and analysis

Lines of businessBusiness segment highlights
Selected business metrics for each of the Firm’s four lines of businessLOBs are presented below for the full year of 2018.
2020.
CCB

ROE 28%

15%
•
Revenue of $52.1 billion,Average deposits up 12%22%; record net income of $14.9 billion, up 58%
•
Average core loans up 6%; average deposits of $670 billion, up 5%
•
Clientclient investment assets of $282 billion, up 3%17%
•
CreditAverage loans down 6%; debit and credit card sales volume down 3%
•Active mobile customers up 11% and merchant processing volume up 15%10%
CIB
ROE 16%
 20%
•
Record revenue$9.5 billion of $36.4 billion,Global Investment Banking fees, up 5%; record net income of $11.8 billion, up 9%25%
•
Maintained #1 ranking for Global Investment Banking fees with 8.7%9.2% wallet share for the year
•
Record EquityTotal Markets revenue of $6.9$29.5 billion, up 21%41%, with Fixed Income Markets up 45% and Equity Markets up 33%
CB
ROE
11%
•
Gross Investment Banking revenue of $3.3 billion, up 2%22%
•Average deposits up 38%; Treasury Services revenueaverage loans up 13%; and Securities Services revenue up 8%5%
CB
AWM
ROE 20%

28%
•
Record revenue of $9.1 billion, up 5%; record net income of $4.2 billion, up 20%
•
Average loan balances of $205.5 billion, up 4%
•
Strong credit quality with net charge-offs of 3 bps
AWM
ROE 31%
•
Record revenue of $14.1 billion, up 2%; record net income of $2.9 billion, up 22%
•
Average loan balances of $139 billion, up 12%
•
Assets under management (“AUM”)(AUM) of $2.0$2.7 trillion, down 2%up 17%
•Average deposits up 20%; average loans up 13%
For a detailed discussion of results by line of business, referRefer to the Business Segment Results on pages 60–61.65–66 for a detailed discussion of results by business segment.
Credit provided and capital raised
JPMorgan Chase continues to support consumers, businesses and communities around the globe. The Firm provided new and renewed credit and raised capital for wholesale and consumer clients during 2018,2020, consisting of:
$2.52.3 trillion
Total credit provided and capital raised (including loans and commitments)(a)
$227 billion$226
billion		Credit for consumers
$24 billion$18
billion		Credit for U.S. small businesses
$937 billion$865 billionCredit for corporations
$1.3 trillion$1.1 trillionCapital raised for corporate clients and non-U.S. government entities
$57 billion$103
billion
Credit and capital raised for nonprofit and U.S. governments and nonprofitgovernment entities(a)(b)
(a)$28 billionIncludes states, municipalities, hospitals and universities.Loans under the Small Business Administration’s Paycheck Protection
Program
(a)Excludes loans under the SBA’s PPP.

(b)Includes states, municipalities, hospitals and universities.
4448JPMorgan Chase & Co./20182020 Form 10-K


2019Recent events
•On January 27, 2021, JPMorgan Chase announced that it will launch a digital retail bank in the U.K. this year, and on February 23, 2021, JPMorgan Chase announced that it will appoint Sanoke Viswanathan, head of International Consumer, to the Operating Committee.
•On December 31, 2020, JPMorgan Chase acquired the Global Loyalty business (“cxLoyalty”) of cxLoyalty Group Holdings, Inc. This includes cxLoyalty’s technology platforms, full-service travel agency, and gift card and merchandise services.
•On December 31, 2020, JPMorgan Chase acquired 55ip, a financial technology company and leading provider of automated tax-smart investment strategies.
•On December 18, 2020, JPMorgan Chase received the results of the 2020 Comprehensive Capital Analysis and Review (“CCAR”) Round 2 stress test from the Federal Reserve. The Firm’s Stress Capital Buffer (“SCB”) requirement remained at 3.3%. The Federal Reserve also announced that all large banks, including the Firm, could resume share repurchases commencing in the first quarter of 2021, subject to certain restrictions. The Firm's Board of Directors has authorized a new common share repurchase program for up to $30 billion. The Firm expects to repurchase up to $4.5 billion of common stock in the first quarter of 2021 and, subject to approval by the Board of Directors, maintain the quarterly common stock dividend of $0.90 per share.
•On December 18, 2020, JPMorgan Chase announced the retirement of Lee Raymond, the Firm’s Lead Independent Director. Stephen B. Burke has succeeded Mr. Raymond as Lead Independent Director effective January 1, 2021.
•On December 7, 2020, Phebe N. Novakovic became a member of the Firm's Board of Directors. Ms. Novakovic is Chairman and Chief Executive Officer of General Dynamics Corporation.
2021 outlook
These current expectations are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. ForRefer to Forward-Looking Statements on page 157, and the Risk Factors section on pages 8-32 of the Firm’s 2020 Form 10-K, for a further discussion of certain of those risks and uncertainties and the other factors that could cause JPMorgan Chase’s actual results to differ materially because of those risks and uncertainties, refer to Forward-Looking Statements on page 147 and the Risk Factors section on pages 7–28 .uncertainties. There is no assurance that actual results in 20192021 will be in line with the outlook set forth below, and the Firm does not undertake to update any forward-looking statements.
JPMorgan Chase’s current outlook for 20192021 should be viewed against the backdrop of the global and U.S. economies, the COVID-19 pandemic, financial markets activity, the geopolitical environment, the competitive environment, client and customer activity levels, and regulatory and legislative developments in the U.S. and other countries where the Firm does business. Each of these factors will affect the performance of the Firm and its lines of business.LOBs. The Firm expects that it will continue to make appropriate adjustments to its businesses and operations in response to ongoing developments in the legal,business, economic, regulatory business and economiclegal environments in which it operates.
The outlook information contained in this Form 10-K supersedes all outlook information included in the Firm’s periodic reports furnished or filed with the SEC prior to the date of this Form 10-K.
Full-year 2021
Firmwide
•Management expects full-year 2019net interest income, on a managed basis, to be approximately $55 billion, market dependent.
•Management expects adjusted expense to be approximately $69 billion, which includes accelerated contributions to the Firm’s Foundation in the form of equity investments, as well as higher revenue-related expense.
First-quarter 2021
•Management expects net interest income, on a managed basis, to be approximately $13 billion, market dependent.
•Investment banking fees are expected to be flat when compared with the fourth quarter of 2020, depending on market conditions.
Fourth-quarter 2021
•Management expects net interest income, on a managed basis, to be in excess of $58$14 billion, reflecting the annualized impact of 2018 interest rate increases, as well as expected loan and deposit growth.market dependent.
The Firm takes a disciplined approach to managing its expenses, while investing for growth and innovation. As a result, management expects Firmwide adjusted expense for the full-year 2019 to be less than $66 billion.
The Firm continues to experience charge-off rates at very low levels, reflecting favorable credit trends across the consumer and wholesale portfolios. Management expects full-year 2019 net charge-offs to be less than $5.5 billion, higher than 2018, driven by growth.
First-quarter 2019
Management expects the first-quarter 2019 netNet interest income, on a managed basis, to be approximately flat compared with the fourth-quarter of 2018.
Firmwideand adjusted expense for the first-quarter 2019 is expectedare non-GAAP financial measures. Refer to be up mid-single digits compared with the first quarter of 2018.
Markets revenue for the first-quarter 2019 is expected to be lower when compared with the prior-year quarter by high-teens percentage points on a reported basis,Explanation and by low double-digit percentage points excluding the impactReconciliation of the recognition and measurement accounting standard in the first quarterFirm’s Use of 2018, dependingNon-GAAP Financial Measures on market conditions.


pages 62-64.

JPMorgan Chase & Co./20182020 Form 10-K4549
Management’s discussion and analysis

Business Developments
Expected departureCOVID-19 Pandemic
In response to the COVID-19 pandemic the Firm invoked resiliency plans to allow its businesses to remain operational, utilizing disaster recovery sites and implementing alternative work arrangements globally.
Additionally, the Firm implemented strategies and procedures designed to help it respond to increased market volatility, client demand for credit and liquidity, distress in certain industries and the ongoing impacts to consumers and businesses.
Throughout 2020, the Firm remained focused on serving its clients, customers and communities, as well as the well-being of its employees, during the pandemic. The Firm continues to actively monitor the health and safety situations at local and regional levels, and will continue to adapt as these situations evolve.
Supporting clients and customers
The Firm has supported its clients and customers during the challenging conditions caused by the COVID-19 pandemic by providing assistance, primarily in the form of payment deferrals on loans and extending credit, including through its participation in the Small Business Association’s (“SBA”) PPP.
Refer to Credit Portfolio on page 112 for information on assistance granted to customers and clients. Refer to Consumer Credit portfolio on page 116 and Wholesale Credit Portfolio on page 122 for information on retained loans under payment deferral.
The Firm has gradually re-opened its branches since April 2020, with nearly 90% of its branches returning to full service as of December 31, 2020. Additionally, the Firm continues to provide a wide range of banking services that are accessible to clients and customers through mobile and other digital channels.
Protecting and supporting employees
In response to the COVID-19 pandemic, the Firm implemented alternative work arrangements, with the vast majority of its global workforce working from home since the onset of the pandemic and continuing into the first quarter of 2021. The Firm also provided additional benefits to employees during the COVID-19 pandemic.
Supporting communities
Since March, the Firm has committed $250 million to help address humanitarian needs and long-term economic challenges posed by the COVID-19 pandemic on the communities in which the Firm operates. As of December 31, 2020, over 75% of this commitment has been funded.


Departure of the U.K. from the EU
In 2016, the U.K. voted to withdraw from the European Union (“EU”), and in March 2017, the U.K. invoked Article 50 of the Lisbon Treaty, which commenced withdrawal negotiations with the EU. As a result, the U.K. is scheduled to depart from the EU on March 29, 2019. Negotiations regarding the terms of theThe U.K.’s withdrawal continue between the U.K. and the EU, although the situation remains highly uncertain.
The Firm has a long-standing presence in the U.K., which currently serves as the regional headquarters of the Firm’s operations in over 30 countries across Europe, the Middle East, and Africa (“EMEA”). In the region, the Firm serves clients and customers across its business segments. The Firm has approximately 16,000 employees in the U.K., of which approximately two-thirds are in London, with operational and technology support centers in locations such as Bournemouth, Glasgow and Edinburgh.
The Firm has been preparing for and continues to make significant progress in its readiness for the U.K.’s expected withdrawaldeparture from the EU, which is commonly referred to as “Brexit.“Brexit,” JPMorgan Chase establishedwas completed on December 31, 2020. The U.K. and the EU have entered into a Trade and Cooperation Agreement which delineates many significant aspects of the future relationship between the U.K. and the EU. However, the agreement contained very limited provisions relating to cross-border financial services, and the U.K. and the EU are expected to engage in further negotiations concerning financial services.
The Firm has executed and continues to execute on its Firmwide Brexit Implementation program, in 2017. The program coverswhich encompasses a strategic implementation plan across all impacted businesses and functions. The program’s objective is to deliver the Firm’s capabilities on “day one” of the U.K.’s withdrawal across all impacted legal entities. The program includesfunctions, including an ongoing assessment of implementation risks including political, legal and regulatory risks and plans for addressing and mitigating thoseother implementation risks. The Firm is also monitoringA key focus of the expected macroeconomic developments associated with a no-deal scenario andprogram has undertaken stress testing covering credit and market risk to assess potential impacts.
Significant uncertainty remains around the U.K.’s expected departure from the EU, including the possibility that the U.K. departs without any agreement being reached on how U.K. financial services firms will conduct business within the EU (i.e., “a no-deal scenario”).
The Firm is planning for a U.K. withdrawal in the event that an agreement is reached, as well as for a no-deal scenario. Significant uncertainties exist under either potential outcome. For example, in planning for the U.K. withdrawal from the EU under a no-deal scenario, the Firm is focused on the following key areasbeen to ensure continuationcontinuity of service to itsthe Firm’s EU clients:clients in the following areas: regulatory and legal entity readiness; client readiness;entities; clients; and business and operational readiness.operations.
Regulatory and legal entity readinessentities
The Firm intends to leverage its existing EUFirm’s legal entities in Germany, Luxembourg and Ireland are now licensed to conduct broader financial service activities. These legal entitiesprovide and are in advanced stages of readiness, including governance,
infrastructure, capital, local regulatory licenses and branch authorizations, as needed. The Firm anticipates that its EU legal entities will be readyproviding services to service its EU clients in March 2019, if required. There are some dependencies on final authorizations from the European Central Bank and jurisdictional National Competent Authorities to carry out new activity in the EU legal entities.
Client readiness
Where required, agreements with the Firm’s EU clients, are being re-documented from current U.K.including through a branch network covering locations such as Paris, Madrid and Milan. Subject to limited exceptions, the Firm’s U.K.-based legal entities are no longer permitted to existingtransact business from the U.K. with EU clients.
Clients
Agreements covering substantially all of the Firm’s EU client activity have been re-documented to EU legal entities to ensurefacilitate continuation of service. This process involves establishing new agreements such as ISDA master agreements between clients and the relevant EU legal entity. There is a risk that not all clients will have the appropriate legal and operational arrangements in place upon the U.K.’s withdrawal from the EU. The Firm continues to actively engage with itsthose clients to ensure preparedness and, to the extent possible, minimizethat have not completed re-documentation or required operational disruption.changes.
Business and operational readinessoperations
The Firm is expectingCOVID-19 pandemic introduced additional risk to add several hundred employee positionsthe Firm’s Brexit Implementation program, particularly in its various EU locations, including individuals whorelation to staff relocations. As a result, the Firm expects to relocate from the U.K. The Firm is preparing to be operational in the EU across all in-scope businesseshas worked closely with regulators and functions, including the build-out of technology, processes and controls, and the necessary resourcing in the EU locations across first, second and third line of defense functions.
The Firm and its EU legal entities’ access to market infrastructures such as trading venues, central counterparties (“CCPs”) and central settlement systems (“CSDs”) will need to be adjusted to comply with the evolving regulatory framework. Some uncertainty remains with respect to the readiness of the overall market ecosystem and connectivity between participants. The Firm continues to monitor the regulatory landscape and is preparing to take mitigating action, as needed, specifically in areas such as “contract continuity” that would allow U.K. entities to continue servicing trade lifecycle events.
In the event that the U.K.’s withdrawal from the EU is delayed through a transition deal or another mechanism, the Firm would have the required operational capabilities to conduct business from its EU legal entities, but the timing of any changes would be re-assessedemployees to ensure that critical staff are relocated in a strategic approach is taken. Thesafe and timely manner so that the Firm continuescan meet its regulatory commitments and continue serving its clients. Further relocations are planned for 2021, and the Firm’s longer-term EU staffing strategy will be developed over time in cooperation with its regulators and as the post-Brexit market landscape evolves in order to closely monitor all negotiationsensure that the Firm maintains operational resilience and legislative developments and has developed an implementation plan that allows for flexibility given the continued uncertainty.effective client coverage.


4650JPMorgan Chase & Co./20182020 Form 10-K


LIBORInterbank Offered Rate (“IBOR”) transition
The Financial Stability BoardJPMorgan Chase and other market participants continue to make progress in preparing for the discontinuation of the London Interbank Offered Rate (“FSB”LIBOR”) and the Financial Stability Oversight Council (“FSOC”) have observed that the secular decline in interbank short-term funding poses structural risks for unsecured benchmark interest rates such as Interbank Offered Rates (“IBORs”), and therefore regulators and market participants in various jurisdictions have been workingother IBORs to identify alternative reference rates that are compliantcomply with the International Organization of Securities Commission’s standards for transaction-based benchmarks. Inbenchmark rates.
On November 30, 2020, ICE Benchmark Administration, the administrator of LIBOR, announced a public consultation on its proposal to cease the publication of the principal tenors of U.S. dollar LIBOR (i.e., overnight, one-month, three-month, six-month and 12-month LIBOR) immediately following a final publication on June 30, 2023. The Federal Reserve, the OCC and the FDIC also released guidance encouraging market participants to cease dealing in new U.S. dollar LIBOR contracts from the end of 2021. There has been no change in the scheduled cessation of U.K. sterling, Japanese yen, Swiss franc and Euro LIBOR, or the remaining tenors of U.S. dollar LIBOR, from December 31, 2021.
The Firm continues to work towards reducing its exposure to IBOR-referencing contracts, including derivatives, bilateral and syndicated loans, securities, and debt and preferred stock issuances, to meet the industry milestones and recommendations published by National Working Groups (“NWG”), including the Alternative Reference Rates Committee (the “ARRC”), in the U.S.
On October 23, 2020, the International Swaps and Derivatives Association, Inc. (“ISDA”) published a groupnew supplement to the ISDA 2006 definitions and the related 2020 IBOR Fallbacks Protocol (the “Protocol”). These publications are intended to facilitate the incorporation of marketrobust rate fallback provisions into both legacy and official sector participants, identifiednew derivative contracts with effect from January 25, 2021. The Firm’s client-facing legal entities have agreed to adhere to the Protocol, in accordance with recommendations from multiple industry working groups, including the ARRC. ISDA further announced that bilateral templates have been made available for use with counterparties who choose not to adhere to the Protocol.
As a key objective of the ARRC’s transition plan to encourage adoption of the Secured Overnight Financing Rate (“SOFR”) as its recommended alternative benchmark rate. Other alternative, counterparty clearing houses, clearing house members and other impacted market participants successfully executed the discounting and price alignment interest (“PAI”) switch from federal funds to SOFR on October 16, 2020. The industry completed a similar switch from EONIA to €STR on July 27, 2020.
On March 12, 2020 and January 7, 2021, the Financial Accounting Standards Board (“FASB”) issued accounting standards updates providing optional expedients and exceptions for applying generally accepted accounting principles to contracts and hedge accounting relationships affected by reference rates have been recommended in other jurisdictions.
IBORsrate reform. These optional expedients are referenced in approximately $370 trillionintended to simplify the operational impact of wholesale and consumerapplying U.S. GAAP to transactions globally spanning a broad rangeimpacted by reference rate reform. The Firm elected to apply certain of financial products and contracts. Without advance transition planning for alternative benchmarks, sudden cessation of those broadly referenced rates could cause significant disruptions to gross flows of floating-rate payments and receipts. An abrupt cessation could also impair the normal functioning of a variety of markets, including commercial and consumer lending.
JPMorgan Chase established a Firmwide LIBOR Transition program in early 2018. The Firmwide CFO and the CEO of the CIB oversee the program as senior sponsors. When assessing risks associated with IBOR transition, the program considers three possible scenarios: disorderly transition, measured/regulated transition, and IBOR in continuity. These risks will continue to be monitored, along with any new risks that emerge as the program progresses. Plans to mitigate the risks associated with IBOR transition have been identified, with some alreadythese expedients beginning in the early stagesthird quarter of implementation. Model risk,2020. On
August 27, 2020, the International Accounting Standards Board (“IASB”) issued guidance that provides similar relief for example, will be mitigated by the identificationentities reporting under International Financial Reporting Standards ("IFRS"). Refer to Accounting and migration of swap curves basedReporting Developments on IBORs to new alternative reference rates.
Market participants are working closely with public sector representation as part of National Working Groups (“NWGs”) towards the common goal of facilitating an orderly transition from IBORs. Current NWG efforts include the development of cash and derivative markets referencing alternative reference rates, as well as the development of industry consensuspage 156 for fallback language that would determine the rates to use in various IBOR-indexed contracts when a particular IBOR ceases to be produced. The Firm is encouraging its clients to actively participate in industry consultations on fallback language in order to ensure the broadest possible industry engagement in and understanding of IBOR transition.additional information. The Firm continues to monitor the transition relief being considered by the U.S. Treasury Department regarding the tax implications of reference rate reform.
The Firm’s initiatives in connection with LIBOR transition include:
•continuing to reduce its overall exposure to LIBOR
•implementing rate fallback provisions developed by NWGs in new LIBOR contracts, where appropriate
•continuing to educate and inform clients fromon LIBOR transition and the current IBOR-referencingnecessity to prepare for the cessation of LIBOR
•assisting clients with discontinuing their issuance or use of LIBOR-linked products within the timelines specified by NWGs
•supporting clients in their efforts to remediate contracts linked to LIBOR, including contracts to which the Firm is a party, which it manages or for which it acts as agent
•offering products referencing the newlinked to alternative reference rates.rates (“ARRs”) across its businesses, and
•planning for the implementation of rate fallback mechanisms across products based on the conventions recommended by NWGs are also workingto prepare for transition to ARRs upon the cessation of various IBORs.
The Firm is on schedule to implement necessary changes to operational and risk management systems in order to transition away from IBORs, including by aiming to meet proposed deadlines set by NWGs for the cessation of new contracts referencing these benchmarks. The Firm continues to engage with accounting standard settersand remains committed to manage the accounting implications of amending existing contractsNWGs in devising solutions to add fallback language andunresolved issues relating to change reference rates. Current efforts include the identification of potential accounting impacts and potential alternatives to mitigate those impacts through interpretation of existing accounting rules, or through transition relief from FASB and IASB standard setting.IBOR transition.
The Firm continues to engage with market participants, NWGs and regulators to address market-wide challenges associated with LIBOR transition, including efforts to:
•improve liquidity in ARRs
•develop and implement plansintroduce forward-looking term rates linked to appropriately mitigate the risks associated with IBOR discontinuation as identified alternative reference rates develop,ARRs, and liquidity
•support legislative proposals in the markets referencing them increases. The Firm will continueU.S., the U.K. and the EU that aim to engage with regulators as the transition progresses.resolve concerns involving “tough legacy” contracts (i.e. contracts that do not provide for automatic conversion to another rate or that are difficult to amend in order to add rate fallback provisions).
Resolution of these challenges should provide more certainty and help to provide a framework for market participants in transitioning away from IBORs.





JPMorgan Chase & Co./2018 Form 10-K47
Management’s discussion and analysis

JPMorgan Chase & Co./2020 Form 10-K51
Management’s discussion and analysis
Regulatory Developments Relating to the COVID-19 Pandemic
Since March 2020, the U.S. government as well as central banks and banking authorities around the world have taken and continue to take actions to help individuals, households and businesses that have been adversely affected by the economic disruption caused by the COVID-19 pandemic. The CARES Act and the Consolidated Appropriations Act, which were signed into law on March 27, 2020 and December 27, 2020, respectively, provide, among other things, funding to support loan facilities to assist consumers and businesses. Set forth below is a summary as of the date of this Form 10-K of U.S. government actions currently impacting the Firm and U.S. government programs in which the Firm is participating. The Firm will continue to assess ongoing developments in government actions in response to the COVID-19 pandemic.
U.S. government actions
Eligible retained income definition.On March 17, 2020, the Office of the Comptroller of the Currency (“OCC”), the Board of Governors of the Federal Reserve System (“Federal Reserve”), and the Federal Deposit Insurance Corporation (“FDIC”), collectively the “federal banking agencies,” issued an interim final rule (issued as final on August 26, 2020) that revised the definition of “eligible retained income” in the regulatory capital rules that apply to all U.S. banking organizations. On March 23, 2020, the Federal Reserve issued an interim final rule (issued as final on August 26, 2020) that revised the definition of “eligible retained income” for purposes of the total loss-absorbing capacity (“TLAC”) buffer requirements that apply to global systemically important banking organizations. The revised definition of eligible retained income makes any automatic limitations on payout distributions that could apply under the agencies’ capital rules or TLAC rule take effect on a more graduated basis in the event that a banking organization’s capital, leverage and TLAC ratios were to decline below regulatory requirements (including buffers). The March 17, 2020 interim final rule was issued, in conjunction with an interagency statement encouraging banking organizations to use their capital and liquidity buffers, to further support banking organizations’ abilities to lend to households and businesses affected by the COVID-19 pandemic.
Reserve requirements. On March 24, 2020, the Federal Reserve issued an interim final rule (issued as final on December 22, 2020) reducing reserve requirement ratios for all depository institutions to zero percent, effective March 26, 2020, an action intended to free up liquidity in the banking system to support lending to households and businesses.
Refer to Note 26 for additional information on the reduction to the reserve requirement.

Regulatory Capital - Current Expected Credit Losses (“CECL”) transition delay. On March 31, 2020, the federal banking agencies issued an interim final rule (issued as final on August 26, 2020) that provided banking organizations with the option to delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period (“CECL capital transition provisions”). The Firm elected to apply the CECL capital transition provisions.
Supplementary leverage ratio (“SLR”) temporary revision. On April 1, 2020, the Federal Reserve issued an interim final rule that requires, on a temporary basis, the calculation of total leverage exposure for purposes of calculating the SLR for bank holding companies (“BHC”), to exclude the on-balance sheet amounts of U.S. Treasury securities and deposits at Federal Reserve Banks. These exclusions became effective April 1, 2020, and will remain in effect through March 31, 2021.
Refer to Capital Risk Management on pages 91-101 and Note 27 for additional information on the CECL capital transition provisions, the impact to the Firm’s capital metrics and the Firm’s SLR.
Loan modifications. On April 7, 2020, the federal banking agencies along with the National Credit Union Administration, and the Consumer Financial Protection Bureau, in consultation with the state financial regulators, issued an interagency statement revising a March 22, 2020 interagency statement on loan modifications and the reporting for financial institutions working with customers affected by the COVID-19 pandemic (the “IA Statement”). The IA Statement reconfirmed that efforts to work with borrowers where the loans are prudently underwritten, and not considered past due or carried on nonaccrual status, should not result in the loans automatically being considered modified in a troubled debt restructuring (“TDR”) for accounting and financial reporting purposes, or for purposes of their respective risk-based capital rules, which would otherwise require financial institutions subject to the capital rules to hold more capital. The IA Statement also clarified the interaction between its previous guidance and Section 4013 of the CARES Act, as extended by Section 541 of the Consolidated Appropriations Act, which provides certain financial institutions with the option to suspend the application of accounting guidance for TDRs for a limited period of time for loan modifications made to address the effects of the COVID-19 pandemic.
The Firm has granted various forms of assistance to customers and clients impacted by the COVID-19 pandemic, including payment deferrals and covenant modifications. The majority of the Firm’s COVID-19 related loan modifications have not been considered TDRs because:
•they represent short-term or other insignificant modifications, whether under the Firm’s regular loan modification assessments or the IA Statement guidance, or
•the Firm has elected to apply the option to suspend the application of accounting guidance for TDRs as provided by
52JPMorgan Chase & Co./2020 Form 10-K

the CARES Act and extended by the Consolidated Appropriations Act.
To the extent that certain modifications do not meet any of the above criteria, the Firm accounts for them as TDRs. Refer to Credit Portfolio on pages 112-113 and Note 12 for additional information on the Firm’s loan modification activities.
PPP. Beginning April 3, 2020, the PPP, established by the CARES Act and administered by the SBA, authorized eligible lenders to provide nonrecourse loans to eligible borrowers until August 8, 2020 to provide an incentive for these businesses to keep their workers on their payroll. As part of the Consolidated Appropriations Act, additional funding was provided for new PPP loans beginning in early January 2021. This program was designed to target smaller businesses as well as to simplify the loan forgiveness process for loans under $150,000. As of February 19, 2021, the Firm has funded approximately $5 billion under this extension of the program.
U.S. government facilities. Beginning in March 2020, the Federal Reserve announced a suite of facilities using its emergency lending powers under section 13(3) of the Federal Reserve Act to support the flow of credit to individuals, households and businesses adversely affected by the COVID-19 pandemic and to support the broader economy.
The Firm has participated and is participating in the PPP and certain of the other government facilities and programs, as needed, to assist its clients and customers or to support the broader economy. Refer to Capital Risk Management on pages 91-101, Liquidity Risk Management on pages 102–108, Credit Portfolio on pages 112-113, Note 12 and Note 27 for additional information on the Firm’s participation in the PPP and other government facilities and programs.
JPMorgan Chase & Co./2020 Form 10-K53
Management’s discussion and analysis
CONSOLIDATED RESULTS OF OPERATIONS
This section provides a comparative discussion of JPMorgan Chase’s Consolidated Results of Operations on a reported basis for the three-yeartwo-year period ended December 31, 2018,2020, unless otherwise specified. Refer to Consolidated Results of Operations on pages 48-51 of the Firm’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”) for a discussion of the 2019 versus 2018 results. Factors that relate primarily to a single business segment are discussed in more detail within that business segment. Forsegment’s results. Refer to pages 152-155 for a discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Results of Operations, refer to pages 141-143.Operations.
Effective January 1, 2018,
Revenue
Year ended December 31,
(in millions)
202020192018
Investment banking fees$9,486 $7,501 $7,550 
Principal transactions18,021 14,018 12,059 
Lending- and deposit-related fees(a)
6,511 6,626 6,377 
Asset management, administration and commissions(a)
18,177 16,908 16,793 
Investment securities gains/(losses)802 258 (395)
Mortgage fees and related income3,091 2,036 1,254 
Card income(b)
4,435 5,076 4,743 
Other income(c)
4,457 5,731 5,343 
Noninterest revenue64,980 58,154 53,724 
Net interest income54,563 57,245 55,059 
Total net revenue$119,543 $115,399 $108,783 
(a)In the first quarter of 2020, the Firm adopted several new accounting standards. Certainreclassified certain fees from asset management, administration and commissions to lending- and deposit-related fees. Prior-period amounts have been revised to conform with the current presentation.
(b)In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
(c)Included operating lease income of $5.5 billion for each of the new accounting standards were applied retrospectivelyyears ended December 31, 2020 and accordingly, prior period amounts were revised. For additional information, refer to Note 1.2019, and $4.5 billion for the year ended December 31, 2018.
Revenue     
Year ended December 31,
(in millions)
     
2018
 2017
 2016
Investment banking fees$7,550
 $7,412
 $6,572
Principal transactions12,059
 11,347
 11,566
Lending- and deposit-related fees6,052
 5,933
 5,774
Asset management, administration and commissions17,118
 16,287
 15,364
Investment securities gains/(losses)(395) (66) 141
Mortgage fees and related income1,254
 1,616
 2,491
Card income4,989
 4,433
 4,779
Other income(a)
5,343
 3,646
 3,799
Noninterest revenue53,970
 50,608
 50,486
Net interest income55,059
 50,097
 46,083
Total net revenue$109,029
 $100,705
 $96,569
(a)Included operating lease income of $4.5 billion, $3.6 billion and $2.7 billion for the years ended December 31, 2018, 2017 and 2016, respectively.
20182020 compared with 20172019
Investment banking fees increased, from a strong prior year, with overall share gains, driven by CIB, reflecting:
higher advisory fees driven by a higher number of large completed transactions, and
•higher equity underwriting fees driven by a higher share ofpredominantly in follow-on offerings and convertible securities markets due to increased industry-wide fees reflecting strong performance across products
predominantly offset by
lower•higher debt underwriting fees primarily drivenin investment-grade and high-yield bonds driven by declinesincreased industry-wide fees and wallet share gains. The increased activity resulted in industry-wide fee levels.part from clients seeking liquidity in the first half of the year as a result of the COVID-19 pandemic.
For additional information, referRefer to CIB segment results on pages 66-7071–76 and Note 6.6 for additional information.
Principal transactions revenueincreased, primarilypredominantly in CIB, reflecting higher revenue in CIB driven by:
Equity Markets with strength across products, primarily in derivatives and prime brokerage, reflecting strong client activity, and
Fixed Income Markets, reflectingdriven by strong performance in Currencies & Emerging Markets, Rates, and higher revenue in Commodities compared to a challenging prior year, largely offset by lower revenue in Credit,
the results also reflect a loss in Credit Adjustments & Other, largely driven by higher funding spreads on derivatives.Credit.
The increase in CIB was partially offset by private equity losses reflecting markdownsprincipal transactions revenue also reflected higher net valuations on certainseveral legacy private equity investments in Corporate, compared with gainsnet losses in the prior yearyear.
Principal transactions revenue in Corporate.CIB may in certain cases have offsets across other revenue lines, including net interest income. The Firm assesses the performance of its CIB Markets business on a total revenue basis.
For additional information, referRefer to CIB and Corporate segment results on pages 66-7071–76 and pages 77–78,83–84, respectively, and Note 6.6 for additional information.
Lending- and deposit-related fees decreased as a result of lower deposit-related fees in CCB, reflecting lower transaction activity and the impact of fee refunds related to the COVID-19 pandemic, predominantly offset by higher cash management fees in CIB and CB, as well as higher lending-related fees, particularly loan commitment fees in CIB.
Refer to CCB, CIB and CB segment results on pages 67–70, pages 71–76 and pages 77–79, respectively, and Note 6 for additional information.
Asset management, administration and commissions revenue increased reflecting:driven by:
•higher asset management fees in AWM and CCB driven by higher average market levels and the cumulative impactas a result of net inflows. For AWM, these were partially offset by fee compressioninflows into liquidity and lowerlong term products, and higher performance feesfees; and in CCB related to a higher level of investment assets
•higher brokerage commissions driven by higher volumes in CIB and AWM on higher client-driven volume,
partially offset by
•lower volume of annuity sales in CCB.
Refer to CCB, CIB and higher asset-based fees in CIB.
For additional information, refer to AWM CCB and CIB segment results on pages 74–76,67–70, pages 62–6571–76 and pages 66-70,80–82, respectively, and Note 6.
For information on lending- and deposit-related fees, refer to the segment results6 for CCB on pages 62–65, CIB on pages 66-70, and CB on pages 71-73 and Note 6; on securities gains, refer to the Corporate segment discussion on pages 77–78.additional information.
Investment securities lossesgains/(losses) increased due to sales related tothe repositioning of the investment securities portfolio.portfolio, including sales of U.S. GSE and government agency mortgage-backed securities, particularly in the first and third quarters of 2020. Refer to Corporate segment results on pages 83–84 and Note 10 for additional information.
Mortgage fees and related income decreased driven by:
lowerincreased due to higher net mortgage production revenue reflecting lowerhigher mortgage production marginsvolumes and volumes, as well asmargins; the impactprior year included gains on sales of a loan sale,certain loans.
partially offset by
higher net mortgage servicing revenue reflecting higher MSR risk management results, predominantly offset by lower servicing revenue on a lower level of third-party loans serviced.
For further information, referRefer to CCB segment results on pages 62–65,67–70, Note 6 and 15.15 for further information.
Card income increased driven by:
lower new account origination costs, and higher merchant processing fees on higher volumes,
largely offset by
lower net interchange income reflecting higher rewards costs and partner payments, largely offset by higher card sales volumes. The rewards costs included an adjustment to the credit card rewards liability of approximately $330 million, recorded in the second quarter of 2018, driven by an increase in redemption rate assumptions.
For further information, refer to CCB segment results on pages 62–65 and Note 6.

4854JPMorgan Chase & Co./20182020 Form 10-K


Card income decreased due to:
•lower net interchange income reflecting lower credit card sales volumes and debit card transactions as a result of the impact of the COVID-19 pandemic, largely offset by lower acquisition costs and higher annual fees in CCB, and
•lower merchant processing fees in CIB predominantly driven by a reporting reclassification of certain expenses to be a reduction of revenue in Merchant Services. Refer to CCB and CIB segment results on pages 67–70 and pages 71–76, respectively, and Note 6 for further information.
Other income increaseddecreased reflecting:
•Increased amortization on higher operating leaselevels of alternative energy investments in CIB. The increased amortization was more than offset by lower income tax expense from growththe associated tax credits
•lower net valuation gains on certain investments in auto operating lease volumeAWM
•net losses on certain equity investments in CCB
fair valueCIB, compared with net gains of $505 million recognized in the first quarter of 2018prior year
•higher costs associated with using forward contracts to hedge certain non-U.S. dollar-denominated net investment exposures, and
•higher losses related to the adoption of the new recognition and measurement accounting guidance for certain equity investments previously held at cost
the absence of the impact related to the enactment of the TCJA, which reduced the valueearly termination of certain of CIB’s tax-oriented investments by $520 millionthe Firm's long-term debt in the prior yearTreasury and CIO,
partially offset by
lower investment valuations in AWM, and
the absence of •a legal benefit of $645 million that was recorded in the prior year in Corporate related tonet increase from a settlement with the FDIC receivership for Washington Mutual and with Deutsche Bank as trustee of certain Washington Mutual trusts.
For further information, refer to Note 6.gain on an equity investment.
Net interest income increased driven bydecreased due to the impact of higherlower rates, loan growth across the businesses, and Card margin expansion, partiallypredominantly offset by lowerhigher net interest income in CIB Markets, net interest income. as well as balance sheet growth.
The Firm’s average interest-earning assets were $2.2$2.8 trillion, up $49$434 billion, from the prior year, and the yield was 2.34%, down 127 basis points (“bps”), primarily due to lower rates. The net interest yield on these assets, on an FTE basis, was 2.50%1.98%, an increasea decrease of 14 basis points from the prior year.48 bps. The net interest yield excluding CIB Markets was 3.25%2.30%, an increase of 40 basis points. down 97 bps.
Net interest yield excluding CIB marketsMarkets is a non-GAAP financial measure. For aRefer to the Consolidated average balance sheets, interest and rates schedule on pages 300–304 for further discussion of this measure, refer todetails; and the Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 57-59.
2017 compared with 2016
Investment banking fees increased reflecting higher debt and equity underwriting fees in CIB. The increase in debt underwriting fees was driven by62–64 for a higher sharefurther discussion of fees and an overall increase in industry-wide fees; and the increase in equity underwriting fees was driven by growth in industry-wide issuance, including a strong initial public offering (“IPO”) market.
Principal transactions revenue decreased compared with a strong prior year in CIB, primarily reflecting:
lower Fixed Income-related revenue driven by sustained low volatility and tighter credit spreads
partially offset by
higher Equity-related revenue primarily in Prime Services, and
higher Lending-related revenue reflecting lower fair value losses on hedges of accrual loans.
Asset management, administration and commissions revenue increased as a result of higher asset management fees in AWM and CCB, and higher asset-based fees in CIB, both driven by higher market levels
Mortgage fees and related income decreased driven by lower MSR risk management results, lower net production revenue on lower margins and volumes, and lower servicing revenue on lower average third-party loans serviced.
Card income decreased predominantly driven by higher credit card new account origination costs, largely offset
by higher card-related fees, primarily annual fees.
Other income decreased primarily due to:
lower other income in CIB largely driven by a $520 million impact related to the enactment of the TCJA, which reduced the value of certain of CIB’s tax-oriented investments, and
the absence in the current year of gains from
–the sale of Visa Europe interests in CCB,
–the redemption of guaranteed capital debt securities (“trust preferred securities”), and
–the disposal of an asset in AWM
partially offset by
higher operating lease income reflecting growth in auto operating lease volume in CCB, and
a legal benefit of $645 million recorded in the second quarter of 2017 in Corporate related to a settlement with the FDIC receivership for Washington Mutual and with Deutsche Bank as trustee of certain Washington Mutual trusts.
Net interest income increased primarily driven by the net impact of higher rates and loan growth across the businesses, partially offset by declines in Markets net interest income in CIB. The Firm’s average interest-earning assets were $2.2 trillion, up $79 billion from the prior year, and the net interest yield on these assets, on a fully taxable equivalent (“FTE”) basis, was 2.36%, an increase of 11 basis points from the prior year. The net interest yield excluding CIB Markets was 2.85%, an increaseMarkets.




Provision for credit losses
Year ended December 31,
(in millions)202020192018
Consumer, excluding credit card$1,016 $(378)$(119)
Credit card10,886 5,348 4,818 
Total consumer11,902 4,970 4,699 
Wholesale5,510 615 172 
Investment securities68 NANA
Total provision for credit losses$17,480 $5,585 $4,871 
Effective January 1, 2020, the Firm adopted the CECL accounting guidance. In conjunction with the adoption of 26 basis pointsCECL, the Firm reclassified risk-rated loans and lending-related commitments from the prior year.consumer, excluding credit card portfolio segment to the wholesale portfolio segment, to align with the methodology applied when determining the allowance. Prior-period amounts have been revised to conform with the current presentation. Refer to Note 1 for further information.


JPMorgan Chase & Co./2018 Form 10-K49
Management’s discussion and analysis

Provision for credit losses    
Year ended December 31,     
(in millions)2018
 2017
 2016
Consumer, excluding credit card$(63) $620
 $467
Credit card4,818
 4,973
 4,042
Total consumer4,755
 5,593
 4,509
Wholesale116
 (303) 852
Total provision for credit losses$4,871
 $5,290
 $5,361
20182020 compared with 20172019
The provision for credit losses decreasedincreased in consumer and wholesale primarily driven by the deterioration and uncertainty in the macroeconomic environment, in particular in the first half of 2020, as a result of the impact of the COVID-19 pandemic.
The increase in consumer reflected:
•net additions of $7.4 billion to the allowance for credit losses, consisting of $6.6 billion for Card, $520 million for Auto, $252 million for Business Banking,
partially offset by
•lower net charge-offs largely in Card, reflecting lower charge-offs and higher recoveries, primarily benefiting from payment assistance and government stimulus.
The prior year included a decline$244 million net reduction in the consumer provision, partially offset by anallowance for credit losses.
The increase in wholesale reflected a net addition of $4.7 billion to the wholesaleallowance for credit losses across the LOBs, impacting multiple industries.
The investment securities provision for credit losses relates to the HTM portfolio, which became subject to
•
the decrease in the consumer, excluding credit card portfolio in CCB was due to
–
lower net charge-offs in the residential real estate portfolio, largely driven by recoveries from loan sales, and
–
lower net charge-offs in the auto portfolio
partially offset by
–
a $250 million reduction in the allowance for loan losses in the residential real estate portfolio — PCI, reflecting continued improvement in home prices and lower delinquencies; the reduction was $75 million lower than the prior year for the residential real estate portfolio — non credit-impaired
•
the prior year also included a net $218 million write-down recorded in connection with the sale of the student loan portfolio, and
•
the decrease in the credit card portfolio was due to
–
a $300 million addition to the allowance for loan losses, reflecting loan growth and higher loss rates, as anticipated; the addition was $550 million lower than the prior year,
largely offset by
–
higher net charge-offs due to seasoning of more recent vintages, as anticipated, and
the CECL accounting guidance beginning on January 1, 2020.
•
in wholesale, the current period expense of $116 million reflected additions to the allowance for loan losses from select client downgrades,
largely offset by
–
other net portfolio activity, including a reduction in the allowance for loan losses related to a single name in the Oil & Gas portfolio in the first quarter of 2018, compared to a net benefit of $303 million in the prior year. The prior year benefit reflected a reduction in the allowance for loan losses on credit quality improvements in the Oil & Gas, Natural Gas Pipelines, and Metals and Mining portfolios.
For a more detailedRefer to the segment discussions of CCB on pages 67–70, CIB on pages 71–76, CB on pages 77–79, AWM on pages 80–82, the Allowance for Credit Losses on pages 132-133, and Notes 1, 10 and 13 for further discussion of the credit portfolio and the allowance for credit losses, refer to the segment discussions of CCB on pages 62–65, CIB on pages 66-70, CB on pages 71-73, the Allowance for Credit Losses on pages 120–122 and Note 13.
2017 compared with 2016losses.
The provision for credit lossesdecreased as a result of:
a net $422 million reduction in the wholesale allowance for credit losses, reflecting credit quality improvements in the Oil & Gas, Natural Gas Pipelines, and Metals & Mining portfolios, compared with an addition of $511 million in the prior year driven by downgrades in the same portfolios
predominantly offset by
a higher consumer provision driven by
–$450 million of higher net charge-offs, primarily in the credit card portfolio due to growth in newer vintages which, as anticipated, have higher loss rates than the more seasoned portion of the portfolio, partially offset by a decrease in net charge-offs in the residential real estate portfolio reflecting continued improvement in home prices and delinquencies,
–a $416 million higher addition to the allowance for credit losses related to the credit card portfolio driven by higher loss rates and loan growth, and a lower reduction in the allowance for the residential real estate portfolio predominantly driven by continued improvement in home prices and delinquencies, and
–a net $218 million write-down recorded in connection with the sale of the student loan portfolio.

50JPMorgan Chase & Co./20182020 Form 10-K55

Management’s discussion and analysis

Noninterest expense
Year ended December 31,
(in millions)202020192018
Compensation expense$34,988 $34,155 $33,117 
Noncompensation expense:
Occupancy4,449 4,322 3,952 
Technology, communications and equipment10,338 9,821 8,802 
Professional and outside services8,464 8,533 8,502 
Marketing(a)
2,476 3,351 3,044 
Other(b)(c)
5,941 5,087 5,731 
Total noncompensation expense31,668 31,114 30,031 
Total noninterest expense$66,656 $65,269 $63,148 
Noninterest expense    
Year ended December 31, 
(in millions)2018
 2017
 2016
Compensation expense$33,117
 $31,208
 $30,203
Noncompensation expense:     
Occupancy3,952
 3,723
 3,638
Technology, communications and equipment8,802
 7,715
 6,853
Professional and outside services8,502
 7,890
 7,526
Marketing3,290
 2,900
 2,897
Other(a)(b)
5,731
 6,079
 5,555
Total noncompensation expense30,277
 28,307
 26,469
Total noninterest expense$63,394
 $59,515
 $56,672
(a)In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
(b)Included Firmwide legal expense of $1.1 billion, $239 million and $72 million for the years ended December 31, 2020, 2019 and 2018, respectively.
(a)Included Firmwide legal expense/(benefit) of $72 million, $(35) million and $(317) million for the years ended December 31, 2018, 2017 and 2016, respectively.
(b)Included FDIC-related expense of $1.2 billion, $1.5 billion and $1.3 billion for the years ended December 31, 2018, 2017 and 2016, respectively.
(c)Included FDIC-related expense of $717 million, $457 million and $1.2 billion for the years ended December 31, 2020, 2019 and 2018, respectively.
2020 compared with 20172019
Compensation expense increased driven by investmentshigher volume-and revenue-related expense, predominantly in headcount across the businesses, including bankersCIB and advisors,CCB, as well as technology and other support staff, and higher revenue-related compensation expense largelythe impact of investments in CIB.the businesses.
Noncompensation expense increased as a result of:
•higher legal expense predominantly in CIB and AWM
•higher volume-related expense, in particular brokerage expense in CIB and depreciation expense due tofrom growth in auto operating lease volumeassets in CCB
higher outside services expense primarily due to higher volume-related transaction costs in CIB and higher external fees on revenue growth in AWM
•higher investments in technology in the businesses, including technology and marketing in CCBreal estate,
•an impairment on a loss of $174 million on the liquidation of a legal entity, recorded in other expenselegacy investment in Corporate, in the second quarter of 2018, and
•higher legalFDIC-related expense, with a net benefit in the prior year
partially offset by
•lower FDIC-relatedmarketing expense as a result of the elimination of the surcharge at the end of the third quarter of 2018, and
the absence of an impairment in CB on certain leased equipment
For additional information on the liquidation of a legal entity, refer to Note 23.
2017 compared with 2016
Compensation expense increased predominantly driven bylower investments in headcountmarketing campaigns and lower travel-related benefits in mostCCB, and
•lower structural expense, including lower travel and entertainment across the businesses, including bankers and business-related support staff, andpayment processing costs, partially offset by higher performance-based compensation expense, predominantly in AWM.
Noncompensation expense increased as a result of:
higher depreciation expense from growth in auto operating lease volume in CCB
contributions to the Firm’s FoundationFoundation.
a lower legal net benefit compared to the prior year
higher FDIC-related expense, and
an impairment in CB on certain leased equipment, the majority of which was sold subsequent to year-end
partially offset by
the absence in the current year of two items totaling $175 million in CCB related to liabilities from a merchant in bankruptcy and mortgage servicing reserves
For a discussion of legal expense, refer to Note 29.
Income tax expense
Year ended December 31,
(in millions, except rate)
202020192018
Income before income tax expense$35,407 $44,545 $40,764 
Income tax expense6,276 8,114 8,290 
Effective tax rate17.7 %18.2 %20.3 %
Income tax expense     
Year ended December 31,
(in millions, except rate)
     
2018 2017 2016
Income before income tax expense$40,764
 $35,900
 $34,536
Income tax expense8,290
 11,459
 9,803
Effective tax rate20.3% 31.9% 28.4%
20182020 compared with 20172019
The effective tax rate decreased in 2018 driven by
, with the current year rate reflecting the impact of the TCJA, including the reduction in the U.S. federal statutorya lower level of pre-tax income tax rate, a $302 million net tax benefit resulting fromand changes in the prior year estimates related to the remeasurement of certain deferred taxes and the deemed repatriation tax on non-U.S. earnings, and the absence of the initial $1.9 billion impact from the TCJA’s enactment in December 2017
the reduction in the effective tax rate was partially offset by
the impact of higher pre-tax income, and the change in mix of income and expenseexpenses subject to U.S. federal, and state and local taxes. For further information, refer to Note 24.
2017 compared with 2016
taxes, as well as other tax adjustments. The effectiveprior year included the effect of $1.1 billion of tax rate increased in 2017 driven by:
a $1.9 billion increase to income tax expense representing the initial impact of the enactment of the TCJA. The increase was driven by the deemed repatriation of the Firm’s unremitted non-U.S. earnings and adjustments to the value of certain tax-oriented investments, partially offset by a benefit from the revaluation of the Firm’s net deferred tax liability. The incremental expense resulted in a 5.4 percentage point increase in the Firm’s effective tax rate
partially offset by
benefits resulting from the vesting of employee share-based awards related to the appreciationresolution of the Firm’s stock price upon vesting above their original grant price, and the release of a valuation allowance.certain tax audits.Refer to Note 25 for further information.

JPMorgan Chase & Co./2018 Form 10-K51
Management’s discussion and analysis

56JPMorgan Chase & Co./2020 Form 10-K

CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS
Effective January 1, 2018,2020, the Firm adopted several newthe CECL accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, referguidance. Refer to Note 1.1 for further information.
Consolidated balance sheets analysis
The following is a discussion of the significant changes between December 31, 20182020 and 2017.2019.
Selected Consolidated balance sheets data
December 31, (in millions)20202019Change
Assets
Cash and due from banks$24,874 $21,704 15 %
Deposits with banks502,735 241,927 108 
Federal funds sold and securities purchased under resale agreements296,284 249,157 19 
Securities borrowed160,635 139,758 15 
Trading assets(a)
503,126 369,687 36 
Available-for-sale securities388,178 350,699 11 
Held-to-maturity securities, net of allowance for credit losses201,821 47,540 325 
Investment securities, net of allowance for credit losses589,999 398,239 48 
Loans(a)
1,012,853 997,620 2 
Allowance for loan losses(28,328)(13,123)116 
Loans, net of allowance for loan losses984,525 984,497 — 
Accrued interest and accounts receivable90,503 72,861 24 
Premises and equipment27,109 25,813 5 
Goodwill, MSRs and other intangible assets53,428 53,341 — 
Other assets(a)
152,853 130,395 17 
Total assets$3,386,071 $2,687,379 26 %
Selected Consolidated balance sheets data 
December 31, (in millions)2018 2017Change
Assets    
Cash and due from banks$22,324
 $25,898
(14)%
Deposits with banks256,469
 405,406
(37)
Federal funds sold and securities purchased under resale agreements321,588
 198,422
62
Securities borrowed111,995
 105,112
7
Trading assets413,714
 381,844
8
Investment securities261,828
 249,958
5
Loans984,554
 930,697
6
Allowance for loan losses(13,445) (13,604)(1)
Loans, net of allowance for loan losses971,109
 917,093
6
Accrued interest and accounts receivable73,200
 67,729
8
Premises and equipment14,934
 14,159
5
Goodwill, MSRs and other intangible assets54,349
 54,392
—
Other assets121,022
 113,587
7
Total assets$2,622,532
 $2,533,600
4 %
(a) In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans and other assets. Prior-period amounts have been revised to conform with the current presentation.
Cash and due from banks and deposits with banks decreasedincreased primarily as a result of a shift insignificant deposit inflows, which also funded asset growth across the deployment of excess cash in TreasuryFirm, including investment securities and Chief Investment Office (“CIO”) from deposits with Federal Reserve Banks to other short-term instruments (as noted below), based on market opportunities.securities purchased under resale agreements. Deposits with banks reflect the Firm’s placements of its excess cash with various central banks, including the Federal Reserve Banks.
Federal funds sold and securities purchased under resale agreements increased primarily due toas a shift in theresult of higher deployment of excess cash in Treasury and CIO, from deposits with banks to securities purchased under resale agreements,as well as the impact of client activity and higher client-driven market-making activitiesdemand for securities to cover short positions in CIB. For additional information on the Firm’sRefer to Liquidity Risk Management refer toon pages 95–100.102–108 and Note 11 for additional information.
Securities borrowed increased driven by higher demandclient-driven activities in CIB. Refer to Liquidity Risk Management on pages 102–108 and Note 11 for securitiesadditional information.
Trading assets remained elevated at the end of 2020, due to cover short positions related tostronger client-driven market-making activities in CIB.
Trading assets increaseddebt and equity instruments and higher derivative receivables as a result of a shiftmarket movements in the deployment of excess cash in Treasury and CIO from deposits with banks into short-term instruments as well as client-driven market-making activities in CIB. For additional information, referCIB Markets. Refer to Derivative contracts on pages 117–118, and Notes 2 and 5.5 for additional information.
Investment securities increased, primarily due toreflecting net purchases of U.S. Treasury Bills, reflecting a shiftTreasuries and U.S. GSE and government agency MBS in the deploymentavailable-for-sale (“AFS”) portfolio, driven by interest rate risk management activities and cash deployment. AFS securities of excess cash$164 billion were transferred to the held-to-maturity (“HTM”) portfolio, resulting in Treasurya decrease in AFS and CIO from deposits with banks.a comparable increase in HTM securities. The increase was partially offset by net sales, paydowns and maturities largely of obligations of U.S. states and municipalities, commercial MBS and non-U.S. government debt securities. For additional information on investmenttransfers were executed for capital management purposes. Refer to
securities, refer to Corporate segment results on pages 77–78,83–84, Investment Portfolio Risk Management on page 123134 and Notes 2 and 10.10 for additional information on investment securities.
Loans increased, reflecting:
•growth in wholesale loans and mortgages in AWM and the impact of PPP loans in CBB and CB, as well as higher wholesale loans across the wholesale businesses, primarily driven by commercial and industrial and financial institution clientsrelated to client-driven activities in CIB and Wealth Management clients globally in AWM, andMarkets
higher consumer loans driven by retention of originated high-quality prime mortgages in CCB and AWM, and growth in credit card loans. These were predominantlylargely offset by mortgage paydowns and loan sales,
•lower home equity loans run-off of PCI loans,in Home Lending primarily due to net paydowns; and lower auto loans.loans in Card due to the decline in sales volumes that began in March as a result of the impact of the COVID-19 pandemic.
The allowance for loan losses decreased driven by:increased
a reduction primarily reflecting the deterioration and uncertainty in the consumer allowance due to a $250 million reductionmacroeconomic environment, in particular in the CCB allowance for loan losses in the residential real estate PCI portfolio, reflecting continued improvement in home prices and lower delinquencies, as wellfirst half of 2020, as a $187 million reductionresult of the impact of the COVID-19 pandemic, consisting of:
•a net $7.4 billion addition in the allowance for write-offs of PCI loans partially due to loan sales. These reductions were largely offset by a $300 million addition to the allowanceconsumer, predominantly in the credit card portfolio, dueand
•a net $3.6 billion addition in wholesale, across the LOBs, impacting multiple industries.
The adoption of CECL on January 1, 2020, resulted in a $4.2 billion addition to the allowance for loan growthlosses.
There were also additions to the allowance for lending-related commitments, which is included in other liabilities on the consolidated balance sheets, of $1.1 billion related to the impact of the COVID-19 pandemic, and higher loss rates,$98 million related to the adoption of CECL. Total additions to the allowance for
JPMorgan Chase & Co./2020 Form 10-K57
Management’s discussion and analysis
credit losses were $12.1 billion related to COVID-19, and $4.3 billion related to CECL, as anticipated.of December 31, 2020.
For a more detailedRefer to Credit and Investment Risk Management on pages 110–134, and Notes 1, 2, 3, 12 and 13 for further discussion of loans and the allowance for loan losses, refer to Credit and Investment Risk Management on pages 102-123, and Notes 2, 3, 12 and 13.losses.

52JPMorgan Chase & Co./2018 Form 10-K


Accrued interest and accounts receivableincreased primarily reflectingdriven by higher client receivables related to client-driven activities in CIB.CIB prime brokerage.
Refer to Note 16 and 18for additional information on Premises and equipment.
Goodwill, MSRs and other intangibles was flat as the increase in goodwill related to the acquisitions of cxLoyalty and 55ip was offset by lower MSRs as a result of faster prepayment speeds on lower rates, and the realization of expected cash flows, partially offset by net additions to the MSRs. Refer to Note 15 for additional information.
Other assets increased reflecting higher auto operating lease assets from growth in business volume in CCB and higher alternative energy investmentscash collateral placed with central counterparties in CIB.
For information on Goodwill and MSRs, refer to Note 15.
Selected Consolidated balance sheets dataSelected Consolidated balance sheets data Selected Consolidated balance sheets data
December 31, (in millions)2018 2017ChangeDecember 31, (in millions)20202019Change
Liabilities    Liabilities
Deposits$1,470,666
 $1,443,982
2
Deposits$2,144,257 $1,562,431 37 
Federal funds purchased and securities loaned or sold under repurchase agreements182,320
 158,916
15
Federal funds purchased and securities loaned or sold under repurchase agreements215,209 183,675 17 
Short-term borrowings69,276
 51,802
34
Short-term borrowings45,208 40,920 10 
Trading liabilities144,773
 123,663
17
Trading liabilities170,181 119,277 43 
Accounts payable and other liabilities196,710
 189,383
4
Accounts payable and other liabilities232,599 210,407 11 
Beneficial interests issued by consolidated variable interest entities (“VIEs”)20,241
 26,081
(22)Beneficial interests issued by consolidated variable interest entities (“VIEs”)17,578 17,841 (1)
Long-term debt282,031
 284,080
(1)Long-term debt281,685 291,498 (3)
Total liabilities2,366,017
 2,277,907
4
Total liabilities3,106,717 2,426,049 28 
Stockholders’ equity256,515
 255,693
—
Stockholders’ equity279,354 261,330 7 
Total liabilities and stockholders’ equity$2,622,532
 $2,533,600
4 %Total liabilities and stockholders’ equity$3,386,071 $2,687,379 26 %
Deposits increased in CIB and CCB, largely offset by decreases in AWM and CB.
The increase in CIB was predominantlyreflecting significant inflows across the LOBs primarily driven by growth the impact of the COVID-19 pandemic and the related effect of certain government actions;
•in operating deposits relatedthe wholesale businesses, while the inflows principally occurred in March as clients sought to client activity in CIB’s Treasury Services business,remain liquid as a result of market conditions, balances continued to increase through the end of 2020, and
•in CCB, reflecting the continuation of growth from new accounts.
The decrease in AWMincrease was driven by balance migration predominantly into the Firm’s higher-yielding investment-related products. The decrease in CB was driven by a reduction in non-operating deposits.lower spending and higher cash balances across both consumer and small business customers, as well as growth from existing and new accounts.
For more information, referRefer to the Liquidity Risk Management discussion on pages 95–100;102–108; and Notes 2
and 17.17 for more information.
Federal funds purchased and securities loaned or sold under repurchase agreements increased reflecting reflecting:
•higher client-driven market-making activities and higher secured financing of AFS investment securities in Treasury and CIO, as well as trading assets-debt and equity instrumentsassets in CIB,
partially offset by
.•a decline in client-driven market-making activities in CIB, including the Firm's non-participation in the Federal Reserve's open market operations. Refer to the Liquidity Risk Management discussion on pages 102–108 and Note 11 for additional information.
Short-term borrowings increased reflecting short-term advances from Federal Home Loan Banks (“FHLBs”) and the net issuancehigher financing of commercial paperCIB prime brokerage activities. Refer to pages 102–108 for information on changes in Treasury and CIO primarily for short-term liquidity management. For additional information, refer to Liquidity Risk Management on pages 95–100.Management.

Trading liabilities increased predominantly as a result ofreflecting client-driven market-making activities, in CIB, which resulted in higher levels of short positions in debt and equity instruments and higher derivative payables as a result of market movements in Equity Markets, including prime brokerage. For additional information, referCIB Markets. Refer to Derivative contracts on pages 117–118, and Notes 2 and 5.5 for additional information.
Accounts payable and other liabilities increased partly as a result ofreflecting higher client payables related to prime brokerageclient-driven activities in CIB.CIB Markets. Refer to Note 19 for additional information.
Refer to Off-Balance Sheet Arrangements on pages 60-61 and Note 14 and 28 for information on Beneficial interests issued by consolidated VIEsdecreased due to net maturities of credit card securitizations. For further information on Firm-sponsored VIEs and loan securitization trusts, refer to Off-Balance Sheet Arrangements on pages 55–56 and Note 14 and 27..
Long-term debt decreased primarily driven by loweras a result of maturities of FHLB advances, predominantly offset byadvances; net issuance of structured notes in CIB, as well as net issuancematurities of senior debt, in Treasurywhich included the early termination of certain of the Firm's debt; partially offset by an issuance of subordinated debt, and CIO. For additional information on the Firm’s long-term debt activities, referhigher fair value hedge accounting adjustments related to lower interest rates. Refer to Liquidity Risk Management on pages 95–100102–108 and Note 19.20 for additional information.
ForStockholders’ equity increased reflecting the combined impact of net income, capital actions, the adoption of CECL and an increase in accumulated other comprehensive income (“AOCI”). The increase in AOCI was driven by net unrealized gains on AFS securities, and higher valuation of interest rate cash flow hedges.Refer to page 165 for information on changes in stockholders’ equity, refer to page 153, and on the Firm’s capital actions, refer to Capital actions on pages 91-92.page 99, Note 24 for additional information on AOCI.

58JPMorgan Chase & Co./20182020 Form 10-K53
Management’s discussion and analysis

Consolidated cash flows analysis
The following is a discussion of cash flow activities during the years ended December 31, 2020 and 2019. Refer to Consolidated cash flows analysis on page 54 of the Firm’s 2019 Form 10-K for a discussion of the 2018 2017activities.
(in millions)Year ended December 31,
202020192018
Net cash provided by/(used in)
Operating activities(a)
$(79,910)$4,092 $15,614 
Investing activities(a)
(261,912)(52,059)(199,420)
Financing activities596,645 32,987 34,158 
Effect of exchange rate changes on cash9,155 (182)(2,863)
Net increase/(decrease) in cash and due from banks and deposits with banks$263,978 $(15,162)$(152,511)
(a) In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans and 2016.
(in millions) Year ended December 31,
 2018 2017 2016
Net cash provided by/(used in)      
Operating activities $14,187
 $(10,827) $21,884
Investing activities (197,993) 28,249
 (89,202)
Financing activities 34,158
 14,642
 98,271
Effect of exchange rate changes on cash (2,863) 8,086
 (1,482)
Net increase/(decrease) in cash and due from banks $(152,511) $40,150
 $29,471
other assets. Prior-period amounts have been revised to conform with the current presentation.
Operating activities
JPMorgan Chase’s operating assets and liabilities primarily support the Firm’s lending and capital markets activities. These assets and liabilities can vary significantly in the normal course of business due to the amount and timing of cash flows, which are affected by client-driven and risk management activities and market conditions. The Firm believes that cash flows from operations, available cash and other liquidity sources, and its capacity to generate cash through secured and unsecured sources, are sufficient to meet its operating liquidity needs.
•In 2018,2020, cash used primarily reflected higher trading assets, other assets, and securities borrowed, partially offset by higher trading liabilities and net income excluding noncash adjustments.
•In 2019, cash provided primarily reflected net income excluding noncash adjustments, increasedlower trading liabilitiesassets, and accounts payablenet proceeds of sales, securitizations, and other liabilities,paydowns of loans held-for-sale, partially offset by higher securities borrowed, an increase in tradingother assets net originations of loans held-for-sale, and higher securities borrowed and other assets.
In 2017, cash used primarily reflected a decrease in trading liabilities and accounts payable and other liabilities, and an increase in accrued interest and accounts receivable, partially offset by net income excluding noncash adjustments and a decrease in trading assets.
In 2016, cash provided primarily reflected net income excluding noncash adjustments, partially offset by an increase in trading assets.liabilities.
Investing activities
The Firm’s investing activities predominantly include originating held-for-investment loans and investing in the investment securities portfolio, and other short-term instruments.
•In 2018,2020, cash used primarily reflected an increase innet purchases of investment securities, purchased under resale agreements, higher net originations of loans, and higher securities purchased under resale agreements.
•In 2019, cash used reflected net purchases of investment securities.
In 2017, cash provided reflected net proceeds from paydowns, maturities, sales and purchases of investment securities, and a decrease inpartially offset by lower securities purchased under resale agreements, partially offset byand net originations of loans.
In 2016, cash used reflected net originationsproceeds from sales and securitizations of loans and an increase in securities purchased under resale agreements.held-for-investment.
Financing activities
The Firm’s financing activities include acquiring customer deposits and issuing long-term debt, as well as preferred and common stock.
•In 2018,2020, cash provided reflected higher deposits short-term borrowings, and securities loaned or sold under repurchase agreements.
In 2017, cash provided reflected higher deposits and short-term borrowings, partially offset by a net decrease in long-term borrowings.
In 2016, cash provided reflected higher deposits, net proceeds from long-term borrowings, and an increase in securities loaned or sold under repurchase agreements.agreements, partially offset by net payments of long-term borrowings.
•In 2019, cash provided reflected higher deposits, partially offset by a decrease in short-term borrowings and net payments of long-term borrowings.
•For allboth periods, cash was used for repurchases of common stock and cash dividends on common and preferred stock. On March 15, 2020, in response to the economic disruptions caused by the COVID-19 pandemic, the Firm temporarily suspended repurchases of its common stock. Subsequently, the Federal Reserve directed all large banks, including the Firm, to discontinue net share repurchases through the end of 2020.
* * *
ForRefer to Consolidated Balance Sheets Analysis on pages 57-58, Capital Risk Management on pages 91-101, and Liquidity Risk Management on pages 102–108 for a further discussion of the activities affecting the Firm’s cash flows, refer to Consolidated Balance Sheets Analysis on pages 52–53 , Capital Risk Management on pages 85-94, and Liquidity Risk Management on pages 95–100.

flows.

54JPMorgan Chase & Co./2018 Form 10-K


JPMorgan Chase & Co./2020 Form 10-K59
Management’s discussion and analysis
OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL CASH OBLIGATIONS
In the normal course of business, the Firm enters into various off-balance sheet arrangements and contractual obligations that may require future cash payments. Certain obligations are recognized on-balance sheet, while others are disclosed as off-balance sheet under accounting principles generally accepted in the U.S. (“U.S. GAAP”).
Special-purpose entities
The Firm is involved withhas several types of off–balance sheet arrangements, including through nonconsolidated special-purpose entities (“SPEs”), which are a type of VIE, and through lending-related financial instruments (e.g., commitments and guarantees).
The Firm holds capital, as deemed appropriate, against all SPE-related transactions and related exposures, such as derivative contracts and lending-related commitments and guarantees.
The Firm has no commitments to issue its own stock to support any SPE transaction, and its policies require that transactions with SPEs be conducted at arm’s length and reflect market pricing. Consistent with this policy, no JPMorgan Chase employee is permitted to invest in SPEs with which the Firm is involved where such investment would violate the Firm’s Code of Conduct.

The table below provides an index of where in this 20182020 Form 10-K a discussiondiscussions of the Firm’s various off-balance sheet arrangements can be found. In addition, referRefer to Note 1 for additional information about the Firm’s consolidation policies.
Type of off-balance sheet arrangementLocation of disclosurePage references
Special-purpose entities: variable interests and other obligations, including contingent obligations, arising from variable interests in nonconsolidated VIEsRefer to Note 14244–251253-260
Off-balance sheet lending-related financial instruments, guarantees, and other commitmentsRefer to Note 2728271–276283-288


60JPMorgan Chase & Co./20182020 Form 10-K55

Management’s discussion and analysis

Contractual cash obligations
The accompanying table summarizes, by remaining maturity, JPMorgan Chase’s significant contractual cash obligations at December 31, 2018.2020. The contractual cash obligations included in the table below reflect the minimum contractual obligation under legally enforceable contracts with terms that are both fixed and determinable. Excluded from the below table are certain liabilities with variable cash flows and/or no obligation to return a stated amount of principal at maturity.
The carrying amount of on-balance sheet obligations on the Consolidated balance sheets may differ from the minimum contractual amount of the obligations reported below. ForRefer to Note 28 for a discussion of mortgage repurchase liabilities and other obligations, referobligations.
Contractual cash obligations
By remaining maturity at December 31,
(in millions)		20202019
20212022-20232024-2025After 2025TotalTotal
On-balance sheet obligations
Deposits(a)
$2,134,256 $4,321 $2,931 $1,637 $2,143,145 $1,558,040 
Federal funds purchased and securities loaned or sold under repurchase agreements214,881 118 9 189 215,197 183,675 
Short-term borrowings(a)
28,514 — — — 28,514 35,107 
Beneficial interests issued by consolidated VIEs14,976 2,400 — 223 17,599 17,874 
Long-term debt(a)
22,461 42,084 42,180 123,477 230,202 250,415 
Operating leases(b)
1,606 2,705 2,070 3,602 9,983 10,090 
Other(c)
8,694 2,237 2,008 2,592 15,531 15,568 
Total on-balance sheet obligations2,425,388 53,865 49,198 131,720 2,660,171 2,070,769 
Off-balance sheet obligations
Unsettled resale and securities borrowed agreements(d)
95,084 1,764 — — 96,848 117,951 
Contractual interest payments(e)
6,071 10,450 8,128 29,719 54,368 54,681 
Equity investment commitments286 — — — 286 539 
Contractual purchases and capital expenditures1,968 942 225 198 3,333 2,929 
Obligations under co-brand programs333 530 240 79 1,182 1,548 
Total off-balance sheet obligations103,742 13,686 8,593 29,996 156,017 177,648 
Total contractual cash obligations$2,529,130 $67,551 $57,791 $161,716 $2,816,188 $2,248,417 
(a)Excludes structured notes on which the Firm is not obligated to return a stated amount of principal at the maturity of the notes, but is obligated to return an amount based on the performance of the structured notes.
(b)Includes noncancelable operating leases for premises and equipment used primarily for business purposes. Excludes the benefit of noncancelable sublease rentals of $593 million and $846 million at December 31, 2020 and 2019, respectively. Refer to Note 27.
18 for further information on operating leases.
(c)Primarily includes dividends declared on preferred and common stock, deferred annuity contracts, pension and other postretirement employee benefit obligations, insurance liabilities and income taxes payable associated with the deemed repatriation under the TCJA.
Contractual cash obligations     
By remaining maturity at December 31,
(in millions)		20182017
20192020-20212022-2023After 2023TotalTotal
On-balance sheet obligations      
Deposits(a)
$1,447,407
$8,958
$6,227
$5,439
$1,468,031
$1,437,464
Federal funds purchased and securities loaned or sold under repurchase agreements181,491
458
—
371
182,320
158,916
Short-term borrowings(a)
62,393
—
—
—
62,393
42,664
Beneficial interests issued by consolidated VIEs13,502
5,075
1,400
281
20,258
26,036
Long-term debt(a)
26,889
75,816
37,171
118,782
258,658
260,895
Other(b)(c)
5,592
1,687
1,669
2,846
11,794
13,613
Total on-balance sheet obligations1,737,274
91,994
46,467
127,719
2,003,454
1,939,588
Off-balance sheet obligations      
Unsettled resale and securities borrowed agreements(d)
102,008
—
—
—
102,008
76,859
Contractual interest payments(e)
10,960
11,501
8,295
27,496
58,252
54,103
Operating leases(f)
1,561
2,840
2,111
4,480
10,992
9,877
Equity investment commitments(c)(g)
262
2
—
7
271
117
Contractual purchases and capital expenditures(c)
1,948
1,048
543
60
3,599
3,743
Obligations under co-brand programs356
728
566
287
1,937
1,434
Total off-balance sheet obligations117,095
16,119
11,515
32,330
177,059
146,133
Total contractual cash obligations$1,854,369
$108,113
$57,982
$160,049
$2,180,513
$2,085,721
(d)Refer to unsettled resale and securities borrowed agreements in Note 28 for further information.
(a)Excludes structured notes on which the Firm is not obligated to return a stated amount of principal at the maturity of the notes, but is obligated to return an amount based on the performance of the structured notes.
(b)Primarily includes dividends declared on preferred and common stock, deferred annuity contracts, pension and other postretirement employee benefit obligations, insurance liabilities and income taxes payable associated with the deemed repatriation under the TCJA.
(c)The prior period amounts have been revised to conform with the current period presentation.
(d)For further information, refer to unsettled resale and securities borrowed agreements in Note 27.
(e)Includes accrued interest and future contractual interest obligations. Excludes interest related to structured notes for which the Firm’s payment obligation is based on the performance of certain benchmarks.
(f)
Includes noncancelable operating leases for premises and equipment used primarily for banking purposes. Excludes the benefit of noncancelable sublease rentals of $825 million and $
(e)Includes accrued interest and future contractual interest obligations. Excludes interest related to structured notes for which the Firm’s payment obligation is based on the performance of certain benchmarks.



1.0 billion at December 31, 2018 and 2017, respectively. Refer to Note 28 for more information on lease commitments.
(g)
Included unfunded commitments of $40 million at both December 31, 2018 and 2017, to third-party private equity funds, and $231 million and $77 million of unfunded commitments at December 31, 2018 and 2017, respectively, to other equity investments.

56JPMorgan Chase & Co./20182020 Form 10-K61


Management’s discussion and analysis
EXPLANATION AND RECONCILIATION OF THE FIRM’S USE OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES
Non-GAAP financial measures
The Firm prepares its Consolidated Financial Statements in accordance with U.S. GAAP; these financial statements appear on pages 150-154.162-166. That presentation, which is referred to as “reported” basis, provides the reader with an understanding of the Firm’s results that can be tracked consistently from year-to-year and enables a comparison of the Firm’s performance with other companies’the U.S. GAAP financial statements.statements of other companies.
In addition to analyzing the Firm’s results on a reported basis, management reviews Firmwide results, including the overhead ratio, on a “managed” basis; these Firmwide managed basis results are non-GAAP financial measures. The Firm also reviews the results of the lines of businessLOBs on a managed basis. The Firm’s definition of managed basis starts, in each case, with the reported U.S. GAAP results and includes certain reclassifications to present total net revenue for the Firm (and each of the reportable business segments) on an FTE basis. Accordingly, revenue from investments that receive tax credits and tax-exempt securities is presented in the managed results on a basis comparable to taxable investments and securities. These
financial measures allow
management to assess the comparability of revenue from year-to-year arising from both taxable and tax-exempt sources. The corresponding income tax impact related to tax-exempt items is recorded within income tax expense. These adjustments have no impact on net income as reported by the Firm as a whole or by the lines of business.LOBs.
Management also uses certain non-GAAP financial measures at the Firm and business-segment level, because these other non-GAAP financial measures provide information to investors about the underlying operational performance and trends of the Firm or of the particular business segment, as the case may be, and, therefore, facilitate a comparison of the Firm or the business segment with the performance of its relevant competitors. For additional information on these non-GAAP measures, referRefer to Business Segment Results on pages 60-78.65–84 for additional information on these non-GAAP measures. Non-GAAP financial measures used by the Firm may not be comparable to similarly named non-GAAP financial measures used by other companies.


The following summary table provides a reconciliation from the Firm’s reported U.S. GAAP results to managed basis.
202020192018
Year ended
December 31,
(in millions, except ratios)		Reported
Fully taxable-equivalent adjustments(b)
Managed
basis		Reported
Fully taxable-equivalent adjustments(b)
Managed
basis		Reported
Fully taxable-equivalent adjustments(b)
Managed
basis
Other income$4,457 $2,968 $7,425 $5,731 $2,534 $8,265 $5,343 $1,877 $7,220 
Total noninterest revenue(a)
64,980 2,968 67,948 58,154 2,534 60,688 53,724 1,877 55,601 
Net interest income54,563 418 54,981 57,245 531 57,776 55,059 628 55,687 
Total net revenue119,543 3,386 122,929 115,399 3,065 118,464 108,783 2,505 111,288 
Total noninterest expense(a)
66,656 NA66,656 65,269 NA65,269 63,148 NA63,148 
Pre-provision profit52,887 3,386 56,273 50,130 3,065 53,195 45,635 2,505 48,140 
Provision for credit losses17,480 NA17,480 5,585 NA5,585 4,871 NA4,871 
Income before income tax expense35,407 3,386 38,793 44,545 3,065 47,610 40,764 2,505 43,269 
Income tax expense6,276 3,386 9,662 8,114 3,065 11,179 8,290 2,505 10,795 
Net income$29,131 NA$29,131 $36,431 NA$36,431 $32,474 NA$32,474 
Overhead ratio56 %NM54 %57 %NM55 %58 %NM57 %
 2018 2017 2016
Year ended
December 31,
(in millions, except ratios)
Reported
Results
 
Fully taxable-equivalent adjustments(a)
 
Managed
basis
 
Reported
Results
 
Fully taxable-equivalent adjustments(a)
 
Managed
basis
 
Reported
Results
 
Fully taxable-equivalent adjustments(a)
 
Managed
basis
Other income$5,343
 $1,877
(b) 
$7,220
 $3,646
 $2,704
 $6,350
 $3,799
 $2,265
 $6,064
Total noninterest revenue53,970
 1,877
 55,847
 50,608
 2,704
 53,312
 50,486
 2,265
 52,751
Net interest income55,059
 628
(b) 
55,687
 50,097
 1,313
 51,410
 46,083
 1,209
 47,292
Total net revenue109,029
 2,505
 111,534
 100,705
 4,017
 104,722
 96,569
 3,474
 100,043
Pre-provision profit45,635
 2,505
 48,140
 41,190
 4,017
 45,207
 39,897
 3,474
 43,371
Income before income tax expense40,764
 2,505
 43,269
 35,900
 4,017
 39,917
 34,536
 3,474
 38,010
Income tax expense8,290
 2,505
(b) 
10,795
 11,459
 4,017
 15,476
 9,803
 3,474
 13,277
Overhead ratio58% NM
 57% 59% NM
 57% 59% NM
 57%
Effective January 1, 2018,(a)In the second quarter of 2020, the Firm adopted several new accounting standards. Certainreclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.current presentation.
(a) (b)Predominantly recognized in CIB, and CB business segments and Corporate.
(b) The decrease in fully taxable-equivalent adjustments for the year ended December 31, 2018, reflects the impact of the TCJA.

62JPMorgan Chase & Co./20182020 Form 10-K57
Management’s discussion and analysis

Net interest income and net yield excluding CIB’sCIB Markets businesses
In addition to reviewing net interest income and the net interest yield on a managed basis, management also reviews these metrics excluding CIB’sCIB Markets, businesses, as shown below; these metrics, which exclude CIB’sCIB Markets, businesses, are non-GAAP financial measures. Management reviews these metrics to assess the performance of the Firm’s lending, investing (including asset-liability management) and deposit-raising activities. The resulting metrics that exclude CIB’sCIB Markets businesses are referred to as non-markets-related net interest income and net yield. CIB’sCIB Markets businesses areconsists of Fixed Income Markets and Equity Markets. Management believes that disclosure of non-markets-related net interest income and net yield provides investors and analysts with other measures by which to analyze the non-markets-related business trends of the Firm and provides a comparable measure to other financial institutions that are primarily focused on lending, investing and deposit-raising activities.
Year ended December 31,
(in millions, except rates)		202020192018
Net interest income – reported$54,563 $57,245 $55,059 
Fully taxable-equivalent adjustments418 531 628 
Net interest income – managed basis(a)
$54,981 $57,776 $55,687 
Less: CIB Markets net interest income(b)
8,374 3,120 3,087 
Net interest income excluding CIB Markets(a)
$46,607 $54,656 $52,600 
Average interest-earning assets(c)
$2,779,710 $2,345,279 $2,212,657 
Less: Average CIB Markets interest-earning assets(b)(c)
751,131 672,417 593,104 
Average interest-earning assets excluding CIB Markets$2,028,579 $1,672,862 $1,619,553 
Net yield on average interest-earning assets – managed basis1.98 %2.46 %2.52 %
Net yield on average CIB Markets interest-earning assets(b)
1.11 0.46 0.52 
Net yield on average interest-earning assets excluding CIB Markets2.30 %3.27 %3.25 %
(a)Interest includes the effect of related hedges. Taxable-equivalent amounts are used where applicable.
Year ended December 31,
(in millions, except rates)
201820172016
Net interest income – managed basis(a)(b)
$55,687
$51,410
$47,292
Less: CIB Markets net interest income(c)
3,087
4,630
6,334
Net interest income excluding CIB Markets(a)
$52,600
$46,780
$40,958
Average interest-earning assets$2,229,188
$2,180,592
$2,101,604
Less: Average CIB Markets interest-earning assets(c)
609,635
540,835
520,307
Average interest-earning assets excluding CIB Markets$1,619,553
$1,639,757
$1,581,297
Net interest yield on average interest-earning assets – managed basis2.50%2.36%2.25%
Net interest yield on average CIB Markets interest-earning assets(c)
0.51
0.86
1.22
Net interest yield on average interest-earning assets excluding CIB Markets3.25%2.85%2.59%
(b)Refer to pages 74-75 for further information on CIB Markets.
(c)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans. Prior-period amounts have been revised to conform with the current presentation.
(a)Interest includes the effect of related hedges. Taxable-equivalent amounts are used where applicable.
(b)For a reconciliation of net interest income on a reported and managed basis, refer to reconciliation from the Firm’s reported U.S. GAAP results to managed basis on page 57.
(c)For further information on CIB’s Markets businesses, refer to page 69.
Calculation of certain U.S. GAAP and non-GAAP financial measures
Certain U.S. GAAP and non-GAAP financial measures are calculated as follows:
Book value per share (“BVPS”)
Common stockholders’ equity at period-end /
Common shares at period-end
Overhead ratio
Total noninterest expense / Total net revenue
Pre-provision profit
Total net revenue – Total noninterest expense
Return on assets (“ROA”)
Reported net income / Total average assets
Return on common equity (“ROE”)
Net income* / Average common stockholders’ equity
Return on tangible common equity (“ROTCE”)
Net income* / Average tangible common equity
Tangible book value per share (“TBVPS”)
Tangible common equity at period-end / Common shares at period-end
* Represents net income applicable to common equity
In addition, the Firm reviews other non-GAAP financial measures which include:
The Firm also reviews adjusted•Adjusted expense, which is noninterest expense excluding Firmwide legal expense
•Allowance for loan losses to period-end loans retained excluding trade finance and is therefore a non-GAAP financial measure. Additionally, certain credit metrics and ratios disclosed by the Firm exclude PCI loans, and are therefore non-GAAP measures. conduits
•Pre-provision profit, which represents total net revenue less total noninterest expense.
Management believes that these measures help investors understand the effect of these items on reported results and provide an alternate presentation of the Firm’s performance. For additional information on credit metrics and ratios excluding PCI loans, refer to Credit and Investment Risk Management on pages 102-123.

58JPMorgan Chase & Co./20182020 Form 10-K63

Management’s discussion and analysis

Tangible common equity, ROTCE and TBVPS
Tangible common equity (“TCE”), ROTCE and TBVPS are each non-GAAP financial measures. TCE represents the Firm’s common stockholders’ equity (i.e., total stockholders’ equity less preferred stock) less goodwill and identifiable intangible assets (other than MSRs), net of related deferred tax liabilities. ROTCE measures the Firm’s net income applicable to common equity as a percentage of average TCE. TBVPS represents the Firm’s TCE at period-end divided by common shares at period-end. TCE, ROTCE and TBVPS are utilized by the Firm, as well as investors and analysts, in assessing the Firm’s use of equity.
The following summary table provides a reconciliation from the Firm’s common stockholders’ equity to TCE.
Period-endAverage
Dec 31,
2020		Dec 31,
2019		Year ended December 31,
(in millions, except per share and ratio data)202020192018
Common stockholders’ equity$249,291 $234,337 $236,865 $232,907 $229,222 
Less: Goodwill49,248 47,823 47,820 47,620 47,491 
Less: Other intangible assets904 819 781 789 807 
Add: Certain deferred tax liabilities(a)
2,453 2,381 2,399 2,328 2,231 
Tangible common equity$201,592 $188,076 $190,663 $186,826 $183,155 
Return on tangible common equityNANA14 %19 %17 %
Tangible book value per share$66.11 $60.98 NANANA
 Period-end Average
 Dec 31,
2018		Dec 31,
2017		 Year ended December 31,
(in millions, except per share and ratio data) 201820172016
Common stockholders’ equity$230,447
$229,625
 $229,222
$230,350
$224,631
Less: Goodwill47,471
47,507
 47,491
47,317
47,310
Less: Other intangible assets748
855
 807
832
922
Add: Certain deferred tax liabilities(a)(b)
2,280
2,204
 2,231
3,116
3,212
Tangible common equity$184,508
$183,467
 $183,155
$185,317
$179,611
       
Return on tangible common equityNA
NA
 17%12%13%
Tangible book value per share$56.33
$53.56
 NA
NA
NA
(a)(a)Represents deferred tax liabilities related to tax-deductible goodwill and to identifiable intangibles created in nontaxable transactions, which are netted against goodwill and other intangibles when calculating TCE.
(b)Amounts presented for December 31, 2017 and later periods include the effect from revaluation of the Firm’s net deferred tax liability as a result of the TCJA.
Key performance measures
The Firm considers the following to be key regulatory capital measures:
Capital, risk-weighted assets (“RWA”), and capital and leverage ratios presented under Basel III Standardized and Advanced Fully Phased-In rules, and
SLR calculated under Basel III Advanced Fully Phased-In rules.
The Firm, as well as banking regulators, investors and analysts, use these measures to assess the Firm’s regulatory capital position and to compare the Firm’s regulatory capital to that ofidentifiable intangibles created in nontaxable transactions, which are netted against goodwill and other financial services companies.
For additional information on these measures, refer to Capital Risk Management on pages 85-94.
Core loans is also considered a key performance measure. Core loans represents loans considered central to the Firm’s ongoing businesses, and excludes loans classified as trading assets, runoff portfolios, discontinued portfolios and portfolios the Firm has an intent to exit. Core loans is a measure utilized by the Firm and its investors and analysts in assessing actual growth in the loan portfolio.


intangibles when calculating TCE.
JPMorgan Chase & Co./2018 Form 10-K59
Management’s discussion and analysis

64JPMorgan Chase & Co./2020 Form 10-K

BUSINESS SEGMENT RESULTS
The Firm is managed on a line of businessan LOB basis. There are four major reportable business segments – Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking and Asset & Wealth Management. In addition, there is a Corporate segment.
The business segments are determined based on the products and services provided, or the type of customer served, and they reflect the manner in which financial information is currently evaluated by the Firm’s Operating Committee. Segment results are presented on a managed basis. For a definition of managed basis, referRefer to Explanation and Reconciliation of the Firm’s use of Non-GAAP Financial Measures, and Key Performance Measures, on pages 57-59.62–64 for a definition of managed basis.
JPMorgan Chase
Consumer BusinessesWholesale Businesses
Consumer & Community BankingCorporate & Investment BankCommercial BankingAsset & Wealth Management
Consumer &

Business Banking
Home LendingCard Merchant Services & AutoBanking
Markets &
Investor
Securities Services
 • Middle Market Banking • Asset Management
 • Consumer Banking/ChaseBanking
 • J.P. Morgan Wealth Management
 • Business Banking
 
 • Home Lending Production
 • Home Lending Servicing
 • Real Estate Portfolios
• Card Services
 – Credit Card
 – Merchant Services
• Auto


 • Investment Banking
 • Treasury ServicesWholesale Payments
 • Lending
 • Fixed
Income
Markets
 • Corporate Client Banking
 • Wealth Management

 • Equity Markets
 • Securities Services
 • Credit Adjustments & Other
 • Commercial Term Lending
 • Real Estate Banking


Business segment changes
In the fourth quarter of 2020, the Firm transferred certain assets, liabilities, revenue, expense and headcount associated with certain wealth management clients from AWM to the J.P. Morgan Wealth Management business unit within CCB. Prior-period amounts have been revised to conform with the current presentation, including the transfer of approximately 1,650 technology and support staff during the second and third quarters of 2020. Ultra-high-net-worth and certain high-net-worth client relationships remained in AWM.
In the first quarter of 2020, the Firm began reporting a Wholesale Payments business unit within CIB following a realignment of the Firm’s wholesale payments businesses. The Wholesale Payments business comprises:
•Merchant Services, which was realigned from CCB to CIB
•Treasury Services and Trade Finance in CIB. Trade Finance was previously reported in Lending in CIB.
In connection with the alignment of Wholesale Payments, the assets, liabilities and headcount associated with the Merchant Services business were realigned to CIB from CCB, and the revenue and expenses of the Merchant Services business are reported across CCB, CIB and CB based primarily on client relationships. In the fourth quarter of 2020, payment processing-only clients along with the associated revenue and expenses were realigned to CIB’s Wholesale Payments business from CCB and CB. Payment processing-only clients are those that only use payment services offered by Merchant Services, and in general do not currently utilize other services offered by the Firm. Prior-period amounts have been revised
to reflect this realignment and revised allocation methodology.
Description of business segment reporting methodology
Results of the business segments are intended to present each segment as if it were essentially a stand-alone business. The management reporting process that derives business segment results includes the allocation of certain income and expense items described in more detail below.items. The Firm also assesses the level of capital required for each line of businessLOB on at least an annual basis. The Firm periodically assesses the assumptions, methodologies and reporting classifications used for segment reporting, and further refinements may be implemented in future periods.
Revenue sharing
When business segments join efforts to sell products and services to the Firm’s clients, the participating business segments may agree to share revenue from those transactions. Revenue is generally recognized in the segment responsible for the related product or service, on a gross basis, with an allocationallocations to the other segment(s) involved in the transaction. The segment results reflect these revenue-sharing agreements.
Expense Allocation
Where business segments use services provided by corporate support units, or another business segment, the costs of those services are allocated to the respective business segments. The expense is generally allocated based on the actual cost and use of services provided. In contrast, certain costs and investments related to corporate support units, technology and operations not currently utilized by any LOB, are not
JPMorgan Chase & Co./2020 Form 10-K65
Management’s discussion and analysis
allocated to the business segments and are retained in Corporate. Expense retained in Corporate generally includes parent company costs that would not be incurred if the segments were stand-alone businesses; and other items not aligned with a particular business segment.
Funds transfer pricing
Funds transfer pricing is the process by which the Firm allocates interest income and expense to each business segment and transfers the primary interest rate risk and liquidity risk exposures to Treasury and CIO within Corporate. The funds transfer pricing process considers the interest rate risk, liquidity risk and regulatory requirements ofon a product-by-product basis within each business segment as if it were operating independently. This process is overseen by senior management and reviewed by the Firm’s Treasurer Committee.segment.


60JPMorgan Chase & Co./2018 Form 10-K


Debt expense and preferred stock dividend allocation
As part of the funds transfer pricing process, almost all of the cost of the credit spread component of outstanding unsecured long-term debt and preferred stock dividends is allocated to the reportable business segments, while the balance of the cost is retained in Corporate. The methodology to allocate the
cost of unsecured long-term debt and preferred stock dividends to the business segments is aligned with the Firm’s process to allocate capital. The allocated cost of unsecured long-term debt is included in a business segment’s net interest income, and net income is reduced by preferred stock dividends to arrive at a business segment’s net income applicable to common equity.
Business segment capital allocation
The amount of capital assigned to each business is referred to as equity. As of January 1, 2021, the Firm has changed its line of business capital allocations primarily as a result of changes in exposures for each LOB and an increase in the relative risk weighting toward Standardized RWA. On at least an annual basis, theThe assumptions and methodologies used into allocate capital allocation are periodically assessed and as a result, the capital allocated to lines of businessthe LOBs may change.change from time to time.  For additional information on business segment capital allocation, refer
Refer to Line of business equity on page 91.
Expense allocation
Where business segments use services provided by corporate support units, or another98 for additional information on business segment the costs of those services are allocated to the respective business segments. The expense is generally allocated based on the actual cost and use of services provided. In contrast, certain other costs related to corporate support units, or to certain technology and operations, are not allocated to the business segments and are retained in Corporate. Expense retained in Corporate generally includes parent company costs that would not be incurred if the segments were stand-alone businesses; adjustments to align corporate support units; and other items not aligned with a particular business segment.capital allocation.


Segment Results – Managed Basis
Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.
Net income in 2018 for each of the business segments reflects the favorable impact of the reduction in the U.S. federal statutory income tax rate as a result of the TCJA.

The following tables summarize the Firm’s results by segment for the periods indicated.
Year ended December 31,
Consumer & Community Banking(a)
Corporate & Investment BankCommercial Banking
(in millions, except ratios)202020192018202020192018202020192018
Total net revenue$51,268$55,133$51,271$49,284 $39,265$37,382$9,313 $9,264$9,336
Total noninterest expense27,99028,27627,16823,538 22,44421,8763,798 3,7353,627
Pre-provision profit/(loss)23,27826,85724,10325,746 16,82115,5065,515 5,5295,709
Provision for credit losses12,3124,9544,7542,726 277(60)2,113 296129
Net income/(loss)8,21716,54114,70717,094 11,95411,7992,578 3,9584,264
Return on equity (“ROE”)15%31%28%20 %14%16%11 %17%20%
Year ended December 31,Consumer & Community Banking Corporate & Investment Bank Commercial BankingYear ended December 31,Asset & Wealth ManagementCorporate
Total(a)
(in millions, except ratios)2018
2017
2016
 2018
2017
2016
 2018
2017
2016
(in millions, except ratios)202020192018202020192018202020192018
Total net revenue$52,079
$46,485
$44,915
 $36,448
$34,657
$35,340
 $9,059
$8,605
$7,453
Total net revenue$14,240 $13,591$13,427$(1,176)$1,211$(128)$122,929$118,464$111,288
Total noninterest expense27,835
26,062
24,905
 20,918
19,407
19,116
 3,386
3,327
2,934
Total noninterest expense9,957 9,7479,5751,3731,06790266,65665,26963,148
Pre-provision profit/(loss)24,244
20,423
20,010
 15,530
15,250
16,224
 5,673
5,278
4,519
Pre-provision profit/(loss)4,283 3,8443,852(2,549)144(1,030)56,27353,19548,140
Provision for credit losses4,753
5,572
4,494
 (60)(45)563
 129
(276)282
Provision for credit losses263 595266(1)(4)17,4805,5854,871
Net income/(loss)14,852
9,395
9,714
 11,773
10,813
10,815
 4,237
3,539
2,657
Net income/(loss)2,992 2,8672,945(1,750)1,111(1,241)29,13136,43132,474
Return on equity (“ROE”)28%17%18% 16%14%16% 20%17%16%Return on equity (“ROE”)28 %26%32% NM NMNM12%15%13%
Year ended December 31,Asset & Wealth Management Corporate Total
(in millions, except ratios)2018
2017
2016
 2018
2017
2016
 2018
2017
2016
Total net revenue$14,076
$13,835
$12,822
 $(128)$1,140
$(487) $111,534
$104,722
$100,043
Total noninterest expense10,353
10,218
9,255
 902
501
462
 63,394
59,515
56,672
Pre-provision profit/(loss)3,723
3,617
3,567
 (1,030)639
(949) 48,140
45,207
43,371
Provision for credit losses53
39
26
 (4)—
(4) 4,871
5,290
5,361
Net income/(loss)2,853
2,337
2,251
 (1,241)(1,643)(704) 32,474
24,441
24,733
Return on equity (“ROE”)31%25%24%  NM
 NM
NM
 13%10%10%

(a)In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
The following sections provide a comparative discussion of the FirmsFirm’s results by segment as of or for the years ended December 31, 2018, 20172020 and 2016.


2019.
JPMorgan Chase & Co./2018 Form 10-K61
Management’s discussion and analysis

66JPMorgan Chase & Co./2020 Form 10-K

CONSUMER & COMMUNITY BANKING
Consumer & Community Banking offers services to consumers and businesses through bank branches, ATMs, digital (including onlinemobile and mobile)online) and telephone banking. CCB is organized into Consumer & Business Banking (including Consumer Banking/ChaseBanking, J.P. Morgan Wealth Management and Business Banking), Home Lending (including Home Lending Production, Home Lending Servicing and Real Estate Portfolios) and Card Merchant Services & Auto. Consumer & Business Banking offers deposit and investment products, payments and services to consumers, and lending, deposit, and cash management and payment solutions to small businesses. Home Lending includes mortgage origination and servicing activities, as well as portfolios consisting of residential mortgages and home equity loans. Card Merchant Services & Auto issues credit cards to consumers and small businesses offers payment processing services to merchants, and originates and services auto loans and leases.

Selected income statement dataSelected income statement data    Selected income statement data
Year ended December 31, Year ended December 31,
(in millions, except ratios)2018 2017 2016(in millions, except ratios)202020192018
Revenue     Revenue
Lending- and deposit-related fees$3,624
 $3,431
 $3,231
Asset management, administration and commissions2,402
 2,212
 2,093
Lending- and deposit-related fees(a)
Lending- and deposit-related fees(a)
$3,166 $3,938 $3,787 
Asset management, administration and commissions(a)
Asset management, administration and commissions(a)
2,780 2,808 2,592 
Mortgage fees and related income1,252
 1,613
 2,490
Mortgage fees and related income3,079 2,035 1,252 
Card income4,554
 4,024
 4,364
Card income(b)
Card income(b)
3,068 3,412 3,108 
All other income4,428
 3,430
 3,077
All other income5,647 5,603 4,599 
Noninterest revenue16,260
 14,710
 15,255
Noninterest revenue17,740 17,796 15,338 
Net interest income35,819
 31,775
 29,660
Net interest income33,528 37,337 35,933 
Total net revenue52,079
 46,485
 44,915
Total net revenue51,268 55,133 51,271 
     
Provision for credit losses4,753
 5,572
 4,494
Provision for credit losses12,312 4,954 4,754 
     
Noninterest expense     Noninterest expense
Compensation expense(a)
10,534
 10,133
 9,697
Noncompensation expense(a)(b)
17,301
 15,929
 15,208
Compensation expenseCompensation expense11,014 10,815 10,580 
Noncompensation expense(b)(c)
Noncompensation expense(b)(c)
16,976 17,461 16,588 
Total noninterest expense27,835
 26,062
 24,905
Total noninterest expense27,990 28,276 27,168 
Income before income tax expense19,491
 14,851
 15,516
Income before income tax expense10,966 21,903 19,349 
Income tax expense4,639
 5,456
 5,802
Income tax expense2,749 5,362 4,642 
Net income$14,852
 $9,395
 $9,714
Net income$8,217 $16,541 $14,707 
     
Revenue by line of business     Revenue by line of business
Consumer & Business Banking$24,805
 $21,104
 $18,659
Consumer & Business Banking$22,955 $27,376 $25,607 
Home Lending5,484
 5,955
 7,361
Home Lending6,018 5,179 5,484 
Card, Merchant Services & Auto21,790
 19,426
 18,895
Card & Auto(b)
Card & Auto(b)
22,295 22,578 20,180 
     
Mortgage fees and related income details:     Mortgage fees and related income details:
Net production revenue268
 636
 853
Net production revenue2,629 1,618 268 
Net mortgage servicing
revenue(c)
984
 977
 1,637
Net mortgage servicing
revenue(d)
Net mortgage servicing
revenue(d)
450 417 984 
Mortgage fees and related income$1,252
 $1,613
 $2,490
Mortgage fees and related income$3,079 $2,035 $1,252 
     
Financial ratios     Financial ratios
Return on equity28% 17% 18%Return on equity15 %31 %28 %
Overhead ratio53
 56
 55
Overhead ratio55 51 53 
Note: In the discussionfirst quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. In the fourth quarter of 2020, payment processing-only clients along with the associated revenue and expenses were realigned to CIB’s Wholesale Payments business from CCB and CB. Prior-period amounts have been revised to conform with the tables which follow, CCB presentscurrent presentation.
In the fourth quarter of 2020, the Firm realigned certain financial measures which excludewealth management clients from AWM to CCB. Prior-period amounts have been revised to conform with the impactcurrent presentation, including an increase to net revenue of PCI loans; these are non-GAAP financial measures.$725 million and $649 million for the years ended December 31, 2019 and 2018, respectively. Ultra-high-net-worth and certain high-net-worth client relationships remained in AWM.
(a)Effective in the first quarter of 2018, certain operations staff were transferred from CCB to CB. The prior period amounts have been revised to conform with the current period presentation. For a further discussion of this transfer, refer to CB segment results on page 71.
(b)Included operating lease depreciation expense of $3.4 billion, $2.7 billion and $1.9 billion for the years ended December 31, 2018, 2017 and 2016, respectively.
(c)Included MSR risk management results of $(111) million, $(242) million and $217 million for the years ended December 31, 2018, 2017 and 2016, respectively.
(a)In the first quarter of 2020, the Firm reclassified certain fees from asset management, administration and commissions to lending- and deposit-related fees. Prior-period amounts have been revised to conform with the current presentation.
(b)In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
(c)Included depreciation expense on leased assets of $4.2 billion, $4.0 billion and $3.4 billion for the years ended December 31, 2020, 2019 and 2018, respectively.
(d)Included MSR risk management results of $(18) million, $(165) million and $(111) million for the years ended December 31, 2020, 2019 and 2018, respectively.

62JPMorgan Chase & Co./20182020 Form 10-K67

Management’s discussion and analysis

20182020 compared with 20172019
Net income was $14.9$8.2 billion, a decrease of 50%, largely driven by an increase of 58%.in the provision for credit losses.
Net revenue was $52.1$51.3 billion, an increasea decrease of 12%7%.
Net interest income was $35.8$33.5 billion, up 13%down 10%, driven by:
higher•the impact of deposit margins and growth in deposit balancesmargin compression in CBB, as well as margin expansionspread compression and higherlower loans in Home Lending, predominantly due to paydowns and prior year loan balancessales, and lower loans in Card due to the decline in sales volume as a result of the COVID-19 pandemic,
partially offset by
higher rates driving•growth in deposits in CBB, and loan spread compressionmargin expansion in Home LendingCard, the prior year included charges for the unwind of the internal funding from Treasury and Auto.CIO associated with the sales of certain mortgage loans.
Noninterest revenue was $16.3$17.7 billion, up 11%, driven by:flat, reflecting:
higher auto lease volume,•lower deposit-related fees due to lower transaction activity and the impact of fee refunds related to the COVID-19 pandemic,
higher•lower card income due to
–lower new account origination costs, and higher merchant processing fees on higher volumes,
lower net interchange income reflecting lower credit card sales volumes and debit card transactions as a result of the impact of the COVID-19 pandemic, largely offset by
–lower net interchange income reflecting higher rewards lower acquisition costs and partner payments, largely offset by higher card sales volumes. The rewards costs included an adjustment to the credit card rewards liability of approximately $330 million in the second quarter of 2018, driven by an increase in redemption rate assumptions
higher deposit-relatedannual fees, as well as higherand
•lower asset management, fees reflecting an increase in clientadministration and commissions due to a lower volume of annuity sales offset by a higher level of investment assets,
partially offset by
lower•higher net mortgage production revenue reflecting lowerhigher mortgage production marginsvolumes and volumes, as well asmargins; the impactprior year included gains on the sales of a loan sale.certain mortgage loans.
Refer to Note 15 for further information regarding changes in the value of the MSR asset and related hedges, and mortgage fees and related income.
Noninterest expense was $27.8$28.0 billion, up 7%, driven by:relatively flat, reflecting:
•lower marketing expense as a result of lower investments in technologymarketing campaigns and marketing,lower travel-related benefits, and
•lower structural expenses,
offset by
•investments in the business, higher volume-related compensation, and higher depreciation on auto lease depreciation.assets.
The provision for credit losses was $4.8 billion, a decrease of 15%, reflecting:
a decrease in the consumer, excluding credit card portfolio due to
–lower net charge-offs in the residential real estate portfolio, largely driven by recoveries from loan sales, and
–lower net charge-offs in the auto portfolio
partially offset by
–a $250 million reduction in the allowance for loan losses in the residential real estate portfolio — PCI, reflecting continued improvement in home prices and lower delinquencies; the reduction was $75 million lower than the prior year for the residential real estate portfolio — non credit-impaired
the prior year included a net $218 million write-down recorded in connection with the sale of the student loan portfolio, and
a decrease in the credit card portfolio due to
–a $300 million addition to the allowance for loan losses, reflecting loan growth and higher loss rates, as anticipated; the addition was $550 million lower than the prior year,
largely offset by
–higher net charge-offs due to seasoning of more recent vintages, as anticipated.
2017 compared with 2016
Net income was $9.4 billion, a decrease of 3%.
Net revenue was $46.5$12.3 billion, an increase of 3%.
Net interest income was $31.8$7.4 billion up 7%,from the prior year, driven by:
growth in deposit balances and higher deposit margins in CBB, as well as higher loan balances in Card,
partially offset by
loan spread compression from higher rates, including the impact of higher funding costs in Home Lending and Auto, and
the impact of the sale of the student loan portfolio.
Noninterest revenue was $14.7 billion, down 4%, driven by:
higher new account origination costs in Card,
lower MSR risk management results,
the absence in the current year of a gain on the sale of Visa Europe interests,
lower net production revenue reflecting lower mortgage production margins and volumes, and
lower mortgage servicing revenue as a result of a lower level of third-party loans serviced
largely offset by
higher auto lease volume and
higher card- and deposit-related fees.
Noninterest expense was $26.1 billion, up 5%, driven by:
higher auto lease depreciation, and
continued business growth
partially offset by
two items totaling $175 million included in the prior year related to liabilities from a merchant bankruptcy and mortgage servicing reserves.
The provision for credit losses was $5.6 billion, an increase of 24%, reflecting:
$445 million of higher net charge-offs, primarily in the credit card portfolio due to growth in newer vintages which, as anticipated, have higher loss rates than the more seasoned portion of the portfolio, partially offset by a decrease in net charge-offs in the residential real estate portfolio reflecting continued improvement in home prices and delinquencies,
a $415 million higher addition•additions to the allowance for credit losses relatedas a result of the impact of the COVID-19 pandemic, consisting of: $6.6 billion for Card, $649 million for CBB, and $560 million for Auto,
partially offset by
•lower net charge-offs largely in Card, reflecting lower charge-offs and higher recoveries primarily benefiting from payment assistance and government stimulus.
The prior year included a $300 million net reduction in the
allowance for credit losses.
Refer to Credit and Investment Risk Management on pages 110–134 and Allowance for Credit Losses on pages 132-133 for further discussions of the credit card portfolio driven by higher loss ratesportfolios and loan growth, and a lower reduction in the allowance for the residential real estate portfolio predominantly driven by continued improvement in home prices and delinquencies, andcredit losses.
a net $218 million impact in connection with the sale of the student loan portfolio.
The sale of the student loan portfolio during 2017 did not have a material impact on the Firm’s Consolidated Financial Statements.


68JPMorgan Chase & Co./20182020 Form 10-K

Selected metrics
As of or for the year ended
December 31,
(in millions, except headcount)202020192018
Selected balance sheet data (period-end)
Total assets$496,705 $541,367 $560,177 
Loans:
Consumer & Business Banking48,810 (d)29,585 28,450 
Home Lending(a)(b)
182,121 213,445 247,721 
Card144,216 168,924 156,632 
Auto66,432 61,522 63,573 
Total loans441,579 473,476 496,376 
Deposits958,706 723,418 684,124 
Equity52,000 52,000 51,000 
Selected balance sheet data (average)
Total assets$501,584 $543,127 $548,637 
Loans:
Consumer & Business Banking43,064 28,859 27,890 
Home Lending(a)(c)
197,148 230,662 250,373 
Card146,633 156,325 145,652 
Auto61,476 61,862 64,675 
Total loans448,321 477,708 488,590 
Deposits851,390 698,378 675,537 
Equity52,000 52,000 51,000 
Headcount122,894 125,756 127,826 
In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. In the fourth quarter of 2020, payment processing-only clients along with the associated revenue and expenses were realigned to CIB’s Wholesale Payments business from CCB and CB. Prior-period amounts have been revised to conform with the current presentation, including a decrease to period-end assets of $6.6 billion and $6.2 billion and headcount of 4,022 and 4,092, as of December 31, 2019 and 2018, respectively.
In the fourth quarter of 2020, the Firm realigned certain wealth management clients from AWM to CCB. Prior-period amounts have been revised to conform with the current presentation, including an increase to headcount of 2,641 and 2,400 as of December 31, 2019 and 2018, respectively.
(a)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans. Prior-period amounts have been revised to conform with the current presentation.
(b)At December 31, 2020, 2019 and 2018, Home Lending loans held-for-sale and loans at fair value were $9.7 billion, $16.6 billion and $7.9 billion, respectively.
(c)Average Home Lending loans held-for sale and loans at fair value were $11.1 billion, $14.1 billion and $9.0 billion, respectively, for the years ended December 31, 2020, 2019 and 2018.
(d)At December 31, 2020 included $19.2 billion of loans in Business Banking under the PPP. Refer to Credit Portfolio on pages 112-113 for a further discussion of the PPP.
Selected metrics
As of or for the year ended
December 31,
(in millions, except ratio data)202020192018
Credit data and quality statistics
Nonaccrual loans(a)(b)(c)
$5,675 (f)$3,027 $3,349 
Net charge-offs/(recoveries)
Consumer & Business Banking263 298 246 
Home Lending(169)(98)(294)
Card4,286 4,848 4,518 
Auto123 206 243 
Total net charge-offs/(recoveries)$4,503 $5,254 $4,713 
Net charge-off/(recovery) rate
Consumer & Business Banking0.61 %(g)1.03 %0.88 %
Home Lending(0.09)(0.05)(0.12)
Card2.93 3.10 3.10 
Auto0.20 0.33 0.38 
Total net charge-off/(recovery) rate1.03 %1.13 %0.98 %
30+ day delinquency rate
Home Lending(d)(e)
1.15 %(h)1.58 %1.63 %
Card1.68 (h)1.87 1.83 
Auto0.69 (h)0.94 0.93 
90+ day delinquency rate - Card0.92 %(h)0.95 %0.92 %
Allowance for loan losses
Consumer & Business Banking$1,372 $750 $796 
Home Lending1,813 1,890 2,791 
Card17,800 5,683 5,184 
Auto1,042 465 464 
Total allowance for loan losses$22,027 $8,788 $9,235 
Effective January 1, 2020, the Firm adopted the CECL accounting guidance. The adoption resulted in a change in the accounting for PCI loans, which are considered purchased credit deteriorated (“PCD”) loans under CECL. Refer to Note 1 for further information.
In the fourth quarter of 2020, the Firm realigned certain wealth management clients from AWM to CCB. Prior-period amounts have been revised to conform with the current presentation.
(a)At December 31, 2020, nonaccrual loans included $1.6 billion of PCD loans. Prior to the adoption of CECL, nonaccrual loans excluded PCI loans as the Firm recognized interest income on each pool of PCI loans as each of the pools was performing.
(b)At December 31, 2020, 2019 and 2018, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $558 million, $963 million and $2.6 billion, respectively. These amounts have been excluded based upon the government guarantee. Prior-period amounts of mortgage loans 90 or more days past due and insured by U.S. government agencies excluded from nonaccrual loans have been revised to conform with the current presentation; refer to footnote (c) for additional information.
(c)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans. Prior-period amounts have been revised to conform with the current presentation.
(d)At December 31, 2020, the 30+ day delinquency rates included PCD loans. The rates prior to January 1, 2020 were revised to include the impact of PCI loans.
(e)At December 31, 2020, 2019 and 2018, excluded mortgage loans insured by U.S. government agencies of $744 million, $1.7 billion and $4.1 billion, respectively, that are 30 or more days past due. These amounts have been excluded based upon the government guarantee. Prior-period amounts of mortgage loans 30 or more days past due and insured by U.S. government agencies excluded from 30+ day delinquency rate have been revised to conform with the current presentation; refer to footnote (c) for additional information.
63
JPMorgan Chase & Co./2020 Form 10-K69
Management’s discussion and analysis
(f)Generally excludes loans under payment deferral programs offered in response to the COVID-19 pandemic. Refer to Consumer Credit Portfolio on pages 114-116 for further information on consumer payment assistance activity. Includes loans to customers that have exited COVID-19 payment deferral programs and are 90 or more days past due, predominantly all of which were also at least 150 days past due and therefore considered collateral-dependent. Collateral-dependent loans are charged down to the lower of amortized cost or fair value of the underlying collateral less costs to sell.
(g)At December 31, 2020, included $19.2 billion of loans in Business Banking under the PPP. Given that PPP loans are guaranteed by the SBA, the Firm does not expect to realize material credit losses on these loans. Refer to Credit Portfolio on pages 112-113 for a further discussion of the PPP.
(h)At December 31, 2020, the principal balance of loans in Home Lending, Card and Auto under payment deferral programs offered in response to the COVID-19 pandemic were $9.1 billion, $264 million and $376 million, respectively. Loans that are performing according to their modified terms are generally not considered delinquent. Refer to Consumer Credit Portfolio on pages 114-116 for further information on consumer payment assistance activity.

Selected metrics
As of or for the year ended December 31,
(in billions, except ratios and where otherwise noted)202020192018
Business Metrics
CCB households (in millions)63.4 62.6 61.7 
Number of branches4,908 4,976 5,036 
Active digital customers
  (in thousands)(a)
55,274 52,453 49,254 
Active mobile customers
(in thousands)(b)
40,899 37,315 33,260 
Debit and credit card
sales volume		$1,081.2 $1,114.4 $1,016.9 
Consumer & Business Banking
Average deposits$832.5 $683.7 $661.7 
Deposit margin1.58 %2.48 %2.38 %
Business banking
origination volume		$26.6 (f)$6.6 $6.7 
Client investment assets590.2 501.4 399.7 
Number of client advisors4,417 4,196 3,929 
Home Lending
Mortgage origination volume
by channel
Retail$72.9 $51.0 $38.3 
Correspondent40.9 54.2 41.1 
Total mortgage origination volume(c)
$113.8 $105.2 $79.4 
Total loans serviced
(period-end)
$626.3 $761.4 $789.8 
Third-party mortgage loans serviced (period-end)447.3 520.8 519.6 
MSR carrying value
(period-end)		3.3 4.7 6.1 
Ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end)0.74 %0.90 %1.17 %
MSR revenue multiple(d)
2.55 x2.65 x3.34x
Credit Card
Credit card sales volume, excluding commercial card$702.7 $762.8 $692.4 
New accounts opened
(in millions)
5.4 $7.8 7.8 
Net revenue rate(e)
10.92 %10.48 %10.17 %
Auto
Loan and lease
origination volume		$38.4 $34.0 $31.8 
Average auto
operating lease assets		22.0 21.6 18.8 
In the fourth quarter of 2020, the Firm realigned certain wealth management clients from AWM to CCB. Prior-period amounts have been revised to conform with the current presentation, including an increase to client investment assets of $143.3 billion and $117.3 billion as of December 31, 2019 and 2018, respectively.
Selected metrics    
As of or for the year ended
December 31,		     
(in millions, except headcount)2018 2017 2016
Selected balance sheet data (period-end)     
Total assets$557,441
 $552,601
 $535,310
Loans:     
Consumer & Business Banking26,612
 25,789
 24,307
Home equity36,013
 42,751
 50,296
Residential mortgage203,859
 197,339
 181,196
Home Lending239,872
 240,090
 231,492
Card156,632
 149,511
 141,816
Auto63,573
 66,242
 65,814
Student—
 —
 7,057
Total loans486,689
 481,632
 470,486
Core loans434,466
 415,167
 382,608
Deposits678,854
 659,885
 618,337
Equity51,000
 51,000
 51,000
Selected balance sheet data (average)     
Total assets$547,368
 $532,756
 $516,354
Loans:     
Consumer & Business Banking26,197
 24,875
 23,431
Home equity39,133
 46,398
 54,545
Residential mortgage202,624
 190,242
 177,010
Home Lending241,757
 236,640
 231,555
Card145,652
 140,024
 131,165
Auto64,675
 65,395
 63,573
Student—
 2,880
 7,623
Total loans478,281
 469,814
 457,347
Core loans419,066
 393,598
 361,316
Deposits670,388
 640,219
 586,637
Equity51,000
 51,000
 51,000
      
Headcount(a)(b)
129,518
 133,721
 132,384
(a)Users of all web and/or mobile platforms who have logged in within the past 90 days.
(b)Users of all mobile platforms who have logged in within the past 90 days.
(c)Firmwide mortgage origination volume was $133.4 billion, $115.9 billion and $86.9 billion for the years ended December 31, 2020, 2019 and 2018, respectively.
(d)Represents the ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end) divided by the ratio of loan servicing-related revenue to third-party mortgage loans serviced (average).
(e)In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
(f)Included $21.9 billion of origination volume under the PPP for the year ended December 31, 2020. Refer to Credit Portfolio on pages 112-113 for a further discussion of the PPP.
(a)Effective in the first quarter of 2018, certain operations staff were transferred from CCB to CB. The prior period amounts have been revised to conform with the current period presentation. For a further discussion of this transfer, refer to CB segment results on page 71.
(b)During the third quarter of 2018, approximately 1,200 employees transferred from CCB to CIB as part of the reorganization of the Commercial Card business.

Selected metrics    
As of or for the year ended
December 31,		     
(in millions, except ratio data)20182017 2016 
Credit data and quality statistics     
Nonaccrual loans(a)(b)
$3,339
$4,084
 $4,708
 
Net charge-offs/(recoveries)(c)
     
Consumer & Business Banking236
257
 257
 
Home equity(7)63
 184
 
Residential mortgage(287)(16) 14
 
Home Lending(294)47
 198
 
Card4,518
4,123
 3,442
 
Auto243
331
 285
 
Student—
498
(g) 
162
 
Total net charge-offs/(recoveries)$4,703
$5,256
(g) 
$4,344
 
      
Net charge-off/(recovery) rate(c)
     
Consumer & Business Banking0.90 %1.03% 1.10% 
Home equity(d)
(0.02)0.18
 0.45
 
Residential mortgage(d)
(0.16)(0.01) 0.01
 
Home Lending(d)
(0.14)0.02
 0.10
 
Card3.10
2.95
 2.63
 
Auto0.38
0.51
 0.45
 
Student—
NM
 2.13
 
Total net charge-offs/(recovery) rate(d)
1.04
1.21
(g) 
1.04
 
30+ day delinquency rate     
Home Lending(e)(f)
0.77 %1.19% 1.23% 
Card1.83
1.80
 1.61
 
Auto0.93
0.89
 1.19
 
Student—
—
 1.60
(h) 
      
90+ day delinquency rate - Card0.92
0.92
 0.81
 
      
Allowance for loan losses     
Consumer & Business Banking$796
$796
 $753
 
Home Lending, excluding PCI loans1,003
1,003
 1,328
 
Home Lending — PCI loans(c)
1,788
2,225
 2,311
 
Card5,184
4,884
 4,034
 
Auto464
464
 474
 
Student—
—
 249
 
Total allowance for loan losses(c)
$9,235
$9,372
 $9,149
 
(a)Excludes PCI loans. The Firm is recognizing interest income on each pool of PCI loans as each of the pools is performing.
(b)At December 31, 2018, 2017 and 2016, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $2.6 billion, $4.3 billion and $5.0 billion, respectively. At December 31, 2016, nonaccrual loans also excluded student loans insured by U.S. government agencies under the Federal Family Education Loan Program (“FFELP”) of $263 million. These amounts have been excluded based upon the government guarantee.
(c)Net charge-offs/(recoveries) and the net charge-off/(recovery) rates for the years ended December 31, 2018, 2017 and 2016, excluded $187 million, $86 million and $156 million, respectively, of write-offs in the PCI portfolio. These write-offs decreased the allowance for loan losses for PCI loans. For further

64JPMorgan Chase & Co./2018 Form 10-K


information on PCI write-offs, refer to Summary of changes in the allowance for credit losses on page 121.
(d)Excludes the impact of PCI loans. For the years ended December 31, 2018, 2017 and 2016, the net charge-off/(recovery) rates including the impact of PCI loans were as follows: (1) home equity of (0.02)%, 0.14% and 0.34%, respectively; (2) residential mortgage of (0.14)%, (0.01)% and 0.01%, respectively; (3) Home Lending of (0.12)%, 0.02% and 0.09%, respectively; and (4) total CCB of 0.98%, 1.12% and 0.95%, respectively.
(e)At December 31, 2018, 2017 and 2016, excluded mortgage loans insured by U.S. government agencies of $4.1 billion, $6.2 billion and $7.0 billion, respectively, that are 30 or more days past due. These amounts have been excluded based upon the government guarantee.
(f)Excludes PCI loans. The 30+ day delinquency rate for PCI loans was 9.16%, 10.13% and 9.82% at December 31, 2018, 2017 and 2016, respectively.
(g)Excluding net charge-offs of $467 million related to the student loan portfolio transfer, the total net charge-off rates for the full year 2017 would have been 1.10%.
(h)Excluded student loans insured by U.S. government agencies under FFELP of $468 million at December 31, 2016 that are 30 or more days past due. This amount has been excluded based upon the government guarantee.
Selected metrics  
As of or for the year ended December 31,   
(in billions, except ratios and where otherwise noted)201820172016
Business Metrics   
CCB households (in millions)(a)
61.7
61.1
60.5
Number of branches5,036
5,130
5,258
Active digital customers
(in thousands)(b)
49,254
46,694
43,836
Active mobile customers
(in thousands)(c)
33,260
30,056
26,536
Debit and credit card sales volume$1,016.9
$916.9
$821.6
    
Consumer & Business Banking  
Average deposits$656.5
$625.6
$570.8
Deposit margin2.38%1.98%1.81%
Business banking origination volume$6.7
$7.3
$7.3
Client investment assets282.5
273.3
234.5
    
Home Lending   
Mortgage origination volume by channel   
Retail$38.3
$40.3
$44.3
Correspondent41.1
57.3
59.3
Total mortgage origination volume(d)
$79.4
$97.6
$103.6
Total loans serviced
(period-end)
$789.8
$816.1
$846.6
Third-party mortgage loans serviced (period-end)519.6
553.5
591.5
MSR carrying value
  (period-end)
6.1
6.0
6.1
Ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end)1.17%1.08%1.03%
    
MSR revenue multiple(e)
3.34x3.09x2.94x
    
Card, excluding Commercial Card  
Credit card sales volume$692.4
$622.2
$545.4
New accounts opened
(in millions)
7.8
8.4
10.4
    
Card Services   
Net revenue rate11.27%10.57%11.29%
    
Merchant Services   
Merchant processing volume$1,366.1
$1,191.7
$1,063.4
    
Auto   
Loan and lease origination volume$31.8
$33.3
$35.4
Average Auto operating lease assets18.8
15.2
11.0
(a)The prior period amounts have been revised to conform with the current period presentation.
(b)Users of all web and/or mobile platforms who have logged in within the past 90 days.
(c)Users of all mobile platforms who have logged in within the past 90 days.
(d)Firmwide mortgage origination volume was $86.9 billion, $107.6 billion and $117.4 billion for the years ended December 31, 2018, 2017 and 2016, respectively.
(e)Represents the ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end) divided by the ratio of loan servicing-related revenue to third-party mortgage loans serviced (average).

JPMorgan Chase & Co./2018 Form 10-K65
Management’s discussion and analysis

70JPMorgan Chase & Co./2020 Form 10-K

CORPORATE & INVESTMENT BANK

The Corporate & Investment Bank, which consists of Banking and Markets & InvestorSecurities Services, offers a broad suite of investment banking, market-making, prime brokerage, and treasury and securities products and services to a global client base of corporations, investors, financial institutions, merchants, government and municipal entities. Banking offers a full range of investment banking products and services in all major capital markets, including advising on corporate strategy and structure, capital-raising in equity and debt markets, as well as loan origination and syndication. Banking also includes Treasury Services,Wholesale Payments, which provides transactionpayments services consisting of cash managementenabling clients to manage payments and liquidity solutions.receipts globally, and cross-border financing. Markets & InvestorSecurities Services isincludes Markets, a global market-maker inacross products, including cash securities and derivative instruments, andwhich also offers sophisticated risk management solutions, prime brokerage, and research. Markets & InvestorSecurities Services also includes Securities Services, a leading global custodian which provides custody, fund accounting and administration, and securities lending products principally for asset managers, insurance companies and public and private investment funds.
Selected income statement data
Year ended December 31,
(in millions)202020192018
Revenue
Investment banking fees$9,477 $7,575 $7,473 
Principal transactions17,560 14,399 12,262 
Lending- and deposit-related fees(a)
2,070 1,668 1,633 
Asset management, administration and commissions(a)
4,721 4,400 4,361 
All other income1,292 2,018 2,125 
Noninterest revenue35,120 30,060 27,854 
Net interest income14,164 9,205 9,528 
Total net revenue(b)
49,284 39,265 37,382 
Provision for credit losses2,726 277 (60)
Noninterest expense
Compensation expense11,612 11,180 10,776 
Noncompensation expense11,926 11,264 11,100 
Total noninterest expense23,538 22,444 21,876 
Income before income tax expense23,020 16,544 15,566 
Income tax expense5,926 4,590 3,767 
Net income$17,094 $11,954 $11,799 
Effective January 1, 2018,In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. In the fourth quarter of 2020, payment processing-only clients along with the associated revenue and expenses were realigned to CIB’s Wholesale Payments business from CCB and CB. Prior-period amounts have been revised to conform with the current presentation.
(a) In the first quarter of 2020, the Firm adopted several new accounting standards;reclassified certain fees from asset management, administration and commissions to lending- and deposit-related fees. Prior-period amounts have been revised to conform with the guidancecurrent presentation.
(b) Includes tax-equivalent adjustments, predominantly due to income tax credits related to alternative energy investments; income tax credits and amortization of the cost of investments in affordable housing projects; and tax-exempt income from municipal bonds of $2.8 billion, $2.3 billion and $1.7 billion for the years ended December 31, 2020, 2019 and 2018, respectively.
Selected income statement data
Year ended December 31,
(in millions, except ratios)202020192018
Financial ratios
Return on equity20 %14 %16 %
Overhead ratio48 57 59 
Compensation expense as
percentage of total net
revenue
24 28 29 
Revenue by business
Investment Banking$8,871 $7,215 $6,987 
Wholesale Payments5,560 5,842 5,930 
Lending1,146 1,021 999 
Total Banking15,577 14,078 13,916 
Fixed Income Markets20,878 14,418 12,706 
Equity Markets8,605 6,494 6,888 
Securities Services4,253 4,154 4,245 
Credit Adjustments & Other(a)
(29)121 (373)
Total Markets & Securities
Services
33,707 25,187 23,466 
Total net revenue$49,284 $39,265 $37,382 
In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. In the fourth quarter of 2020, payment processing-only clients along with the associated revenue and expenses were realigned to CIB’s Wholesale Payments business from CCB and CB. Prior-period amounts have been revised to conform with the current presentation.
(a)Includes credit valuation adjustments (“CVA”) managed centrally within CIB and funding valuation adjustments (“FVA”) on derivatives and certain components of fair value option elected liabilities, which had the most significant impact on the CIB segment results was revenue recognition,are primarily reported in principal transactions revenue. Results are presented net of associated hedging activities and recognitionnet of CVA and measurement of financial assets. The revenue recognition guidance was applied retrospectivelyFVA amounts allocated to Fixed Income Markets and accordingly, prior period amounts were revised. ForEquity Markets. Refer to Notes 2, 3 and 24 for additional information, refer to Note 1.information.
Selected income statement data  
Year ended December 31, 
(in millions)2018 2017 2016
Revenue     
Investment banking fees$7,473
 $7,356
 $6,548
Principal transactions12,271
 10,873
 11,089
Lending- and deposit-related fees1,497
 1,531
 1,581
Asset management, administration and commissions4,488
 4,207
 4,062
All other income1,239
 572
 1,169
Noninterest revenue26,968
 24,539
 24,449
Net interest income9,480
 10,118
 10,891
Total net revenue(a)(b)
36,448
 34,657
 35,340
      
Provision for credit losses(60) (45) 563
      
Noninterest expense     
Compensation expense10,215
 9,531
 9,540
Noncompensation expense10,703
 9,876
 9,576
Total noninterest expense20,918
 19,407
 19,116
Income before income tax expense15,590
 15,295
 15,661
Income tax expense3,817
 4,482
 4,846
Net income(a)
$11,773
 $10,813
 $10,815

(a)The full year 2017 results reflect the impact of the enactment of the TCJA including a decrease to net revenue of $259 million and a benefit to net income of $141 million. For additional information related to the impact of the TCJA, refer to Note 24.
(b)JPMorgan Chase & Co./2020 Form 10-KIncluded tax-equivalent adjustments, predominantly due to income tax credits related to alternative energy investments; income tax credits and amortization of the cost of investments in affordable housing projects; and tax-exempt income from municipal bonds of $1.7 billion, $2.4 billion and $2.0 billion for the years ended December 31, 2018, 2017 and 2016, respectively.71
Selected income statement data  
Year ended December 31, 
(in millions, except ratios)2018 2017 2016
Financial ratios     
Return on equity16% 14% 16%
Overhead ratio57
 56
 54
Compensation expense as
percentage of total net
revenue
28
 28
 27
Revenue by business     
Investment Banking$6,987
 $6,852
 $6,074
Treasury Services4,697
 4,172
 3,643
Lending1,298
 1,429
 1,208
Total Banking12,982
 12,453
 10,925
Fixed Income Markets12,706
 12,812
 15,259
Equity Markets6,888
 5,703
 5,740
Securities Services4,245
 3,917
 3,591
Credit Adjustments & Other(a)
(373) (228) (175)
Total Markets & Investor
Services
23,466
 22,204
 24,415
Total net revenue$36,448
 $34,657
 $35,340
Management’s discussion and analysis
(a)
Consists primarily of credit valuation adjustments (“CVA”) managed centrally within CIB and funding valuation adjustments (“FVA”) on derivatives. Results are primarily reported in principal transactions revenue. Results are presented net of associated hedging activities and net of CVA and FVA amounts allocated to Fixed Income Markets and Equity Markets. For additional information, refer to Notes 2, 3 and 23.
2018
2020 compared with 20172019
Net income was $11.8$17.1 billion, up 9%43%.
Net revenue was $36.4$49.3 billion, up 5%26%.
Banking revenue was $13.0$15.6 billion, up 4%11%.
•Investment Banking revenue was $7.0$8.9 billion, up 2% compared to a strong prior year, predominantly23%, driven by higher advisoryInvestment Banking fees, up 25%, reflecting higher equity and equity underwriting fees, predominantly offset by lower debt underwriting fees. The Firm maintained its #1 ranking for Global Investment Banking fees with overall share gains, according to Dealogic. Advisory fees were $2.5 billion, up 17%, driven by a higher number of large completed transactions.
–Equity underwriting fees were $1.7$2.8 billion, up 15% driven by a higher share of fees reflecting strong performance across products. 66%, predominantly in follow-on offerings and convertible securities markets due to increased industry-wide fees.
–Debt underwriting fees were $3.3 billion, down 12%, compared to a strong prior year, primarily driven by declines in industry-wide fee levels. Treasury Services revenue was $4.7$4.4 billion, up 13%23%, driven by the impact of higher interest ratesincreased industry-wide fees and growthwallet share gains in operating deposits as well as higher fees oninvestment grade and high yield bonds. The increased payments volume. Lending revenue was $1.3 billion, down

66JPMorgan Chase & Co./2018 Form 10-K


9%, driven by lower net interest income primarily reflecting a changeactivity resulted in part from clients seeking liquidity in the portfolio mix and overall spread compression, and higher gains infirst half of the prior year on securities received from restructurings.
Markets & Investor Services revenue was $23.5 billion, up 6%. The results included a reduction of approximately $620 million in tax-equivalent adjustments as a result of the TCJA,COVID-19 pandemic.
–Advisory fees of $2.4 billion were flat, reflecting an increase in wallet share, despite a decrease in industry-wide fees.
•Wholesale Payments revenue was $5.6 billion, down 5%, driven by deposit margin compression and approximately $500 million of fair value gains in the first quarter of 2018 related to the adoption of the new recognition and measurement accounting guidancea reporting reclassification for certain equity investments previously held at cost. Prior year results includedexpenses which are now reported as a reduction of $259 million resulting from the enactment of the TCJA. Fixed Income Marketsrevenue in Merchant Services, largely offset by higher deposit balances.
•Lending revenue was $12.7 billion, down 1%. Excluding the impact of the TCJA and fair value gains mentioned above, Fixed Income Markets revenue was down 2%. Rates and Credit revenue declined reflecting challenging market conditions in the fourth quarter of 2018 while lower revenue in Fixed Income Financing was driven by compressed margins. This decline was predominantly offset by strong performance including higher client activity in Currencies & Emerging Markets, and higher Commodities revenue compared to a challenging prior year. Equity Markets revenue was $6.9$1.1 billion, up 21%, or up 18% excluding the fair value loss of $143 million on a margin loan to a single client in the prior year, driven by strength across derivatives, prime brokerage and cash equities, reflecting strong client activity. Securities Services revenue was $4.2 billion, up 8%, driven by fee growth, higher interest rates and operating deposit growth partially offset by the impact of a business exit. Credit Adjustments & Other was a loss of $373 million, largely driven by higher funding spreads on derivatives.
The provision for credit losses was a benefit of $60 million, driven by a reduction in the allowance for credit losses in the first quarter of 2018 related to a single name in the Oil & Gas portfolio, predominantly offset by other net portfolio activity, which includes additions to the allowance for credit losses from select client downgrades. The prior year was a benefit of $45 million primarily driven by a net reduction in the allowance for credit losses in the Oil & Gas and Metals & Mining portfolios partially offset by a net increase in the allowance for credit losses for a single client.
Noninterest expense was $20.9 billion, up 8%12%, predominantly driven by investments in technology and bankers, higher performance-related compensation expense, volume-related transaction costs, and legal expense.
2017 compared with 2016
Netnet interest income was $10.8 billion, flat compared with the prior year, reflecting lower net revenuehigher yields on new loans and higher noninterest expense,loan balances, as well as higher loan commitment fees, largely offset by a lower provision for credit losses, and a tax benefit resulting from the vesting of employee share-based awards. The current year included a $141 million benefit to net income as a result of the enactment of the TCJA.
Net revenue was $34.7 billion, down 2%.
Banking revenue was $12.5 billion, up 14% compared with the prior year. Investment banking revenue was $6.9 billion, up 13% from the prior year, driven by higher debt and equity underwriting fees. The Firm maintained its #1 ranking for Global Investment Banking fees, according to Dealogic. Debt underwriting fees were $3.7 billion, up 16% driven by a higher share of fees and an overall increase in industry-wide fees; the Firm maintained its #1 ranking globally in fees across high-grade, high-yield, and loan products. Equity underwriting fees were $1.5 billion, up 21% driven by growth in industry-wide issuance including a strong IPO market; the Firm ranked #2 in equity underwriting fees globally. Advisory fees were $2.2 billion, up 2%; the Firm maintained its #2 ranking for M&A. Treasury Services revenue was $4.2 billion, up 15%, driven by the impact of higher interest rates and growth in operating deposits. Lending revenue was $1.4 billion, up 18% from the prior year, reflecting lower fair value losses on hedges of accrual loans.
Markets & InvestorSecurities Services revenue was $22.2$33.7 billion, down 9% from the prior year. up 34%. Markets revenue was $29.5 billion, up 41%.
•Fixed Income Markets revenue was $12.8$20.9 billion, down 16%up 45%, as lower revenuedriven by strong client activity across products was driven by sustained low volatility, tighter credit spreads,primarily in Rates, Credit, Currencies & Emerging Markets, and the impact from the TCJA on tax-oriented investments of $259 million, against a strong prior year. Securitized Products.
•Equity Markets revenue was $5.7$8.6 billion, down 1% from the prior year, and included a fair value loss of $143 million on a margin loan to a single client. Excluding the fair value loss, Equity Markets revenue was higherup 33%, driven by higher revenue in Prime Services and cash equities, partially offset by lower revenue in derivatives. strong client activity across products.
•Securities Services revenue was $3.9$4.3 billion, up 9%2%, driven by the impact of higher interest ratesdeposit balance and fee growth largely offset by deposit growth, as well as higher asset-based fees driven by higher market levels. Credit Adjustments & Other was a loss of $228 million, driven by valuation adjustments.margin compression.
The provision for credit losses was a benefit of $45$2.7 billion, compared with $277 million which included a net reduction in the allowance for credit lossesprior year. The increase was driven by the Oil & Gas and Metals & Mining portfolios partially offset by a net increase in the allowance for credit losses for a single client. The prior year was an expense of $563 million, which included an additionadditions to the allowance for credit losses driven byas a result of the Oil & Gas and Metals & Mining portfolios.impact of the COVID-19 pandemic across multiple industries.
Noninterest expense was $19.4$23.5 billion, up 2% compared with the prior year.5%, driven by higher volume- and revenue-related expense and legal expense.


72JPMorgan Chase & Co./20182020 Form 10-K

Selected metrics
As of or for the year ended
December 31,
(in millions, except headcount)
202020192018
Selected balance sheet data (period-end)
Assets$1,097,219 $914,705 $909,292 
Loans:
Loans retained(a)
133,296 121,733 129,389 
Loans held-for-sale and loans at fair value(b)(c)
39,588 34,317 36,407 
Total loans172,884 156,050 165,796 
Equity80,000 80,000 70,000 
Selected balance sheet data (average)
Assets$1,122,939 $993,508 $930,126 
Trading assets-debt and equity instruments(c)
422,237 376,182 321,280 
Trading assets-derivative receivables72,065 48,196 60,552 
Loans:
Loans retained(a)
135,676 122,371 114,417 
Loans held-for-sale and loans at fair value(b)(c)
33,792 32,884 30,317 
Total loans169,468 155,255 144,734 
Equity80,000 80,000 70,000 
Headcount61,733 60,013 58,572 
In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. In the fourth quarter of 2020, payment processing-only clients along with the associated revenue and expenses were realigned to CIB’s Wholesale Payments business from CCB and CB. Prior-period amounts have been revised to conform with the current presentation, including an increase to period-end assets of $6.6 billion and $6.2 billion and headcount of 4,022 and 4,092, as of December 31, 2019 and 2018, respectively.
(a)Loans retained includes credit portfolio loans, loans held by consolidated Firm-administered multi-seller conduits, trade finance loans, mortgage-related secured lending, other held-for-investment loans and overdrafts
(b)Loans held-for-sale and loans at fair value primarily reflect lending-related positions originated and purchased in CIB Markets, including loans held for securitization.
(c)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans and other assets. Prior-period amounts have been revised to conform with the current presentation.
Selected metrics
As of or for the year ended
December 31,
(in millions, except ratios)
202020192018
Credit data and quality statistics
Net charge-offs/(recoveries)$370 $183 $93 
Nonperforming assets:
Nonaccrual loans:
Nonaccrual loans retained(a)
1,008 308 443 
Nonaccrual loans held-for-sale and loans at fair value(b)(c)
1,662 644 921 
Total nonaccrual loans2,670 952 1,364 
Derivative receivables56 30 60 
Assets acquired in loan satisfactions85 70 57 
Total nonperforming assets2,811 1,052 1,481 
Allowance for credit losses:
Allowance for loan losses2,366 1,202 1,199 
Allowance for lending-related commitments1,534 848 754 
Total allowance for credit losses3,900 2,050 1,953 
Net charge-off/(recovery) rate(d)
0.27 %0.15 %0.08 %
Allowance for loan losses to period-end loans
retained
1.77 0.99 0.93 
Allowance for loan losses to period-end loans retained, excluding trade finance and conduits(e)
2.54 1.31 1.24 
Allowance for loan losses to nonaccrual loans
retained(a)
235 390 271 
Nonaccrual loans to total period-end loans(b)
1.54 0.61 0.82 
(a)Allowance for loan losses of $278 million, $110 million and $174 million were held against these nonaccrual loans at December 31, 2020, 2019 and 2018, respectively.
(b)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans. Prior-period amounts have been revised to conform with the current presentation.
(c)At December 31, 2020, 2019 and 2018, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $316 million, $127 million and $155 million, respectively. These amounts have been excluded based upon the government guarantee.
(d)Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate.
(e)Management uses allowance for loan losses to period-end loans retained, excluding trade finance and conduits, a non-GAAP financial measure, to provide a more meaningful assessment of CIB’s allowance coverage ratio.
67
JPMorgan Chase & Co./2020 Form 10-K73
Management’s discussion and analysis

Investment banking fees
Year ended December 31,
(in millions)202020192018
Advisory$2,368 $2,377 $2,509 
Equity underwriting2,758 1,666 1,684 
Debt underwriting(a)
4,351 3,532 3,280 
Total investment banking fees$9,477 $7,575 $7,473 
Selected metrics    
As of or for the year ended
December 31,
(in millions, except headcount)
 
2018 2017 2016
Selected balance sheet data (period-end)     
Assets$903,051
 $826,384
 $803,511
Loans:     
Loans retained(a)
129,389
 108,765
 111,872
Loans held-for-sale and loans at fair value13,050
 4,321
 3,781
Total loans142,439
 113,086
 115,653
Core loans142,122
 112,754
 115,243
Equity70,000
 70,000
 64,000
Selected balance sheet data (average)     
Assets$922,758
 $857,060
 $815,321
Trading assets-debt and equity instruments349,169
 342,124
 300,606
Trading assets-derivative receivables60,552
 56,466
 63,387
Loans:     
Loans retained(a)
114,417
 108,368
 111,082
Loans held-for-sale and loans at fair value6,412
 4,995
 3,812
Total loans120,829
 113,363
 114,894
Core loans120,560
 113,006
 114,455
Equity70,000
 70,000
 64,000
      
Headcount(b)
54,480
 51,181
 48,748
(a)Loans retained includes credit portfolio loans, loans held by consolidated Firm-administered multi-seller conduits, trade finance loans, other held-for-investment loans and overdrafts.
(b)During the third quarter of 2018 approximately 1,200 employees transferred from CCB to CIB as part of the reorganization of the Commercial Card business.
(a)Represents long-term debt and loan syndications.
League table results – wallet share
202020192018
Year ended December 31,RankShareRankShareRankShare
Based on fees(a)
M&A(b)
Global#2 9.3 %#2 8.9 %#2 8.6 %
U.S.2 9.7 2 9.2 2 8.8 
Equity and equity-related(c)
Global2 8.6 1 9.3 1 9.0 
U.S.2 11.1 2 13.2 1 12.3 
Long-term debt(d)
Global1 8.9 1 7.8 1 7.2 
U.S.1 12.8 1 12.0 1 11.4 
Loan syndications
Global1 11.1 1 10.1 1 10.1 
U.S.1 11.5 1 12.5 1 12.3 
Global investment banking fees(e)
#1 9.2 %#1 8.9 %#1 8.6 %
Selected metrics     
As of or for the year ended
December 31,
(in millions, except ratios)
 
2018 2017 2016
Credit data and quality statistics     
Net charge-offs/(recoveries)$93
 $71
 $168
Nonperforming assets:     
Nonaccrual loans:     
Nonaccrual loans retained(a)
443
 812
 467
Nonaccrual loans held-for-sale and loans at fair value
220
 —
 109
Total nonaccrual loans663
 812
 576
Derivative receivables60
 130
 223
Assets acquired in loan satisfactions57
 85
 79
Total nonperforming assets780
 1,027
 878
Allowance for credit losses:     
Allowance for loan losses1,199
 1,379
 1,420
Allowance for lending-related commitments754
 727
 801
Total allowance for credit losses1,953
 2,106
 2,221
Net charge-off/(recovery) rate(b)
0.08% 0.07% 0.15%
Allowance for loan losses to period-end loans
retained
0.93
 1.27
 1.27
Allowance for loan losses to period-end loans retained, excluding trade finance and conduits(c)
1.24
 1.92
 1.86
Allowance for loan losses to nonaccrual loans
retained(a)
271
 170
 304
Nonaccrual loans to total period-end loans0.47
 0.72
 0.50
(a)Allowance for loan losses of $174 million, $316 million and $113 million were held against these nonaccrual loans at December 31, 2018, 2017 and 2016, respectively.
(b)Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate.
(c)Management uses allowance for loan losses to period-end loans retained, excluding trade finance and conduits, a non-GAAP financial measure, to provide a more meaningful assessment of CIB’s allowance coverage ratio.

(a)Source: Dealogic as of January 4, 2021. Reflects the ranking of revenue wallet and market share.
(b)Global M&A excludes any withdrawn transactions. U.S. M&A revenue wallet represents wallet from client parents based in the U.S.
Investment banking fees     
 Year ended December 31,
(in millions)2018 2017 2016
Advisory$2,509
 $2,150
 $2,110
Equity underwriting1,684
 1,468
 1,213
Debt underwriting(a)
3,280
 3,738
 3,225
Total investment banking fees$7,473
 $7,356
 $6,548
(a)Includes loan syndications.

(c)Global equity and equity-related ranking includes rights offerings and Chinese A-Shares.
(d)Long-term debt rankings include investment-grade, high-yield, supranationals, sovereigns, agencies, covered bonds, asset-backed securities (“ABS”) and mortgage-backed securities (“MBS”); and exclude money market, short-term debt, and U.S. municipal securities.
68JPMorgan Chase & Co./2018 Form 10-K
(e)Global investment banking fees exclude money market, short-term debt and shelf securities.


League table results – wallet share
 2018 2017 2016
Year ended
December 31,		RankShare RankShare RankShare
Based on fees(a)
        
Long-term debt(b)
        
Global#17.3% #1
7.8% #1
6.8%
U.S.111.2
 2
11.1
 1
11.1
Equity and equity-related        
Global(c)
19.1
 2
7.1
 1
7.4
U.S.112.3
 1
11.6
 1
13.4
M&A(d)
        
Global28.9
 2
8.4
 2
8.3
U.S.29.1
 2
9.1
 2
9.8
Loan syndications        
Global19.5
 1
9.3
 1
9.3
U.S.112.1
 1
11.0
 2
11.9
Global investment banking fees (e)
#18.7% #1
8.1% #1
7.9%
(a)Source: Dealogic as of January 1, 2019. Reflects the ranking of revenue wallet and market share.
(b)Long-term debt rankings include investment-grade, high-yield, supranationals, sovereigns, agencies, covered bonds, asset-backed securities (“ABS”) and mortgage-backed securities (“MBS”); and exclude money market, short-term debt, and U.S. municipal securities.
(c)Global equity and equity-related ranking includes rights offerings and Chinese A-Shares.
(d)Global M&A reflects the removal of any withdrawn transactions. U.S. M&A revenue wallet represents wallet from client parents based in the U.S.
(e)Global investment banking fees exclude money market, short-term debt and shelf deals.
Markets revenue
The following table summarizes select income statement data for the Markets businesses. Markets includes bothconsists of Fixed Income Markets and Equity Markets. Markets revenue comprises principal transactions, fees, commissions and other income, as well as net interest income. The Firm assesses its Markets business performance on a total revenue basis, as offsets may occur across revenue line items. For example, securities that generate net interest income may be risk-managed by derivatives that are recorded in principal transactions revenue. ForRefer to Notes 6 and 7 for a description of the composition of these income statement line items, refer to Notes 6 and 7.items.
Principal transactions reflects revenue on financial instruments and commodities transactions that arise from client-driven market makingmarket-making activity. Principal transactions revenue includes amounts recognized upon executing new transactions with market participants, as well as “inventory-related revenue”, which is revenue recognized from gains and losses on derivatives and other instruments that the
Firm has been holding in anticipation of, or in response to, client demand, and changes in the fair value of instruments used by the Firm to actively manage the risk exposure arising from such inventory. Principal transactions revenue recognized upon executing new transactions with market participants is driven by many factors including the level of client activity, the bid-offer spread (which is the difference
between the price at which a market participant is willing and able to sell an instrument to the Firm and the price at which another market participant is willing and able to buy it from the Firm, and vice versa), market liquidity and volatility. These factors are interrelated and sensitive to the same factors that drive inventory-related revenue, which include general market conditions, such as interest rates, foreign exchange rates, credit spreads, and equity and commodity prices, as well as other macroeconomic conditions. 

74JPMorgan Chase & Co./2020 Form 10-K

For the periods presented below, the predominant source of principal transactions revenue was the amount recognized upon executing new transactions.
202020192018
Year ended December 31,
(in millions, except where otherwise noted)		Fixed Income MarketsEquity MarketsTotal MarketsFixed Income MarketsEquity MarketsTotal MarketsFixed Income MarketsEquity MarketsTotal Markets
Principal transactions$11,857 $6,087 $17,944 $8,786 $5,739 $14,525 $7,560 $5,566 $13,126 
Lending- and deposit-related fees226 10 236 198 7 205 197 6 203 
Asset management, administration and commissions411 2,087 2,498 407 1,775 2,182 410 1,794 2,204 
All other income493 (62)431 872 8 880 952 22 974 
Noninterest revenue12,987 8,122 21,109 10,263 7,529 17,792 9,119 7,388 16,507 
Net interest income7,891 483 8,374 4,155 (1,035)3,120 3,587 (500)3,087 
Total net revenue$20,878 $8,605 $29,483 $14,418 $6,494 $20,912 $12,706 $6,888 $19,594 
Loss days(a)
415
(a)Loss days represent the number of days for which CIB Markets, which consists of Fixed Income Markets and Equity Markets, posted losses to total net revenue. The loss days determined under this measure differ from the measure used to determine backtesting gains and losses. Daily backtesting gains and losses include positions in the Firm’s Risk Management value-at-risk (“VaR”) measure and exclude select components of total net revenue, which may more than offset backtesting gains or losses on a particular day. For more information on daily backtesting gains and losses, refer to the VaR discussion on pages 137–139.
 2018 2017 2016
Year ended December 31,
(in millions, except where otherwise noted)
Fixed Income MarketsEquity MarketsTotal Markets Fixed Income MarketsEquity MarketsTotal Markets Fixed Income MarketsEquity MarketsTotal Markets
Principal transactions$7,560
$5,566
$13,126
 $7,393
$3,855
$11,248
 $8,347
$3,130
$11,477
Lending- and deposit-related fees197
6
203
 191
6
197
 220
2
222
Asset management, administration and commissions410
1,794
2,204
 390
1,635
2,025
 388
1,551
1,939
All other income952
22
974
 436
(21)415
 1,014
13
1,027
Noninterest revenue9,119
7,388
16,507
 8,410
5,475
13,885
 9,969
4,696
14,665
Net interest income(a)
3,587
(500)3,087
 4,402
228
4,630
 5,290
1,044
6,334
Total net revenue$12,706
$6,888
$19,594
 $12,812
$5,703
$18,515
 $15,259
$5,740
$20,999
Loss days(b)
5  4  0 
Selected metrics
As of or for the year ended
December 31,
(in millions, except where otherwise noted)		202020192018
Assets under custody (“AUC”) by asset class (period-end) (in billions):
Fixed Income$15,840 $13,498 $12,440 
Equity11,489 10,100 8,078 
Other(a)
3,651 3,233 2,699 
Total AUC$30,980 $26,831 $23,217 
Merchant processing volume (in billions)(b)
$1,597.3 $1,511.5 $1,366.1 
Client deposits and other third party liabilities (average)(c)
$610,555 $464,795 $434,422 
(a)Declines in Markets net interest income in 2018 and 2017 were driven by higher funding costs.
(b)Loss days represent the number of days for which Markets posted losses. The loss days determined under this measure differ from the disclosure of daily market risk-related gains and losses for the Firm in the value-at-risk (“VaR”) back-testing discussion on pages 126-128.

In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. Prior-period amounts have been revised to conform with the current presentation.
(a)Consists of mutual funds, unit investment trusts, currencies, annuities, insurance contracts, options and other contracts.
(b)Represents total merchant processing volume across CIB, CCB and CB.
(c)Client deposits and other third-party liabilities pertain to the Wholesale Payments and Securities Services businesses.
JPMorgan Chase & Co./20182020 Form 10-K6975
Management’s discussion and analysis

International metrics
As of or for the year ended
December 31,
(in millions, except where otherwise noted)		2020
2019(c)
2018(c)
Total net revenue(a)
Europe/Middle East/Africa$13,872 $11,905 $12,422 
Asia-Pacific7,524 5,319 5,077 
Latin America/Caribbean1,931 1,543 1,473 
Total international net revenue23,327 18,767 18,972 
North America25,957 20,498 18,410 
Total net revenue$49,284 $39,265 $37,382 
Loans retained (period-end)(a)
Europe/Middle East/Africa$27,659 $26,067 $23,648 
Asia-Pacific12,802 14,759 17,101 
Latin America/Caribbean5,425 6,173 6,515 
Total international loans45,886 46,999 47,264 
North America87,410 74,734 82,125 
Total loans retained$133,296 $121,733 $129,389 
Client deposits and other third-party liabilities (average)(b)
Europe/Middle East/Africa$211,592 $174,477 $162,846 
Asia-Pacific124,145 90,364 82,867 
Latin America/Caribbean37,664 29,024 26,668 
Total international$373,401 $293,865 $272,381 
North America237,154 170,930 162,041 
Total client deposits and other third-party liabilities$610,555 $464,795 $434,422 
AUC (period-end)(b)
(in billions)
North America$20,028 $16,855 $14,359 
All other regions10,952 9,976 8,858 
Total AUC$30,980 $26,831 $23,217 
In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. In the fourth quarter of 2020, payment processing-only clients along with the associated revenue and expenses were realigned to CIB’s Wholesale Payments business from CCB and CB. Prior-period amounts have been revised to conform with the current presentation.
Selected metrics     
As of or for the year ended
December 31,
(in millions, except where otherwise noted)
2018 2017 2016
Assets under custody (“AUC”) by asset class (period-end) (in billions):     
Fixed Income$12,440
 $13,043
 $12,166
Equity8,078
 7,863
 6,428
Other(a)
2,699
 2,563
 1,926
Total AUC$23,217
 $23,469
 $20,520
Client deposits and other third party liabilities (average)(b)
$434,422
 $408,911
 $376,287
(a)Consists of mutual funds, unit investment trusts, currencies, annuities, insurance contracts, options and other contracts.
(b)Client deposits and other third party liabilities pertain to the Treasury Services and Securities Services businesses.
International metrics    
Year ended December 31, 
(in millions, except where otherwise noted)2018 2017 2016
Total net revenue(a)
     
Europe/Middle East/Africa$12,102
 $11,328
 $10,786
Asia/Pacific5,219
 4,525
 4,915
Latin America/Caribbean1,394
 1,125
 1,225
Total international net revenue18,715
 16,978
 16,926
North America17,733
 17,679
 18,414
Total net revenue$36,448
 $34,657
 $35,340
      
Loans retained (period-end)(a)
     
Europe/Middle East/Africa$26,524
 $25,931
 $26,696
Asia/Pacific16,778
 15,248
 14,508
Latin America/Caribbean5,060
 6,546
 7,607
Total international loans48,362
 47,725
 48,811
North America81,027
 61,040
 63,061
Total loans retained$129,389
 $108,765
 $111,872
      
Client deposits and other third-party liabilities (average)(a)(b)
     
Europe/Middle East/Africa$162,846
 $154,582
 $135,979
Asia/Pacific82,867
 76,744
 68,110
Latin America/Caribbean26,668
 25,419
 22,914
Total international$272,381
 $256,745
 $227,003
North America162,041
 152,166
 149,284
Total client deposits and other third-party liabilities$434,422
 $408,911
 $376,287
      
AUC (period-end)(a)
(in billions)
     
North America$14,359
 $13,971
 $12,290
All other regions8,858
 9,498
 8,230
Total AUC$23,217
 $23,469
 $20,520
(a)Total net revenue is based predominantly on the domicile of the client or location of the trading desk, as applicable. Loans outstanding (excluding loans held-for-sale and loans at fair value), client deposits and other third-party liabilities, and AUC are based predominantly on the domicile of the client.
(b)Client deposits and other third party liabilities pertain to the Treasury Services and Securities Services businesses.

(a)Total net revenue and loans retained (excluding loans held-for-sale and loans at fair value) are based on the location of the trading desk, booking location, or domicile of the client, as applicable.

(b)Client deposits and other third-party liabilities pertaining to the Wholesale Payments and Securities Services businesses, and AUC, are based on the domicile of the client.
(c)Prior-period amounts have been revised to conform with the current presentation.
70JPMorgan Chase & Co./2018 Form 10-K


76JPMorgan Chase & Co./2020 Form 10-K

COMMERCIAL BANKING
Commercial Banking delivers extensive industry knowledge, local expertise and dedicated service to U.S. and U.S. multinational clients, including corporations, municipalities, financial institutions and nonprofit entities with annual revenue generally ranging from $20 million to $2 billion. In addition, CB provides financing to real estate investors and owners. Partnering with the Firm’s other businesses, CB provides comprehensive financial solutions, including lending, treasury services,wholesale payments, investment banking and asset management to meet its clients’ domesticproducts across three primary client segments: Middle Market Banking, Corporate Client Banking and international financial needs.Commercial Real Estate Banking. Other includes amounts not aligned with a primary client segment.
Middle Market Banking covers small and midsized companies, local governments and nonprofit clients.
Corporate Client Banking covers large corporations.
Commercial Real Estate Banking covers investors, developers, and owners of multifamily, office, retail, industrial and affordable housing properties.
Selected income statement data
Year ended December 31,
(in millions)		202020192018
Revenue
Lending- and deposit-related fees(a)
$1,187 $941 $896 
All other income(a)
1,880 1,769 1,724 
Noninterest revenue3,067 2,710 2,620 
Net interest income6,246 6,554 6,716 
Total net revenue(b)
9,313 9,264 9,336 
Provision for credit losses2,113 296 129 
Noninterest expense
Compensation expense1,854 1,785 1,694 
Noncompensation expense1,944 1,950 1,933 
Total noninterest expense3,798 3,735 3,627 
Income before income tax expense3,402 5,233 5,580 
Income tax expense824 1,275 1,316 
Net income$2,578 $3,958 $4,264 
In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. In conjunction with this realignment, treasury services product revenue has been renamed wholesale payments. In the fourth quarter of 2020, payment processing-only clients along with the associated revenue and expenses were realigned to CIB’s Wholesale Payments business from CCB and CB. Prior-period revenue and expense amounts have been revised to conform with the current presentation.
(a)In the first quarter of 2020, the Firm reclassified certain fees from asset management, administration and commissions (which are included in all other income) to lending and deposit-related fees. Prior period amounts have been revised to conform with the current period presentation.
(b)Total net revenue included tax-equivalent adjustments from income tax credits related to equity investments in designated community development entities and in entities established for rehabilitation of historic properties, as well as tax-exempt income related to municipal financing activities of $351 million, $460 million and $444 million for the years ended December 31, 2020, 2019 and 2018, respectively.
Selected income statement data    
Year ended December 31,
(in millions)
2018 2017 2016
Revenue     
Lending- and deposit-related fees$870
 $919
 $917
Asset management, administration and commissions73
 68
 69
All other income(a)
1,400
 1,535
 1,334
Noninterest revenue2,343
 2,522
 2,320
Net interest income6,716
 6,083
 5,133
Total net revenue(b)
9,059
 8,605
 7,453
      
Provision for credit losses129
 (276) 282
      
Noninterest expense     
Compensation expense(c)
1,694
 1,534
 1,396
Noncompensation expense(c)
1,692
 1,793
 1,538
Total noninterest expense3,386
 3,327
 2,934
      
Income before income tax expense5,544
 5,554
 4,237
Income tax expense1,307
 2,015
 1,580
Net income$4,237
 $3,539
 $2,657
(a)Includes revenue from investment banking products and commercial card transactions.
(b)Total net revenue included tax-equivalent adjustments from income tax credits related to equity investments in designated community development entities that provide loans to qualified businesses in low-income communities, as well as tax-exempt income related to municipal financing activities of $444 million, $699 million and $505 million for the years ended December 31, 2018, 2017 and 2016, respectively. The decrease in taxable-equivalent adjustments reflects the impact of TCJA.
(c)Effective in the first quarter of 2018, certain Operations and Compliance staff were transferred from CCB and Corporate, respectively, to CB. As a result, expense for this staff is now reflected in CB’s compensation expense with a corresponding adjustment for expense allocations reflected in noncompensation expense. CB’s, Corporate’s and CCB’s previously reported headcount, compensation expense and noncompensation expense have been revised to reflect this transfer.

20182020 compared with 20172019
Net income was $4.2$2.6 billion, a decrease of 35%, driven by an increase in the provision for credit losses.
Net revenue was $9.3 billion, flat compared to the prior year. Net interest income was $6.2 billion, a decrease of 5%, driven by deposit margin compression, predominantly offset by higher deposit balances and lending revenue. Noninterest revenue was $3.1 billion, an increase of 20%.
Net13%, driven by higher deposit-related fees, particularly cash management fees, higher investment banking revenue, was $9.1 billion, anand a gain on a strategic investment. The increase of 5%. Net interest income was $6.7 billion, an increase of 10%, reflecting higher deposit margins and loan growth, partially offset by a $56 million markdown of a held-for-sale position and lower loan spreads. Noninterest revenue was $2.3 billion,card income, primarily due to lower volumes as a decrease of 7%, reflecting lower Community Development Banking revenue, which was also impacted by the absenceresult of the TCJA benefit in the prior year, and lower deposit fees, partially offset by higher investment banking revenue.COVID-19 pandemic.
Noninterest expense was $3.4$3.8 billion, an increase of 2%, with continued investments in banker coverage and technology in the current year predominantly offsetdriven by the absence of an impairment on certain leased equipment in the prior year.higher compensation expense.
The provision for credit losses was an expense of $129$2.1 billion, compared to $296 million in the prior year. The increase was driven by select client downgrades. The prior year provisionnet additions to the allowance for credit losses wasas a benefitresult of $276 million.

2017 compared with 2016
Net income was $3.5 billion, an increase of 33%, driven by higher net revenue and a lower provision for credit losses, partially offset by higher noninterest expense.
Net revenue was $8.6 billion, an increase of 15%. Net interest income was $6.1 billion, an increase of 19%, driven by higher deposit spreads and loan growth. Noninterest revenue was $2.5 billion, an increase of 9%, predominantly driven by higher Community Development Banking revenue, including a $115 million benefit for the impact of the TCJA on certain investments, and higher investment banking revenue.COVID-19 pandemic across multiple industries.
Noninterest expense was $3.3 billion, an increase of 13% driven by hiring of bankers and business-related support staff, investments in technology, and an impairment of approximately $130 million on certain leased equipment, the majority of which was sold subsequent to year-end.
The provision for credit losses was a benefit of $276 million, driven by net reductions in the allowance for credit
losses, including in the Oil & Gas, Natural Gas Pipelines and Metals & Mining portfolios. The prior year provision for credit losses was $282 million driven by downgrades in the Oil & Gas portfolio and select client downgrades in other industries.

















JPMorgan Chase & Co./20182020 Form 10-K7177
Management’s discussion and analysis

CB product revenue consists of the following:
Lending includes a variety of financing alternatives, which are primarily provided on a secured basis; collateral includes receivables, inventory, equipment, real estate or other assets. Products include term loans, revolving lines of credit, bridge financing, asset-based structures, leases, and standby letters of credit.
Treasury servicesWholesale payments includes revenue from a broad range of products and services that enable CB clients to manage payments and receipts, as well as invest and manage funds.
Investment banking includes revenue from a range of products providing CB clients with sophisticated capital-raising alternatives, as well as balance sheet and risk management tools through advisory, equity underwriting, and loan syndications. Revenue from Fixed Income and Equity Markets products used by CB clients is also included.
Other product revenue primarily includes tax-equivalent adjustments generated from Community Development Banking activities and certain income derived from principal transactions.
Selected income statement data (continued)
Year ended December 31,
(in millions, except ratios)		202020192018
Revenue by product
Lending$4,396 $4,057 $4,049 
Wholesale payments3,715 4,200 4,351 
Investment banking(a)
1,069 919 852 
Other133 88 84 
Total Commercial Banking net revenue$9,313 $9,264 $9,336 
Investment banking revenue, gross(b)
$3,348 $2,744 $2,491 
Revenue by client segment
Middle Market Banking$3,640 $3,805 $3,797 
Corporate Client Banking3,203 3,119 3,119 
Commercial Real Estate Banking2,313 2,169 2,251 
Other157 171 169 
Total Commercial Banking net revenue$9,313 $9,264 $9,336 
Financial ratios
Return on equity11 %17 %20 %
Overhead ratio41 40 39 
In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. In conjunction with this realignment, treasury services product revenue has been renamed wholesale payments. In the fourth quarter of 2020, payment processing-only clients along with the associated revenue and expenses were realigned to CIB’s Wholesale Payments business from CCB and CB. Prior-period revenue and expense amounts have been revised to conform with the current presentation.
(a)Includes CB’s share of revenue from investment banking products sold to CB clients through the CIB.
(b)Refer to Business Segment Results page 65 for a discussion of revenue sharing.



Selected metrics
As of or for the year ended December 31, (in millions, except headcount)202020192018
Selected balance sheet data (period-end)
Total assets$228,932 $220,514 $220,229 
Loans:
Loans retained207,880 207,287 204,219 
Loans held-for-sale and loans at fair value2,245 1,009 1,978 
Total loans$210,125 $208,296 $206,197 
Equity22,000 22,000 20,000 
Period-end loans by client segment
Middle Market Banking$61,115 (a)$54,188 $56,656 
Corporate Client Banking47,420 51,165 48,343 
Commercial Real Estate Banking101,146 101,951 100,088 
Other444 992 1,110 
Total Commercial Banking loans$210,125 (a)$208,296 $206,197 
Selected balance sheet data (average)
Total assets$233,158 $218,896 $218,259 
Loans:
Loans retained217,767 206,837 204,243 
Loans held-for-sale and loans at fair value1,129 1,082 1,258 
Total loans$218,896 $207,919 $205,501 
Client deposits and other third-party liabilities237,825 172,734 170,901 
Equity22,000 22,000 20,000 
Average loans by client segment
Middle Market Banking$61,558 $55,690 $57,092 
Corporate Client Banking54,172 50,360 47,780 
Commercial Real Estate Banking102,479 100,884 99,243 
Other687 985 1,386 
Total Commercial Banking loans$218,896 $207,919 $205,501 
Headcount11,675 11,629 11,042 
(a)At December 31, 2020, total loans included $6.6 billion of loans under the PPP, of which $6.4 billion were in Middle Market Banking. Refer to Credit Portfolio on pages 112-113 for a further discussion of the PPP.
CB is divided into four primary client segments: Middle Market Banking, Corporate Client Banking, Commercial Term Lending, and Real Estate Banking.78
Middle Market Banking JPMorgan Chase & Co./2020 Form 10-Kcovers corporate, municipal and nonprofit clients, with annual revenue generally ranging between $20 million and $500 million.
Corporate Client Banking covers clients with annual revenue generally ranging between $500 million and $2 billion and focuses on clients that have broader investment banking needs.
Commercial Term Lending primarily provides term financing to real estate investors/owners for multifamily properties as well as office, retail and industrial properties.
Real Estate Banking provides full-service banking to investors and developers of institutional-grade real estate investment properties.
Other primarily includes lending and investment-related activities within the Community Development Banking business.

Selected income statement data (continued)  
Year ended December 31,
(in millions, except ratios)
2018 2017 2016
Revenue by product     
Lending$4,049
 $4,094
 $3,795
Treasury services4,074
 3,444
 2,797
Investment banking(a)
852
 805
 785
Other84
 262
 76
Total Commercial Banking net revenue$9,059
 $8,605
 $7,453
      
Investment banking revenue, gross(b)
$2,491
 $2,385
 $2,331
      
Revenue by client segment     
Middle Market Banking$3,708
 $3,341
 $2,848
Corporate Client Banking2,984
 2,727
 2,429
Commercial Term Lending1,366
 1,454
 1,408
Real Estate Banking681
 604
 456
Other320
 479
 312
Total Commercial Banking net revenue$9,059
 $8,605
 $7,453
      
Financial ratios     
Return on equity20% 17% 16%
Overhead ratio37
 39
 39
(a)Includes total Firm revenue from investment banking products sold to CB clients, net of revenue sharing with the CIB.
(b)Represents total Firm revenue from investment banking products sold to CB clients. As a result of the adoption of the revenue recognition guidance, prior period amounts have been revised to conform with the current period presentation. For additional information, refer to Note 1.

Selected metrics
As of or for the year ended December 31, (in millions, except ratios)202020192018
Credit data and quality statistics
Net charge-offs/(recoveries)$401 $160 $53 
Nonperforming assets
Nonaccrual loans:
Nonaccrual loans retained(a)
1,286 498 511 
Nonaccrual loans held-for-sale and loans at fair value120 — — 
Total nonaccrual loans1,406 498 511 
Assets acquired in loan satisfactions24 25 2 
Total nonperforming assets1,430 523 513 
Allowance for credit losses:
Allowance for loan losses3,335 2,780 2,682 
Allowance for lending-related commitments651 293 254 
Total allowance for credit losses3,986 3,073 2,936 
Net charge-off/(recovery) rate(b)
0.18 %0.08 %0.03 %
Allowance for loan losses to period-end loans retained
1.60 1.34 1.31 
Allowance for loan losses to nonaccrual loans retained(a)
259 558 525 
Nonaccrual loans to period-end total loans0.67 0.24 0.25 

(a)Allowance for loan losses of $273 million, $114 million and $92 million was held against nonaccrual loans retained at December 31, 2020, 2019 and 2018, respectively.
(b)Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate.


72JPMorgan Chase & Co./2018 Form 10-K


Selected metrics
As of or for the year ended December 31, (in millions, except headcount)2018 2017 2016
Selected balance sheet data (period-end)     
Total assets$220,229
 $221,228
 $214,341
Loans:     
Loans retained204,219
 202,400
 188,261
Loans held-for-sale and loans at fair value1,978
 1,286
 734
Total loans$206,197
 $203,686
 $188,995
Core loans206,039
 203,469
 188,673
Equity20,000
 20,000
 16,000
      
Period-end loans by client segment     
Middle Market Banking$56,656
 $56,965
 $53,929
Corporate Client Banking48,343
 46,963
 43,027
Commercial Term Lending76,720
 74,901
 71,249
Real Estate Banking17,563
 17,796
 14,722
Other6,915
 7,061
 6,068
Total Commercial Banking loans$206,197
 $203,686
 $188,995
      
Selected balance sheet data (average)     
Total assets$218,259
 $217,047
 $207,532
Loans:     
Loans retained204,243
 197,203
 178,670
Loans held-for-sale and loans at fair value1,258
 909
 723
Total loans$205,501
 $198,112
 $179,393
Core loans205,320
 197,846
 178,875
Client deposits and other third-party liabilities170,901
 177,018
 174,396
Equity20,000
 20,000
 16,000
      
Average loans by client segment     
Middle Market Banking$57,092
 $55,474
 $52,242
Corporate Client Banking47,780
 46,037
 41,756
Commercial Term Lending75,694
 73,428
 66,700
Real Estate Banking17,808
 16,525
 13,063
Other7,127
 6,648
 5,632
Total Commercial Banking loans$205,501
 $198,112
 $179,393
      
Headcount(a)
11,042
 10,061
 9,352
(a)Effective in the first quarter of 2018, certain Operations and Compliance staff were transferred from CCB and Corporate, respectively, to CB. The prior period amounts have been revised to conform with the current period presentation. For a further discussion of this transfer, refer to page 71, Selected income statement data, footnote (c).
Selected metrics    
As of or for the year ended December 31, (in millions, except ratios)2018 2017 2016
Credit data and quality statistics     
Net charge-offs/(recoveries)$53
 $39
 $163
Nonperforming assets     
Nonaccrual loans:     
Nonaccrual loans retained(a)
511
 617
 1,149
Nonaccrual loans held-for-sale and loans at fair value—
 —
 —
Total nonaccrual loans511
 617
 1,149
      
Assets acquired in loan satisfactions2
 3
 1
Total nonperforming assets513
 620
 1,150
Allowance for credit losses:     
Allowance for loan losses2,682
 2,558
 2,925
Allowance for lending-related commitments254
 300
 248
Total allowance for credit losses2,936
 2,858
 3,173
      
Net charge-off/(recovery) rate(b)
0.03% 0.02% 0.09%
Allowance for loan losses to period-end loans retained
1.31
 1.26
 1.55
Allowance for loan losses to nonaccrual loans retained(a)
525
 415
 255
Nonaccrual loans to period-end total loans0.25
 0.30
 0.61
(a)Allowance for loan losses of $92 million, $92 million and $155 million was held against nonaccrual loans retained at December 31, 2018, 2017 and 2016, respectively.
(b)Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate.


JPMorgan Chase & Co./2018 Form 10-K73
Management’s discussion and analysis

JPMorgan Chase & Co./2020 Form 10-K79
Management’s discussion and analysis
ASSET & WEALTH MANAGEMENT
Asset & Wealth Management, with client assets of $2.7$3.7 trillion, is a global leader in investment and wealth management. AWM clients include institutions, high-net-worth individuals and retail investors in many major markets throughout the world. AWM offers

Asset Management
Offers multi-asset investment management solutions across most major asset classes including equities, fixed income, alternatives and money market funds. AWM also offers multi-asset investment management,funds to institutional and retail investors providing solutions for a broad range of clients’ investment needs. For

Wealth Management clients, AWM also provides
Provides retirement products and services, brokerage, and banking services includingcustody, trusts and estates, loans, mortgages, deposits and deposits. investment management to high net worth clients.

The majority of AWM’s client assets are in actively managed portfolios.
Selected income statement data
Year ended December 31,
(in millions, except ratios
and headcount)		202020192018
Revenue
Asset management, administration and commissions$10,610 $9,818 $9,808 
All other income212 418 244 
Noninterest revenue10,822 10,236 10,052 
Net interest income3,418 3,355 3,375 
Total net revenue14,240 13,591 13,427 
Provision for credit losses263 59 52 
Noninterest expense
Compensation expense4,959 5,028 4,888 
Noncompensation expense4,998 4,719 4,687 
Total noninterest expense9,957 9,747 9,575 
Income before income tax expense4,020 3,785 3,800 
Income tax expense1,028 918 855 
Net income$2,992 $2,867 $2,945 
Revenue by line of business
Asset Management$7,654 $7,254 $7,163 
Wealth Management6,586 6,337 6,264 
Total net revenue$14,240 $13,591 $13,427 
Financial ratios
Return on common equity28 %26 %32 %
Overhead ratio70 72 71 
Pre-tax margin ratio:
Asset Management29 26 26 
Wealth Management27 30 30 
Asset & Wealth Management28 28 28 
Effective January 1, 2018,In the fourth quarter of 2020, the Firm adopted several new accounting standards;realigned certain wealth management clients from AWM to CCB. Prior-period amounts have been revised to conform with the guidance which hadcurrent presentation, including a decrease to net revenue of $725 million and $649 million for the most significant impact onyears ended December 31, 2019 and 2018, respectively. Effective in the AWM segment resultsfirst quarter of 2021, the Wealth Management business was revenue recognition. The revenue recognition guidance was applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.renamed Global Private Bank.
Selected income statement data  
Year ended December 31,
(in millions, except ratios
and headcount)
201820172016
Revenue   
Asset management, administration and commissions$10,171
$9,856
$9,187
All other income368
600
602
Noninterest revenue10,539
10,456
9,789
Net interest income3,537
3,379
3,033
Total net revenue14,076
13,835
12,822
    
Provision for credit losses53
39
26
    
Noninterest expense   
Compensation expense5,495
5,317
5,063
Noncompensation expense4,858
4,901
4,192
Total noninterest expense10,353
10,218
9,255
    
Income before income tax expense3,670
3,578
3,541
Income tax expense817
1,241
1,290
Net income$2,853
$2,337
$2,251
    
Revenue by line of business   
Asset Management$7,163
$7,257
$6,747
Wealth Management6,913
6,578
6,075
Total net revenue$14,076
$13,835
$12,822
    
Financial ratios   
Return on common equity31%25%24%
Overhead ratio74
74
72
Pre-tax margin ratio:   
Asset Management26
22
27
Wealth Management26
30
28
Asset & Wealth Management26
26
28
    
Headcount23,920
22,975
21,082
    
Number of Wealth Management client advisors2,865
2,605
2,504
20182020 compared with 20172019
Net income was $2.9$3.0 billion, an increase of 22%4%.
Net revenue was $14.1$14.2 billion, an increase of 2%. Net interest income was $3.5 billion, up 5%, driven by deposit margin expansion and loan growth. Noninterest revenue was $10.5 billion, up 1%, driven by higher management fees on higher average market levels and the cumulative impact of net inflows, predominantly offset by fee compression, lower investment valuations and lower performance fees.
Revenue from Asset Management was $7.2 billion, down 1%, driven by lower investment valuations, fee compression and lower performance fees, predominantly offset by higher management fees on higher average market levels and the cumulative impact of net inflows.
Revenue from Wealth Management was $6.9 billion, up 5%, reflecting higher management fees on the cumulative impact of net inflows and higher average market levels as well as higher net interest income from deposit margin expansion and continued loan growth, partially offset by fee compression.
Noninterest expense was $10.4 billion, an increase of 1%, driven by investments in advisors and technology and higher external fees on revenue growth, largely offset by lower legal expense.
2017 compared with 2016
Net income was $2.3 billion, an increase of 4% compared with the prior year, reflecting higher revenue and a tax benefit resulting from the vesting of employee share-based awards, offset by higher noninterest expense.
Net revenue was $13.8 billion, an increase of 8%. Net interest income was $3.4 billion, up 11%2%, driven by higher deposit spreads.and loan balances as well as loan margin expansion, offset by deposit margin compression. Noninterest revenue was $10.5$10.8 billion, up 7%6%, predominantly driven by higher market levels,asset management fees as a result of net inflows into liquidity and long term products, higher performance fees and increased brokerage commissions on higher client-driven volume, partially offset by the absence of a gain in the prior year on the disposal of an asset.lower net investment valuation gains.
Revenue from Asset Management was $7.3$7.7 billion, up 8% from the prior year,6%, predominantly driven by higher market levels,asset management fees as a result of net inflows into liquidity products as well as higher performance fees, partially offset by the absence of a gain in prior year on the disposal of an asset.lower net investment valuation gains.
Revenue from Wealth Management was $6.6 billion, up 8% from the prior year, reflecting higher net interest income from higher deposit spreads.
Noninterest expense was $10.2 billion, an increase of 10%4%, predominantly driven by higher deposit and loan balances, increased brokerage commissions and asset management fees, largely offset by deposit margin compression.
The provision for credit losses was $263 million, driven by additions to the allowance for credit losses, predominantly as a result of the impact of the COVID-19 pandemic.
Noninterest expense was $10.0 billion, an increase of 2%, driven by legal expense, volume- and compensationrevenue-related expense on higher revenue and headcount.as well as investments in the business, partially offset by lower structural expense.

74JPMorgan Chase & Co./2018 Form 10-K


AWM’s lines of business consist of the following:80
Asset ManagementJPMorgan Chase & Co./2020 Form 10-K provides comprehensive global investment services, including asset management, pension analytics, asset-liability management and active risk-budgeting strategies.
Wealth Management offers investment advice and wealth management, including investment management, capital markets and risk management, tax and estate planning, banking, lending and specialty-wealth advisory services.

AWM’s client segments consist of the following:
Private Banking clients include high- and ultra-high-net-worth individuals, families, money managers and business owners and small corporations worldwide.owners.
Institutional clients include both corporate and public institutions, endowments, foundations, nonprofit organizations and governments worldwide.
Retail clients include financial intermediaries and individual investors.
Asset Management has two high-level measures of its overall fund performance.
• Percentage of mutual fund assets under management in funds rated 4- or 5-star: Mutual fund rating services rank funds based on their risk-adjusted performance over various periods. A 5-star rating is the best rating and represents the top 10% of industry-wide ranked funds. A 4-star rating represents the next 22.5% of industry-wide ranked funds. A 3-star rating represents the next 35% of industry-wide ranked funds. A 2-star rating represents the next 22.5% of industry-wide ranked funds. A 1-star rating is the worst rating and represents the bottom 10% of industry-wide ranked funds. The “overall Morningstar rating” is derived from a weighted average of the performance associated with a fund’s three-, five- and ten-year (if applicable) Morningstar Rating metrics. For U.S. domiciled funds, separate star ratings are given at the individual share class level. The Nomura “star rating” is based on three-year risk-adjusted performance only. Funds with fewer than three years of history are not rated and hence excluded from this analysis. All ratings, the assigned peer categories and the asset values used to derive this analysis are sourced from these fund rating providers mentioned in footnote (a). The data providers re-denominate the asset values into U.S. dollars. This % of AUM is based on star ratings at the share class level for U.S. domiciled funds, and at a “primary share class” level to represent the star rating of all other funds except for Japan where Nomura provides ratings at the fund level. The “primary share class”, as defined by Morningstar, denotes the share class recommended as being the best proxy for the portfolio and in most cases will be the most retail version (based upon annual management charge, minimum investment, currency and other factors). The performance data could have been different if all funds/accounts would have been included. Past performance is not indicative of future results.
• Percentage of mutual fund assets under management in funds ranked in the 1st or 2nd quartile (one, three and five years): All quartile rankings, the assigned peer categories and the asset values used to derive this analysis are sourced from the fund ranking providers mentioned in footnote (c)(b). Quartile rankings are done on the net-of-fee absolute return of each fund. The data providers re-denominate the asset values into U.S. dollars. This % of AUM is based on fund performance and associated peer rankings at the share class level for U.S. domiciled funds and at a “primarythe “primary share class” level to represent the quartile ranking of the U.K., Luxembourg and Hong Kong funds and at theor fund level for all other funds. The “primary“primary share class”class”, as defined by Morningstar, denotes the share class recommended as being the best proxy for the portfolio and in most cases will be the most retail version (based upon annual management charge, minimum investment, currency and other factors). Where peer group rankings given for a fund are in more than one “primary share class” territory both rankings are included to reflect local market competitiveness (applies to “Offshore Territories” and “HK SFC Authorized” funds only).competitiveness. The performance data could have been different if all funds/accounts would have been included. Past performance is not indicative of future results.
Selected metrics
As of or for the year ended December 31,
(in millions, except ranking data and ratios)
202020192018
% of JPM mutual fund assets rated as 4- or 5-star(a)
55 %61 %58 %
% of JPM mutual fund assets ranked in 1st or 2nd
quartile:(b)
1 year55 59 68 
3 years69 77 73 
5 years68 75 85 
Selected balance sheet data (period-end)(c)
Total assets$203,384 $173,175 $161,047 
Loans186,608 158,149 145,794 
Deposits198,755 142,740 133,276 
Equity10,500 10,500 9,000 
Selected balance sheet data (average)(c)
Total assets$181,432 $161,863 $151,632 
Loans166,311 147,404 136,929 
Deposits161,955 135,265 132,123 
Equity10,500 10,500 9,000 
Headcount20,68321,55021,520
Number of Wealth Management client advisors2,4622,4192,385
Credit data and quality statistics(c)
Net charge-offs/(recoveries)$(14)$29 $— 
Nonaccrual loans785 115 263 
Allowance for credit losses:
Allowance for loan losses598 350 326 
Allowance for lending-related commitments38 19 16 
Total allowance for credit losses636 369 342 
Net charge-off/(recovery) rate(0.01)%0.02 %— %
Allowance for loan losses to period-end loans0.32 0.22 0.22 
Allowance for loan losses to nonaccrual loans76 304 124 
Nonaccrual loans to period-end loans0.42 0.07 0.18 
Selected metrics   
As of or for the year ended December 31,
(in millions, except ranking data and ratios)
201820172016
% of JPM mutual fund assets rated as 4- or 5-star(a)
58%60%63%
% of JPM mutual fund assets ranked in 1st or 2nd 
quartile:(b)
   
1 year68
64
54
3 years73
75
72
5 years85
83
79
    
Selected balance sheet data (period-end)   
Total assets$170,024
$151,909
$138,384
Loans147,632
130,640
118,039
Core loans147,632
130,640
118,039
Deposits138,546
146,407
161,577
Equity9,000
9,000
9,000
    
Selected balance sheet data (average)   
Total assets$160,269
$144,206
$132,875
Loans138,622
123,464
112,876
Core loans138,622
123,464
112,876
Deposits137,272
148,982
153,334
Equity9,000
9,000
9,000
    
Credit data and quality statistics   
Net charge-offs$10
$14
$16
Nonaccrual loans263
375
390
Allowance for credit losses:   
Allowance for loan losses326
290
274
Allowance for lending-related commitments16
10
4
Total allowance for credit losses342
300
278
Net charge-off rate0.01%0.01%0.01%
Allowance for loan losses to period-end loans0.22
0.22
0.23
Allowance for loan losses to nonaccrual loans124
77
70
Nonaccrual loans to period-end loans0.18
0.29
0.33
In the fourth quarter of 2020, the Firm realigned certain wealth management clients from AWM to CCB. Prior-period amounts have been revised to conform with the current presentation, including a decrease to headcount of 2,641 and 2,400 as of December 31, 2019 and 2018, respectively.
(a)Represents the Nomura “star rating” for Japan domiciled funds and Morningstar for all other domiciled funds. Includes only Asset Management retail open-ended mutual funds that have a rating. Excludes money market funds, Undiscovered Managers Fund, and Brazil domiciled funds.
(b)Quartile ranking sourced from Lipper, Morningstar and Nomura based on country of domicile. Includes only Asset Management retail open-ended mutual funds that are ranked by the aforementioned sources. Excludes money market funds, Undiscovered Managers Fund, and Brazil domiciled funds.
(c)Loans, deposits and related credit data and quality statistics relate to the Wealth Management business.
(a)Represents the “overall star rating” derived from Morningstar for the U.S., the U.K., Luxembourg, Hong Kong and Taiwan domiciled funds; and Nomura “star rating” for Japan domiciled funds. Includes only Asset Management retail open-ended mutual funds that have a rating. Excludes money market funds, Undiscovered Managers Fund, and Brazil domiciled funds.
(b)Quartile ranking sourced from: Lipper for the U.S. and Taiwan domiciled funds; Morningstar for the U.K., Luxembourg and Hong Kong domiciled funds; Nomura for Japan domiciled funds and Fund Doctor for South Korea domiciled funds. Includes only Asset Management retail open-ended mutual funds that are ranked by the aforementioned sources. Excludes money market funds, Undiscovered Managers Fund, and Brazil domiciled funds.

JPMorgan Chase & Co./20182020 Form 10-K7581
Management’s discussion and analysis

Client assets
20182020 compared with 20172019
Client assets were $2.7$3.7 trillion, a decreasean increase of 2%18%. Assets under management were $2.0 trillion, a decrease of 2% reflecting lower spot market levels, largely offset by net inflows into liquidity and long-term products.
2017 compared with 2016
Client assets were $2.8$2.7 trillion, an increase of 14% compared with17% driven by the prior year. Assets under management were $2.0 trillion, an increaseimpact of 15% from the prior year reflecting higher market levels and net inflows into both long-term and liquidity products.
Client assets
December 31,
(in billions)		202020192018
Assets by asset class
Liquidity$641 $539 $477 
Fixed income671 591 455 
Equity595 463 376 
Multi-asset656 596 515 
Alternatives153 139 135 
Total assets under management2,716 2,328 1,958 
Custody/brokerage/
administration/deposits
936 761 661 
Total client assets$3,652 $3,089 $2,619 
Assets by client segment
Private Banking$689 $628 $518 
Institutional1,273 1,081 930 
Retail754 619 510 
Total assets under management$2,716 $2,328 $1,958 
Private Banking$1,581 $1,359 $1,155 
Institutional1,311 1,106 950 
Retail760 624 514 
Total client assets$3,652 $3,089 $2,619 
Client assets (continued)
Year ended December 31,
(in billions)		202020192018
Assets under management rollforward
Beginning balance$2,328 $1,958 $2,010 
Net asset flows:
Liquidity104 61 30 
Fixed income48 104 (4)
Equity33 (11)— 
Multi-asset5 2 17 
Alternatives6 2 5 
Market/performance/other impacts192 212 (100)
Ending balance, December 31$2,716 $2,328 $1,958 
Client assets rollforward
Beginning balance$3,089 $2,619 $2,685 
Net asset flows276 176 74 
Market/performance/other impacts287 294 (140)
Ending balance, December 31$3,652 $3,089 $2,619 
In the fourth quarter of 2020, the Firm realigned certain wealth management clients from AWM to CCB. Prior-period amounts have been revised to conform with the current presentation, including a decrease to client assets of $137 billion and $114 billion as of December 31, 2019 and 2018, respectively.
Client assets  
December 31,
(in billions)
201820172016
Assets by asset class   
Liquidity$480
$459
$436
Fixed income464
474
420
Equity384
428
351
Multi-asset and alternatives659
673
564
Total assets under management1,987
2,034
1,771
Custody/brokerage/
administration/deposits
746
755
682
Total client assets$2,733
$2,789
$2,453
    
Memo:   
Alternatives client assets(a)
$171
$166
$154
    
Assets by client segment   
Private Banking$552
$526
$435
Institutional926
968
869
Retail509
540
467
Total assets under management$1,987
$2,034
$1,771
    
Private Banking$1,274
$1,256
$1,098
Institutional946
990
886
Retail513
543
469
Total client assets$2,733
$2,789
$2,453
(a)Represents assets under management, as well as client balances in brokerage accounts.
International metrics
Year ended December 31,
(in billions, except where otherwise noted)		202020192018
Total net revenue (in millions)(a)
Europe/Middle East/Africa(b)
$2,956 $2,869 $2,850 
Asia-Pacific(b)
1,665 1,509 1,538 
Latin America/Caribbean(b)
782 724 755 
Total international net revenue5,403 5,102 5,143 
North America8,837 8,489 8,284 
Total net revenue$14,240 $13,591 $13,427 
Assets under management
Europe/Middle East/Africa(b)
$517 $428 $366 
Asia-Pacific(b)
224 192 163 
Latin America/Caribbean(b)
70 62 51 
Total international assets under management811 682 580 
North America1,905 1,646 1,378 
Total assets under management$2,716 $2,328 $1,958 
Client assets
Europe/Middle East/Africa(b)
$622 $520 $440 
Asia-Pacific(b)
330 272 226 
Latin America/Caribbean(b)
166 147 125 
Total international client assets1,118 939 791 
North America2,534 2,150 1,828 
Total client assets$3,652 $3,089 $2,619 
Client assets (continued)   
Year ended December 31,
(in billions)
201820172016
Assets under management rollforward   
Beginning balance$2,034
$1,771
$1,723
Net asset flows:   
Liquidity31
9
24
Fixed income(1)36
30
Equity2
(11)(29)
Multi-asset and alternatives24
43
22
Market/performance/other impacts(103)186
1
Ending balance, December 31$1,987
$2,034
$1,771
    
Client assets rollforward   
Beginning balance$2,789
$2,453
$2,350
Net asset flows88
93
63
Market/performance/other impacts(144)243
40
Ending balance, December 31$2,733
$2,789
$2,453
In the fourth quarter of 2020, the Firm realigned certain wealth management clients from AWM to CCB. Prior-period amounts have been revised to conform with the current presentation, including a decrease to net revenue of $725 million and $649 million for the years ended December 31, 2019 and 2018, respectively, and client assets of $137 billion and $114 billion as of December 31, 2019 and 2018, respectively.
(a)Regional revenue is based on the domicile of the client.
(b)The prior period amounts have been revised to conform with the current period presentation.
International metrics
Year ended December 31,
(in billions, except where otherwise noted)
201820172016
Total net revenue (in millions)(a)
   
Europe/Middle East/Africa$2,721
$2,715
$2,425
Asia/Pacific1,518
1,385
1,278
Latin America/Caribbean904
844
726
Total international net revenue5,143
4,944
4,429
    
North America8,933
8,891
8,393
Total net revenue$14,076
$13,835
$12,822
    
Assets under management   
Europe/Middle East/Africa$355
$384
$309
Asia/Pacific162
160
123
Latin America/Caribbean63
61
45
Total international assets under management580
605
477
    
North America1,407
1,429
1,294
Total assets under management$1,987
$2,034
$1,771
    
Client assets   
Europe/Middle East/Africa$414
$441
$359
Asia/Pacific222
225
177
Latin America/Caribbean155
154
114
Total international client assets791
820
650
    
North America1,942
1,969
1,803
Total client assets$2,733
$2,789
$2,453
(a)Regional revenue is based on the domicile of the client.


76JPMorgan Chase & Co./2018 Form 10-K


82JPMorgan Chase & Co./2020 Form 10-K

CORPORATE
The Corporate segment consists of Treasury and Chief Investment Office and Other Corporate, which includes corporate staff functions and expense that is centrally managed. Treasury and CIO is predominantly responsible for measuring, monitoring, reporting and managing the Firm’s liquidity, funding, capital, structural interest rate and foreign exchange risks. The major Other Corporate functions include Real Estate, Technology, Legal, Corporate Finance, Human Resources, Internal Audit, Risk Management, Compliance, Control Management, Corporate Responsibility and various Other Corporate groups.
Selected income statement and balance sheet data
Year ended December 31,
(in millions, except headcount)		202020192018
Revenue
Principal transactions$245 $(461)$(426)
Investment securities gains/(losses)795 258 (395)
All other income159 89 558 
Noninterest revenue1,199 (114)(263)
Net interest income(2,375)1,325 135 
Total net revenue(a)
(1,176)1,211 (128)
Provision for credit losses66 (1)(4)
Noninterest expense1,373 1,067 902 
Income/(loss) before income tax expense/(benefit)(2,615)145 (1,026)
Income tax expense/(benefit)(865)(966)215 
Net income/(loss)$(1,750)$1,111 $(1,241)
Total net revenue
Treasury and CIO(1,368)2,032 510 
Other Corporate192 (821)(638)
Total net revenue$(1,176)$1,211 $(128)
Net income/(loss)
Treasury and CIO(1,403)1,394 (69)
Other Corporate(347)(283)(1,172)
Total net income/(loss)$(1,750)$1,111 $(1,241)
Total assets (period-end)$1,359,831 $837,618 $771,787 
Loans (period-end)1,657 1,649 1,597 
Headcount38,366 38,033 37,145 
(a)Included tax-equivalent adjustments, driven by tax-exempt income from municipal bonds, of $241 million, $314 million and $382 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Selected income statement and balance sheet data
Year ended December 31,
(in millions, except headcount)
2018 2017 2016
Revenue     
Principal transactions$(426) $284
 $210
Securities gains/(losses)(395) (66) 140
All other income/(loss)(a)
558
 867
 588
Noninterest revenue(263) 1,085
 938
Net interest income135
 55
 (1,425)
Total net revenue(b)
(128) 1,140
 (487)
      
Provision for credit losses(4) —
 (4)
      
Noninterest expense(c)
902
 501
 462
Income/(loss) before income tax benefit(1,026) 639
 (945)
Income tax expense/(benefit)215
 2,282
 (241)
Net income/(loss)$(1,241) $(1,643) $(704)
Total net revenue     
Treasury and CIO510
 566
 (787)
Other Corporate(638) 574
 300
Total net revenue$(128) $1,140
 $(487)
Net income/(loss)     
Treasury and CIO(69) 60
 (715)
Other Corporate(1,172) (1,703) 11
Total net income/(loss)$(1,241) $(1,643) $(704)
      
Total assets (period-end)$771,787
 $781,478
 $799,426
Loans (period-end)1,597
 1,653
 1,592
Core loans(d)
1,597
 1,653
 1,589
Headcount(e)
37,145
 34,601
 31,789
(a)Included revenue related to a legal settlement of $645 million for the year ended December 31, 2017.
(b)Included tax-equivalent adjustments, driven by tax-exempt income from municipal bond investments, of $382 million, $905 million and $885 million for the years ended December 31, 2018, 2017 and 2016, respectively. The decrease in taxable-equivalent adjustments reflects the impact of the TCJA.
(c)Included legal expense/(benefit) of $(241) million, $(593) million and $(385) million for the years ended December 31, 2018, 2017 and 2016, respectively.
(d)Average core loans were $1.7 billion, $1.6 billion and $1.9 billion for the years ended December 31, 2018, 2017 and 2016, respectively.
(e)Effective in the first quarter of 2018, certain Compliance staff were transferred from Corporate to CB. The prior period amounts have been revised to conform with the current period presentation. For a further discussion of this transfer, refer to CB segment results on page 71.

20182020 compared with 20172019
Net income was a loss was $1.2 billion.of $1.8 billion compared with income of $1.1 billion in the prior year.
Net revenue was a loss of $128 million,$1.2 billion, compared with net revenue of $1.1$1.2 billion in the prior year.year, driven by lower net interest income partially offset by higher noninterest revenue. The current year includes markdownsdecrease in net interest income was predominantly driven by lower rates, including the impact of faster prepayments on mortgage-backed securities, as well as limited opportunities to deploy funds in response to significant deposit growth across the LOBs.
Noninterest revenue increased reflecting higher net valuations on certain legacy private equity investments and higher net investment securities losses relatedgains due to the repositioning of the investment securities portfolio, partially offset by higher net interest income primarily driven by higher rates. The prior year included a $645 million benefit from a legal settlement.portfolio.
Noninterest expense of $902$1.4 billion was up $305 million includesdriven by an impairment on a pre-tax loss of $174 millionlegacy investment.
The provision for credit losses relates to the HTM portfolio, which became subject to the CECL accounting guidance beginning on January 1, 2020.
Refer to Note 10 and Note 13 for additional information on the liquidation of a legal entity recorded ininvestment securities portfolio and the second quarter of 2018, as well as investments in technology and real estate.allowance for credit losses.
CurrentThe current period income tax expense reflectsbenefit was predominantly driven by a net benefitlower level of $302 million resulting frompre-tax income and changes in estimates under the TCJAlevel and mix of income and expenses subject to U.S. federal, and state and local taxes. The prior period included $1.1 billion of tax benefits related to the remeasurementresolution of certain deferred taxes and the deemed repatriation tax on non-U.S. earnings. This amount was more than offset by changes to certain tax reserves and other tax adjustments. The prior year income tax expense included a $2.7 billion expense related to the impact of the TCJA.audits.
2017 compared with 2016
Net loss was $1.6 billion, compared with a net loss of $704 million in the prior year. The current year net loss included a $2.7 billion increase to income tax expense related to the impact of the TCJA.
Net revenue was $1.1 billion, compared with a loss of $487 million in the prior year. The increase in current year net revenue was driven by a $645 million benefit from a legal settlement with the FDIC receivership for Washington Mutual and with Deutsche Bank as trustee of certain Washington Mutual trusts and by the net impact of higher interest rates.
Net interest income was $55 million, compared with a loss of $1.4 billion in the prior year. The gain in the current year was primarily driven by higher interest income on deposits with banks due to higher interest rates and balances, partially offset by higher interest expense on long-term debt primarily driven by higher interest rates.

JPMorgan Chase & Co./20182020 Form 10-K7783
Management’s discussion and analysis

Treasury and CIOoverview
Treasury and CIO is predominantly responsible for measuring, monitoring, reporting and managing the Firm’s liquidity, funding, capital, structural interest rate and foreign exchange risks. The risks managed by Treasury and CIO arise from the activities undertaken by the Firm’s four major reportable business segments to serve their respective client bases, which generate both on- and off-balance sheet assets and liabilities.
Treasury and CIO seek to achieve the Firm’s asset-liability management objectives generally by investing in high-quality securities that are managed for the longer-term as part of the Firm’s investment securities portfolio. Treasury and CIO also use derivatives to meet the Firm’s asset-liability management objectives. ForRefer to Note 5 for further information on derivatives, refer to Note 5.derivatives. In addition, Treasury and CIO manage the Firm’s cash position primarily through depositingdeposits at central banks and investinginvestments in short-term instruments. For further information on liquidity and funding risk, referRefer to Liquidity Risk Management on pages 95–100. For102–108 for further information on liquidity and funding risk. Refer to Market Risk Management on pages 135–142 for information on interest rate, foreign exchange and other risks, refer to risks.Market Risk Management onpages 124–131.

The investment securities portfolio primarily consists of U.S. GSE and government agency and nonagency mortgage-backed securities, U.S. and non-U.S. government securities, obligations of U.S. states and municipalities, other ABS and corporate debt securities. At December 31, 2018,2020, the investment securities portfolio was $260.1$587.9 billion, and the average credit rating of the securities comprising the portfolio was AA+ (based upon external ratings where available and, where not available, based primarily upon internal ratings that correspond to ratings as defined by S&P and Moody’s)risk ratings). Refer to Note 10 for further information on the Firm’s investment securities portfolio.portfolio and internal risk ratings.
Selected income statement and balance sheet data
As of or for the year ended December 31, (in millions)2018 2017 2016
Investment securities gains/(losses)$(395) $(78) $132
Available-for-sale (“AFS”) investment securities (average)203,449
 219,345
 226,892
Held-to-maturity (“HTM”) investment securities (average)31,747
 47,927
 51,358
Investment securities portfolio (average)235,197
 267,272
 278,250
AFS investment securities (period-end)228,681
 200,247
 236,670
HTM investment securities (period-end)31,434
 47,733
 50,168
Investment securities portfolio (period–end)260,115
 247,980
 286,838
Selected income statement and balance sheet data
As of or for the year ended December 31, (in millions)202020192018
Investment securities gains/(losses)$795 $258 $(395)
Available-for-sale securities (average)$413,367 $283,205 $203,449 
Held-to-maturity securities (average)94,569 34,939 31,747 
Investment securities portfolio (average)$507,936 $318,144 $235,196 
Available-for-sale securities (period-end)$386,065 $348,876 $228,681 
Held-to-maturity securities, net of allowance for credit losses (period–end)(a)(b)
201,821 47,540 31,434 
Investment securities portfolio, net of allowance for credit losses (period–end)(a)
$587,886 $396,416 $260,115 
As permitted by(a)At December 31, 2020, the new hedge accounting guidance,allowance for credit losses on HTM securities was $78 million.
(b)During 2020, the Firm elected to transfer certaintransferred $164.2 billion of investment securities from AFS to HTM for capital management purposes.
Refer to AFS in the first quarter of 2018. For additional information, refer to Notes 1 and 10.

Note 10 for further information.












78JPMorgan Chase & Co./2018 Form 10-K

ENTERPRISE-WIDE84JPMorgan Chase & Co./2020 Form 10-K

FIRMWIDE RISK MANAGEMENT
Risk is an inherent part of JPMorgan Chase’s business activities. When the Firm extends a consumer or wholesale loan, advises customers and clients on their investment decisions, makes markets in securities, or offers other products or services, the Firm takes on some degree of risk. The Firm’s overall objective is to manage its businesses, and the associated risks, in a manner that balances serving the interests of its clients, customers and investors and protects the safety and soundness of the Firm.
The Firm believes that effective risk management requires: requires, among other things:
•Acceptance of responsibility, including identification and escalation of risks by all individuals within the Firm;
•
Acceptance of responsibility, including identification and escalation of risk issues, by all individuals within the Firm;
•
Ownership of risk identification, assessment, data and management within each of the lines of business and Corporate; and
•
Firmwide structures for risk governance.
The Firm strives•Ownership of risk identification, assessment, data and management within each of the LOBs and Corporate; and
•Firmwide structures for continual improvement through efforts to enhance controls, ongoing employee training and development, talent retention, and other measures. risk governance.
The Firm follows a disciplined and balanced compensation framework with strong internal governance and independent oversight by the Board oversight.of Directors (the “Board”). The impact of risk and control issues areis carefully considered in the Firm’s performance evaluation and incentive compensation processes.
Risk governance and oversight framework
Firmwide Risk Management is overseen and managed on an enterprise-wide basis. The Firm’s risk management governance and oversight framework involves understanding drivers of risks, types of risks, and impacts of risks. jpm-20201231_g2.jpg
Drivers of Risks
are factors that cause a risk to exist. Drivers of risks include but are not limited to, the economic environment, regulatory orand government policy, competitor orand market evolution, business decisions, process orand judgment error, deliberate wrongdoing, dysfunctional markets, and natural disasters.
Types of Risks
The Firm’sare categories by which risks manifest themselves. Risks are generally categorized in the following four risk types:
•Strategic risk is the risk to earnings, capital, liquidity or reputation associated with poorly designed or failed business plans or inadequate response to changes in the operating environment.
•
•Credit and investment risk is the risk associated with the default or change in credit profile of a client, counterparty or customer; or loss of principal or a reduction in expected returns on investments, including
consumer credit risk, wholesale credit risk, and investment portfolio risk.
•Market risk is the risk associated with the effect of changes in market factors, such as interest and foreign exchange rates, equity and commodity prices, credit spreads or implied volatilities, on the value of assets and liabilities held for both the short and long term.
•Operational risk is the risk associated with an adverse outcome resulting from inadequate or failed internal processes or systems; human factors; or external events impacting the Firm’s processes or systems. It includes compliance, conduct, legal, and estimations and model risk.
Strategic risk is the risk associated with the Firm’s current and future business plans and objectives, including capital risk, liquidity risk, and the impact to the Firm’s reputation.
•
Credit and investment risk is the risk associated with the default or change in credit profile of a client, counterparty or customer; or loss of principal or a reduction in expected returns on investments, including consumer credit risk, wholesale credit risk, and investment portfolio risk.
•
Market risk is the risk associated with the effect of changes in market factors, such as interest and foreign exchange rates, equity and commodity prices, credit spreads or implied volatilities, on the value of assets and liabilities held for both the short and long term.
•
Operational risk is the risk associated with inadequate or failed internal processes, people and systems, or from external events and includes compliance risk, conduct risk, legal risk, and estimations and model risk.
Impacts of Risks
are consequences of risks, both quantitative and qualitative. There may be many consequences of risks manifesting, including quantitative impacts such as a reduction in earnings and capital, liquidity outflows, and fines or penalties, or qualitative impacts such as reputation damage, loss of clients and customers, and regulatory and enforcement actions.
The Firm’s risk governance and oversight framework is managed on a Firmwide basis. The Firm has an Independent Risk Management (“IRM”) function, which consists of the Risk Management and Compliance organizations. The Chief Executive Officer (“CEO”) appoints, subject to approval by the Risk Committee of the Board (“Board Risk Committee”), the Firm’s Chief Risk Officer (“CRO”) to lead the IRM organization and manage the risk governance structure of the Firm. The framework is subject to approval by the Board Risk Committee in the form of the Risk Governance and Oversight FunctionsPolicy. The Firm’s CRO oversees and delegates authorities to LOB CROs, Firmwide Risk Executives (“FREs”), and the Firm’s Chief Compliance Officer (“CCO”), who each establish Risk Management and Compliance organizations, set the Firm’s risk governance policies and standards, and define and oversee the implementation of the Firm’s risk governance. The LOB CROs are responsible for risks that arise in their LOBs, while FREs oversee risk areas that span across the individual LOBs, functions and regions.
Three lines of defense
The Firm relies upon each of its LOBs and Corporate areas giving rise to risk to operate within the parameters identified by the IRM function, and within its own management-identified risk and control standards. Each LOB and Treasury & CIO, including their aligned Operations, Technology and Control Management, are the Firm’s “first line of defense” and own the identification of risks, as well as the design and execution of controls to manage those risks. The first line of defense is responsible for adherence to applicable laws, rules and regulations and for the implementation of the risk management structure (which may include policy, standards, limits, thresholds and controls) established by IRM.
JPMorgan Chase & Co./2020 Form 10-K85
Management’s discussion and analysis
The IRM function is independent of the businesses and is the Firm’s “second line of defense.” The IRM function independently assesses and challenges the first line of defense risk management practices. IRM is also responsible for its own adherence to applicable laws, rules and regulations and for the implementation of policies and standards established by IRM with respect to its own processes.
Internal Audit is an independent function that provides objective assessment on the adequacy and effectiveness of Firmwide processes, controls, governance and risk management as the “third line of defense.” The Internal Audit Function is headed by the General Auditor, who reports to the Audit Committee and administratively to the CEO.
In addition, there are other functions that contribute to the Firmwide control environment but are not considered part of a particular line of defense, including Finance, Human Resources and Legal.
Risk identification and ownership
Each LOB and Corporate area owns the ongoing identification of risks, as well as the design and execution of controls, inclusive of IRM-specified controls, to manage those risks. To support this activity, the Firm has a formal Risk Identification framework designed to facilitate their responsibility to identify material risks inherent to the Firm, catalog them in a central repository and review the most material risks on a regular basis. The IRM function reviews and challenges the LOB and Corporate’s identified risks, maintains the central repository and provides the consolidated Firmwide results to the Firmwide Risk Committee (“FRC”) and Board Risk Committee.
Risk appetite
The Firm’s overall appetite for risk is governed by a “Risk Appetite” framework. The framework and the Firm’s risk appetite are set and approved by the Firm’s CEO, Chief Financial Officer (“CFO”) and CRO. Quantitative parameters and qualitative factors are used to monitor and measure the Firm’s capacity to take risk consistent with its stated risk appetite. Qualitative factors have been established to assess select operational risks, and impact to the Firm’s reputation. Risk Appetite results are reported to the Board Risk Committee.
86JPMorgan Chase & Co./2020 Form 10-K

Risk governance and oversight structure
The independent status of the IRM function is supported by a governance structure that provides for escalation of risk issues to senior management, the FRC, and the Board of Directors, as appropriate.
The chart below illustrates the committees of the Board of Directors and key senior management-level committees in the Firm’s risk governance structure. In addition, there are other committees, forums and paths of escalation that support the oversight of risk which are not shown in the chart below or described in this Form 10-K.jpm-20201231_g3.jpg
The Firm’s Operating Committee, which consists of the Firm’s CEO, CRO, CFO, General Counsel, CEOs of the LOBs and other senior executives, is accountable to and may refer matters to the Firm’s Board of Directors. The Operating Committee is responsible for escalating to the Board the information necessary to facilitate the Board’s exercise of its duties.
Board oversight
The Firm’s Board of Directors provides oversight of risk. The Board Risk Committee is the principal committee that oversees risk matters. The Audit Committee oversees the control environment, and the Compensation & Management Development Committee oversees compensation and other management-related matters. Each committee of the Board oversees reputational risks and conduct risks within its scope of responsibility.
The JPMorgan Chase Bank, N.A. Board of Directors is responsible for the oversight of management of the bank. The JPMorgan Chase Bank, N.A. Board accomplishes this function acting directly and through the principal standing committees of the Firm’s Board of Directors. Risk and control oversight on behalf of JPMorgan Chase Bank N.A. is primarily the responsibility of the Risk Committee and the Audit Committee, respectively, and, with respect to
compensation and other management-related matters, the Compensation & Management Development Committee.
The Board Risk Committee assists the Board in its oversight of management’s responsibility to implement a global risk management framework reasonably designed to identify, assess and manage the Firm’s risks. The Board Risk Committee’s responsibilities include approval of applicable primary risk policies and review of certain associated frameworks, analysis and reporting established by management. Breaches in risk appetite and parameters, issues that may have a material adverse impact on the Firm, including capital and liquidity issues, and other significant risk-related matters are escalated to the Board Risk Committee, as appropriate.
The Audit Committee assists the Board in its oversight of management’s responsibility to ensure that there is an effective system of controls reasonably designed to safeguard the Firm’s assets and income, ensure the integrity of the Firm’s financial statements, and maintain compliance with the Firm’s ethical standards, policies, plans and procedures, and with laws and regulations. It also assists the Board in its oversight of the Firm’s independent registered public accounting firm’s qualifications, independence and performance, and of the performance of the Firm’s Internal Audit function.
JPMorgan Chase & Co./2020 Form 10-K87
Management’s discussion and analysis
The Compensation & Management Development Committee(“CMDC”) assists the Board in its oversight of the Firm’s compensation principles and practices. The CMDC reviews and approves the Firm’s compensation and qualified benefits programs. The Committee reviews the performance of Operating Committee members against their goals, and approves their compensation awards. In addition, the CEO’s award is subject to ratification by the independent directors of the Board. The CMDC also reviews the development of and succession for key executives, and provides oversight of the Firm’s culture, including reviewing updates from management regarding significant conduct issues and any related employee actions, including compensation actions.
The Public Responsibility Committee assists the Board in its oversight of the Firm's positions and practices on public responsibility matters such as community investment, fair lending, sustainability, consumer practices and other public policy issues that reflect the Firm's values and character and could impact the Firm's reputation among its stakeholders. The Committee also provides guidance on these matters to management and the Board, as appropriate.
The Corporate Governance & Nominating Committee exercises general oversight with respect to the governance of the Board of Directors. It reviews the qualifications of and recommends to the Board of Directors proposed nominees for election to the Board. The Committee evaluates and recommends to the Board corporate governance practices applicable to the Firm. It also appraises the framework for assessing the Board’s performance and self-evaluation.
Management oversight
The Firm’s senior management-level committees that are primarily responsible for key risk-related functions include:
The Firmwide Risk Committee (“FRC”) is the Firm’s highest management-level risk committee. It provides oversight of the risks inherent in the Firm’s businesses and serves as an escalation point for risk topics and issues raised by underlying committees and/or FRC members.
The Firmwide Control Committee (“FCC”) is an escalation committee for senior management to review and discuss the Firmwide operational risk environment including identified issues, operational risk metrics and significant events that have been escalated.
Line of Business and Regional Risk Committees are responsible for providing oversight of the governance, limits, and controls that are in place through the scope of their activities. These committeesreview the ways in which the particular LOB or the business operating in a particular region could be exposed to adverse outcomes with a focus on identifying, accepting, escalating and/or requiring remediation of matters brought to these committees.
Line of Business and Corporate Function Control Committees oversee the operational risk and control environment of their respective business or function, inclusive of Operational Risk, Compliance and Conduct Risks. As part of that mandate, they are responsible for reviewing indicators of elevated or emerging risks and other data that may impact the level of operating risk in a business or function, addressing key operational risk issues, focusing on processes with control concerns and overseeing control remediation.
The Asset and Liability Committee (“ALCO”) is responsible for overseeing the Firm’s asset and liability management (“ALM”) activities and the management of liquidity risk, balance sheet, interest rate risk, and capital risk.
The Firmwide Valuation Governance Forum (“VGF”) is composed of senior finance and risk executives and is responsible for overseeing the management of risks arising from valuation activities conducted across the Firm.

88JPMorgan Chase & Co./2020 Form 10-K

Risk governance and oversight functions
The Firm manages its risk through risk governance and oversight functions. The scope of a particular function may include one or more drivers, types and/or impacts of risk. For example, Country Risk Management oversees country risk which may be a driver of risk or an aggregation of exposures that could give rise to multiple risk types such as credit or market risk.
The following sections discussesdiscuss the risk governance and oversight functions in place to manage the risks inherent in the Firms business activities.
Risk governance and oversight functionsPage
Strategic risk

Risk		8490
Capital risk85–9491-101
Liquidity risk95–100102-108
Reputation risk101109
Consumer credit risk

Credit Risk		106-111114-120
Wholesale credit risk112-119121-131
Investment portfolio risk123134
Market risk124-131135-142
Country risk132–133143-144
Operational risk134-136145-151
Compliance risk

Risk		137148
Conduct risk138149
Legal risk139150
Estimations and Model risk140151


JPMorgan Chase & Co./20182020 Form 10-K7989
Management’s discussion and analysis

Governance and oversight
The Firm’s overall appetite for risk is governed by a “Risk Appetite” framework. The framework and the Firm’s risk appetite are set and approved by the Firm’s Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and Chief Risk Officer (“CRO”). LOB-level risk appetite is set by the respective LOB CEO, CFO and CRO and is approved by the Firm’s CEO, CFO and CRO. Quantitative parameters and qualitative factors are used to monitor and measure the Firm’s capacity to take risk consistent with its stated risk appetite. Quantitative parameters have been established to assess select strategic risks, credit risks and market risks. Qualitative factors have been established to assess select operational risks, and impact to the Firm’s reputation. Risk Appetite results are reported quarterly to the Board of Directors’ Risk Policy Committee (“DRPC”).
The Firm has an Independent Risk Management (“IRM”) function, which consists of the Risk Management and Compliance organizations. The CEO appoints, subject to DRPC approval, the Firm’s CRO to lead the IRM organization and manage the risk governance structure of the Firm. The framework is subject to approval by the DRPC in the form of the primary risk management policies. The Firm’s CRO oversees and delegates authorities to LOB CROs, Firmwide Risk Executives (“FREs”), and the Firm’s Chief Compliance Officer (“CCO”). The CCO oversees and delegates authorities to the LOB CCOs, and is responsible for the creation and effective execution of the Global Compliance Program.
The Firm places reliance on each of its LOBs and other functional areas giving rise to risk to operate within the parameters identified by the IRM function, and within its own management-identified risk and control standards. Each LOB and Treasury and CIO, inclusive of their aligned Operations, Technology and Control Management are considered the “first line of defense” and owns the identification of risks, as well as the design and execution of controls, inclusive of IRM-specified controls, to manage those risks. The first line of defense is responsible for adherence to applicable laws, rules, and regulations and for the implementation of the risk management structure (which may include policy, standards, limits, thresholds and controls) established by IRM.
The IRM function is independent of the businesses and is “the second line of defense”. The IRM function sets and oversees the risk management structure for firmwide risk governance, and independently assesses and challenges the first line of defense risk management practices. IRM is also responsible for its own adherence to applicable laws, rules, regulations and for the implementation of policies and standards established by IRM with respect to its own processes.
The Internal Audit function operates independently from other parts of the Firm and performs independent testing and evaluation of processes and controls across the entire enterprise as the Firm’s “third line of defense”. The Internal Audit Function is headed by the General Auditor, who reports to the Audit Committee.
In addition, there are other functions that contribute to the firmwide control environment including Finance, Human Resources, Legal, and Control Management.


80JPMorgan Chase & Co./2018 Form 10-K

The independent status of the IRM function is supported by a governance structure that provides for escalation of risk issues to senior management, the Firmwide Risk Committee, and the Board of Directors, as appropriate.
The chart below illustrates the Board of Directors and key senior management level committees in the Firm’s risk governance structure. In addition, there are other committees, forums and paths of escalation that support the oversight of risk which are not shown in the chart below. a10korgchart4qfinal.jpg
The Firm’s Operating Committee, which consists of the Firm’s CEO, CRO, CFO and other senior executives, is accountable to and may refer matters to the Firm’s Board of Directors. The Operating Committee is responsible to escalate to the Board the information necessary to facilitate the Board’s exercise of its duties.
The Board of Directors provides oversight of risk. The DRPC is the principal committee that oversees risk matters. The Audit Committee oversees the control environment, and the Compensation & Management Development Committee oversees compensation and other management-related matters. Each committee of the Board oversees reputation risk and/or conduct risk issues within its scope of responsibility.
The Directors’ Risk Policy Committee of the Board assists the board in its oversight of the Firm’s global risk management framework and approves the primary risk management policies of the Firm. The Committee’s responsibilities include oversight of management’s exercise of its responsibility to assess and manage the Firm’s risks, and its capital and liquidity planning and analysis. Breaches in risk appetite, capital and liquidity issues that may have a material adverse impact on the Firm and other significant risk-related matters are escalated to the DRPC.

JPMorgan Chase & Co./2018 Form 10-K81
Management’s discussion and analysis

The Audit Committee of the Board assists the Board in its oversight of management’s responsibilities to assure that there is an effective system of controls reasonably designed to safeguard the assets and income of the Firm, assure the integrity of the Firm’s financial statements and maintain compliance with the Firm’s ethical standards, policies, plans and procedures, and with laws and regulations. In addition, the Audit Committee assists the Board in its oversight of the Firm’s independent registered public accounting firm’s qualifications, independence and performance, and of the performance of the Firm’s Internal Audit function.
The Compensation & Management Development Committee(“CMDC”) of the Board assists the Board in its oversight of the Firm’s compensation programs and reviews and approves the Firm’s overall compensation philosophy, incentive compensation pools, and compensation practices consistent with key business objectives and safety and soundness. The CMDC reviews Operating Committee members’ performance against their goals, and approves their compensation awards. The CMDC also periodically reviews the Firm’s diversity programs and management development and succession planning, and provides oversight of the Firm’s culture, including reviewing management updates regarding significant conduct issues and any related employee actions, including but not limited to compensation actions.
The Public Responsibility Committee of the Board assists the Board in its oversight of the Firm's positions and practices on public responsibility matters such as community investment, fair lending, sustainability, consumer practices and other public policy issues that reflect the Firm's values and character and impact the Firm's reputation among all of its stakeholders. The Committee also provides guidance on these matters to management and the Board as appropriate.
Among the Firm’s senior management-level committees that are primarily responsible for key risk-related functions are:
The Firmwide Risk Committee (“FRC”) is the Firm’s highest management-level risk committee. It provides oversight of the risks inherent in the Firm’s businesses. The FRC is co-chaired by the Firm’s CEO and CRO. The FRC serves as an escalation point for risk topics and issues raised by its members, the Line of Business Risk Committees, Firmwide Control Committee, Firmwide Fiduciary Risk Governance Committee, Firmwide Estimations Risk Committee, Conduct Risk Steering Committee and Regional Risk Committees, as appropriate. The FRC escalates significant issues to the DRPC, as appropriate.
The Firmwide Control Committee (“FCC”) provides a forum for senior management to review and discuss firmwide operational risks, including existing and emerging issues and operational risk metrics, and to review operational risk management execution in the contextof the Operational Risk Management Framework (“ORMF”). The ORMF provides the framework for the governance, risk identification and assessment, measurement, monitoring and reporting of
operational risk.The FCC is co-chaired by the Chief Control Manager and the Firmwide Risk Executive for Operational Risk Management. The FCC relies on the prompt escalation of operational risk and control issues from businesses and functions as the primary owners of the operational risk. Operational risk and control issues may be escalated by business or function control committees to the FCC, which in turn, may escalate to the FRC, as appropriate.
The Firmwide Fiduciary Risk Governance Committee (“FFRGC”) is a forum for risk matters related to the Firm’s fiduciary activities. The FFRGC oversees the governance framework for fiduciary risk inherent in each of the Firm’s LOBs. The governance framework supports the consistent identification and escalation of fiduciary risk or fiduciary related conflict of interest risk. The FFRGC approves risk or compliance policy exceptions and reviews periodic reports from the LOBs and control functions including fiduciary metrics and control trends. The FFRGC is co-chaired by the Wealth Management CEO and the Asset & Wealth Management CRO. The FFRGC escalates significant fiduciary issues to the FRC,the DRPC and the Audit Committee, as appropriate.
The Firmwide Estimations Risk Committee (“FERC”) reviews and oversees governance and execution activities related to quantitative and qualitative estimations, such as those used in risk management, budget forecasting and capital planning and analysis. The FERC is chaired by the Firmwide Risk Executive for Model Risk Governance and Review. The FERC serves as an escalation channel for relevant topics and issues raised by its members and the Line of Business Estimation Risk Committees. The FERC escalates significant issues to the FRC, as appropriate.
The Conduct Risk Steering Committee (“CRSC”) provides oversight of the Firm’s conduct initiatives to develop a more holistic view of conduct risks and to connect key programs across the Firm to identify opportunities and emerging areas of focus. The CRSC is co-chaired by the Conduct Risk Compliance Executive and the Human Resources Chief Administrative Officer. The CRSC may escalate systemic conduct risk issues to the FRC and as appropriate to the DRPC.
Line of Business and Regional Risk Committees review the ways in which the particular line of business or the business operating in a particular region could be exposed to adverse outcomes with a focus on identifying, accepting, escalating and/or requiring remediation of matters brought to these committees. These committees may escalate matters to the FRC, as appropriate. LOB risk committees are co-chaired by the LOB CEO and the LOB CRO. Each LOB risk committee may create sub-committees with requirements for escalation. The regional committees are established similarly, as appropriate, for the region.
Line of Business and Corporate Control Committees oversee the control environment of their respective business or function. As part of that mandate, they are responsible for reviewing data that indicates the quality and stability of the

82JPMorgan Chase & Co./2018 Form 10-K

processes in a business or function, addressing key operational risk issues, focusing on processes with control concerns and overseeing control remediation. These committees escalate issues to the FCC, as appropriate.
The Firmwide Asset and Liability Committee (“ALCO”), chaired by the Firm’s Treasurer and Chief Investment Officer, is responsible for overseeing the Firm’s asset and liability management (“ALM”) activities and the management of liquidity risk, balance sheet, interest rate risk, and capital risk. The ALCO is supported by the Treasurer Committee and the Capital Governance Committee. The Treasurer Committee is responsible for monitoring the Firm’s overall balance sheet, liquidity risk and interest rate risk. The Capital Governance Committee is responsible for overseeing the Firm’s strategic end-to-end capital management and governance framework, including capital planning, capital strategy, and the implementation of regulatory capital requirements.
The Firmwide Valuation Governance Forum (“VGF”) is composed of senior finance and risk executives and is responsible for overseeing the management of fair value risks arising from valuation activities conducted across the Firm. The VGF is chaired by the Firmwide head of the Valuation Control Group (“VCG”) under the direction of the Firm’s Controller, and includes sub-forums covering the Corporate & Investment Bank, Consumer & Community Banking, Commercial Banking, Asset & Wealth Management and Corporate, including Treasury and CIO.
In addition, the JPMorgan Chase Bank, N.A. Board of Directors is responsible for the oversight of management of the bank. The JPMorgan Chase Bank, N.A. Board accomplishes this function acting directly and through the principal standing committees of the Firm’s Board of Directors. Risk and control oversight on behalf of JPMorgan Chase Bank N.A. is primarily the responsibility of the DRPC and the Audit Committee of the Firm’s Board of Directors, respectively, and, with respect to compensation and other management-related matters, the Compensation & Management Development Committee of the Firm’s Board of Directors.
Risk Identification
The Firm has a Risk Identification process designed to facilitate the first line of defense’s responsibility to identify material risks inherent to the Firm, catalog them in a central repository and review the most material risks on a regular basis. The second line of defense reviews and challenges the first line’s identification of risks, maintains the central repository and provides the consolidated Firmwide results to the FRC and DRPC.


JPMorgan Chase & Co./2018 Form 10-K83
Management’s discussion and analysis

STRATEGIC RISK MANAGEMENT
Strategic risk is the risk associated with the Firm’s current and future business plans and objectives. Strategic risk includes the risk to current or anticipated earnings, capital, liquidity enterprise value, or the Firm’s reputation arising from adverseassociated with poorly designed or failed business decisions, poor implementation of business decisions,plans or lack of responsivenessinadequate response to changes in the industry or externaloperating environment.
OverviewManagement and oversight
The Operating Committee and the senior leadership of each LOB and Corporate are responsible for managing the Firm’s most significant strategic risks. Strategic risks are overseen by IRM through participation in relevant business reviews, LOB and Corporate senior management committees, ongoing management of the Firm’smeetings, risk appetite and limit framework,control committees and other relevant governance forums.forums and ongoing discussions. The Board of Directors oversees management’s strategic decisions, and the DRPCBoard Risk Committee oversees IRM and the Firm’s risk management framework.
In the process of developing business plans and strategic initiatives, LOB and Corporate senior management identify the associated risks that are incorporated into the Firmwide Risk Identification process and monitored and assessed as part of the Firmwide Risk Appetite framework.
In addition, IRM conducts a qualitative assessment of the LOB and Corporate strategic initiatives to assess their impact on the risk profile of the Firm.
The Firm’s strategic planning process, which includes the development and execution of strategic priorities and initiatives, by the Operating Committee and the management teamsis one component of the lines of business and Corporate, is an important process for managing the Firm’s strategic risk. Guided by the Firm’s How We Do Business Principles (the “Principles”), the Operating Committee and senior management teams in each LOB and Corporate review and update the strategic prioritiesplan periodically. The process includes evaluating the high-level strategic framework and initiatives are updated annually and include evaluating performance against prior yearprior-year initiatives, assessment ofassessing the operating environment, refinement ofrefining existing strategies and development ofdeveloping new strategies.
These strategic priorities and initiatives, along with IRM’s assessment, are then incorporated in the Firm’s budget and are reviewed byprovided to the Board of Directors.for review. 
In the process of developing the strategic initiatives, line of business and Corporate leadership identify the strategic risks associated with their strategic initiatives and those risks are incorporated into the Firmwide Risk Identification process and monitored and assessed as part of the Firmwide Risk Appetite framework. For further information on Risk Identification, refer to Enterprise-Wide Risk Management on page 79. For further information on the Risk Appetite framework, refer to Enterprise-Wide Risk Management on page 80.

The Firm’s balance sheet strategy, which focuses on risk-adjusted returns, strong capital and robust liquidity, is key toalso a component in the management of strategic risk. For further information on capital risk, referRefer to Capital Risk Management on pages 85-94. For91-101 for further information on liquidity risk, refercapital risk. Refer to Liquidity Risk Management on pages 95–100
For102–108 for further information on reputation risk, referliquidity risk. Refer to Reputation Risk Management on page 101.
Governance and oversight
On at least an annual basis, the Firm’s Operating Committee defines the most significant strategic priorities and initiatives, including those of the Firm, the LOBs and Corporate,109 for the coming year and evaluates performance against the prior year. As part of the strategic planning process, IRM conducts a qualitative assessment of those significant initiatives to determine the impactfurther information on the risk profile of the Firm. The Firm’s priorities, initiatives and IRM’s assessment are provided to the Board for its review.
As part of its ongoing oversight and management of risk across the Firm, IRM is regularly engaged in significant discussions and decision-making across the Firm, including decisions to pursue new business opportunities or modify or exit existing businesses.


reputation risk.

84JPMorgan Chase & Co./2018 Form 10-K


90JPMorgan Chase & Co./2020 Form 10-K

CAPITAL RISK MANAGEMENT
Capital risk is the risk the Firm has an insufficient level andor composition of capital to support the Firm’s business activities and associated risks during normal economic environments and under stressed conditions.
A strong capital position is essential to the Firm’s business strategy and competitive position. Maintaining a strong balance sheet to manage through economic volatility is considered a strategic imperative of the Firm’s Board of Directors, CEO and Operating Committee. The Firm’s fortress balance sheet philosophy focuses on risk-adjusted returns, strong capital and robust liquidity. The Firm’s capital risk management strategy focuses on maintaining long-term stability to enable itthe Firm to build and invest in market-leading businesses, evenincluding in a highly stressed environment.environments. Senior management considers the implications on the Firm’s capital prior to making any significant decisions that could impact future business activities. In addition to considering the Firm’s earnings outlook, senior management evaluates all sources and uses of capital with a view to ensuring the Firm’s capital strength.
Capital management oversight
The Firm has a Capital Management Oversight function whose primary objective is to provide independent oversight of capital risk across the Firm.
Capital Management Oversight’s responsibilities include:
•Defining, monitoring and reporting capital risk metrics;
•Establishing, calibrating and monitoring capital risk limits and indicators, including capital risk appetite;
•Developing a process to classify, monitor and report capital limit breaches; and
•Performing an independent assessment of the Firm’s capital management activities, including changes made to the Contingency Capital Plan described below.
In addition, the Basel Independent Review function (“BIR”), which is a part of the IRM function, conducts independent assessments of the Firm’s regulatory capital framework. These assessments are intended to ensure compliance with the applicable regulatory capital rules in support of senior management’s responsibility for managing capital and for the Board Risk Committee’s oversight of management in executing that responsibility.
Capital management
Treasury & CIO assumed responsibilityis responsible for capital management in March 2018.management.
The primary objectives of effectivethe Firm’s capital management are to:
•Maintain sufficient capital in order to continue to build and invest in the Firm’s businesses through the cycle and in stressed environments;
•Retain flexibility to take advantage of future investment opportunities;
•Promote the Firm’s ability to serve as a source of strength to its subsidiaries;
•Ensure the Firm operates above the minimum regulatory capital ratios as well as maintain “well-capitalized” status for the Firm and its insured depository institution (“IDI”) subsidiaries at all times under applicable regulatory capital requirements;
•Meet capital distribution objectives; and
•Maintain sufficient capital resources to operate throughout a resolution period in accordance with the Firm’s preferred resolution strategy.
The Firm meetsaddresses these objectives through the establishment ofestablishing internal minimum capital requirements and a strong capital management governance framework, bothframework. The internal minimum capital levels consider the Firm’s regulatory capital requirements as well as an internal assessment of capital adequacy, in business as usual conditionsnormal economic cycles and in the event of stress.stress events, when setting its minimum capital levels.
Capital risk management is intended to be flexible in order to react to a range of potential events. In its management of capital, the Firm takes into consideration economic risk and all applicable regulatory capital requirements to determine the level of capital needed.
The Firm’s minimum capital levels are based on the most binding of three pillars: an internal assessment of the Firm’s
capital needs; an estimate of required capital under theCCAR and other stress testing requirements; and Basel III Fully Phased-In regulatory minimums. Where necessary, each pillar may include a management-established buffer. Thecurrent capital governance framework requires regular monitoring of the Firm’s capital positions, stress testingposition and definingfollows prescribed escalation protocols, both at the Firm and material legal entity levels.
ContingencyGovernance
Committees responsible for overseeing the Firm’s capital plan
The Firm’s contingency capital plan, which is approved bymanagement include the firmwide ALCOCapital Governance Committee, the Treasurer Committee and the DRPC, establishes theFirmwide ALCO. Oversight of capital management framework foris governed through the FirmCIO, Treasury and specifiesCorporate (“CTC”) Risk Committee. In addition, the principles underlyingBoard Risk Committee periodically reviews the Firm’s approach towards capital management in normal economic timesrisk tolerance. Refer to Firmwide Risk Management on pages 85-89 for additional discussion on the Board Risk Committee and during stress. The contingency capital plan defines how the Firm calibrates its targeted capital levels and meets minimum capital requirements, monitors the ongoing appropriateness of planned distributions, and sets out the capital contingency actions that must be taken or considered at various levels of capital depletion during a period of stress.ALCO.
Capital planning and stress testing
Comprehensive Capital Analysis and Review
The Federal Reserve requires large bank holding companies,BHCs, including the Firm, to submit on an annual basisat least annually a capital plan that has been reviewed and approved by the Board of Directors. The Federal Reserve uses the CCAR and other stress testing processes to ensure that large BHCs have sufficient capital during periods of economic and financial stress, and have robust, forward-looking capital assessment and planning processes in place that address each BHC’s unique risks to enable it to absorb losses under certain stress scenarios.Through CCAR, the Federal Reserve evaluates each BHC’s capital adequacy and internal capital adequacy assessment processes (“ICAAP”ICAAP”), as well as its plans to make capital distributions, such as dividend payments or stock repurchases. The Federal Reserve uses results under the severely adverse scenario from its supervisory stress test to determine each firm’s SCB requirement for the coming
JPMorgan Chase & Co./2020 Form 10-K91
Management’s discussion and analysis
year. Refer to Key Regulatory Developments on pages 93–94 for additional information.
On June 28, 2018,29, 2020, the Firm announced that it had completed the 2020 CCAR stress test process. On August 10, 2020, the Federal Reserve informedaffirmed the Firm's SCB requirement of 3.3% and the Firm's minimum Standardized CET1 capital ratio of 11.3% (up from 10.5%). The SCB requirement became effective on October 1, 2020.
In June 2020, the Federal Reserve determined that changes in financial markets or the macroeconomic outlook due to the COVID-19 pandemic could have a material effect on a firm’s risk profile and financial condition and therefore required all large bank holding companies, including the Firm, to update and resubmit their capital plans by November 2, 2020. On December 18, 2020, the Federal Reserve released its results from the 2020 CCAR Round 2 stress test, which showed that large banks had strong levels of capital and announced that it didwould allow all large banks, including the Firm, to resume share repurchases commencing in the first quarter of 2021, subject to certain restrictions for at least the first quarter of 2021 given considerable economic uncertainty remained. The Federal Reserve has stated that due to uncertainty about future economic conditions and the ultimate path of the current recovery, the SCB will not object,be reset at this time. The Federal Reserve will notify firms by March 31, 2021 whether a revised SCB requirement based on either a quantitative or qualitative basis,the 2020 CCAR Round 2 stress test will be recalculated ahead of the 2021 annual CCAR assessment.
Refer to the Firm’s 2018 capital plan. ForCapital actions on page 99 for information on actions taken by the Firm’s Board of Directors following the 20182020 CCAR results, refer to Capital actions on pages 91-92.results.
Internal Capital Adequacy Assessment Process
Annually, the Firm prepares the ICAAP, which informs the Board of Directors of the ongoing assessment of the Firm’s processes for managing the sources and uses of capital as well as compliance with supervisory expectations for capital planning and capital adequacy. The Firm’s ICAAP integrates stress testing protocols with capital planning. The Firm’s Audit Committee is responsible for reviewing and approving the capital stress testing control framework.
The CCAR and other stress testing processes assess the potential impact of alternative economic and business scenarios on the Firm’s earnings and capital. Economic scenarios, and the parameters underlying those scenarios, are defined centrally and applied uniformly across the

JPMorgan Chase & Co./2018 Form 10-K85
Management’s discussion and analysis

businesses. These scenarios are articulated in terms of macroeconomic factors, which are key drivers of business results; global market shocks, which generate short-term but severe trading losses; and idiosyncratic operational risk events. The scenarios are intended to capture and stress key vulnerabilities and idiosyncratic risks facing the Firm. However, when defining a broad range of scenarios, actual events can always be worse. Accordingly, management considers additional stresses outside these scenarios, as necessary. These results are reviewed by management and the Board of Directors.
Capital
Contingency capital plan
The Firm’s contingency capital plan establishes the capital management oversight
With the reorganization of the Capital Management group into the Treasury and CIO organization,framework for the Firm established a Capital Management oversight function withinand specifies the CTC risk function. The CTC CRO, who reports toprinciples underlying the Firm’s CRO, is responsible for Firmwide Capital Management Oversight. Capital Management’s Oversight responsibilities include:
Establishing, calibrating and monitoring capital risk limits and indicators, including capital risk appetite tolerances;
Performing independent assessment of the Firm’sapproach towards capital management activities;in normal economic conditions and
Monitoring during stress. The contingency capital plan defines how the Firm’sFirm calibrates its targeted capital positionlevels and balance sheet activities
In addition,meets minimum capital requirements, monitors the Basel Independent Review function (“BIR”), which is nowongoing appropriateness of planned capital distributions, and sets out the capital contingency actions that are expected to be taken or considered at various levels of capital depletion during a partperiod of the IRM function, conducts independent assessments of the Firm’s regulatory capital framework. These assessments are intended to ensure compliance with the applicable regulatory capital rules in support of senior management’s responsibility for managing capital and for the DRPC’s oversight of management in executing that responsibility.stress.
Governance
Committees responsible for overseeing the Firm’s capital management include the Capital Governance Committee, the Treasurer Committee and the ALCO. Capital management oversight is governed through the CTC risk committee. In addition, the DRPC approves the Firm’s capital management oversight policy and reviews and recommends to the Board of Directors, for formal approval, the Firm’s capital risk tolerances. For additional discussion on the DRPC and the ALCO, refer to Enterprise-wide Risk Management on pages 79-140.
Regulatory capital
The Federal Reserve establishes capital requirements, including well-capitalized standards, for the consolidated financial holding company. The OCC establishes similar minimum capital requirements and standards for the Firm’s national banks,IDI subsidiaries, including JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. The U.S. capital requirements generally follow the Capital Accord of the Basel Committee, as amended from time to time.
Basel III Overview
CapitalThe capital rules under Basel III establish minimum capital ratios and overall capital adequacy standards for large and internationally active U.S. bank holding companies (“BHC”)BHCs and banks, including the Firm and its IDI subsidiaries, including JPMorgan Chase Bank, N.A. IDIsubsidiaries.Basel III sets forth twoThe minimum amount of regulatory capital that must be held by BHCs and banks is determined by calculating risk-weighted assets (“RWA”), which are on-balance sheet assets and off-balance sheet exposures, weighted according to risk. Two comprehensive approaches are prescribed for calculating RWA: a standardized approach (“Basel III Standardized”), and an advanced approach (“Basel III Advanced”). CertainFor each of the requirements of Basel III were subject to phase-in periods that began on January 1, 2014 and continued through the end of 2018 (“transitional period”). While the required capital remained subject to the transitional rules during 2018, the Firm’srisk-based capital ratios, asthe capital adequacy of December 31, 2018 were equivalent whether calculated on a transitionalthe Firm is evaluated against the lower of the Standardized or fully phased-in basis.Advanced approaches compared to their respective minimum capital ratios.
Basel III establishes capital requirements for calculating credit risk RWA and market risk RWA, and in the case of Basel III Advanced, operational risk RWA. Key differences in the calculation of credit risk RWA between the Standardized and Advanced approaches are that for Basel III Advanced, credit risk RWA is based on risk-sensitive approaches which largely rely on the use of internal credit models and parameters, whereas for Basel III Standardized, credit risk RWA is generally based on supervisory risk-weightings which vary primarily by counterparty type and asset class. Market risk RWA is calculated on a generally consistent basis between Basel III Standardized and Basel III Advanced. In addition to the RWA calculated under these methodologies,approaches, the Firm may supplement such amounts to incorporate management judgment and feedback from its regulators.
Basel III also includes a requirement for Advanced Approach banking organizations, including the Firm, to calculate theSLR. For additional information on the SLR, refer to page 91.
Key Regulatory Developments
Banking supervisors globally continue to consider refinements and enhancements to the Basel III capital framework for financial institutions, and in December 2017, the Basel Committee issued Basel III: Finalizing post-crisis reforms (“Basel III Reforms”). The Basel Committee expects national regulatory authorities to implement the Basel III Reforms in the laws of their respective jurisdictions and to require banking organizations subject to such laws to meet most of the revised requirements by January 1, 2022, with certain elements being phased in through January 1, 2027.

8692JPMorgan Chase & Co./20182020 Form 10-K


In April 2018,calculate the SLR. Refer to SLR on page 98 for additional information.
COVID-19 Pandemic
The Firm has been impacted by market events as a result of the COVID-19 pandemic, but remains well-capitalized. However, the continuation or further deterioration of the current macroeconomic environment could result in impacts to the Firm’s capital and leverage.
Key Regulatory Developments
Current Expected Credit Losses. Effective January 1, 2020, the Firm adopted the Financial Instruments – Credit Losses guidance under U.S. GAAP. As permitted under the U.S. capital rules issued by the federal banking agencies in 2019, the Firm initially elected to phase-in the January 1, 2020 (“day 1”) CECL adoption impact to retained earnings of $2.7 billion to CET1 capital, at 25% per year in each of 2020 to 2023. As part of their response to the impact of the COVID-19 pandemic, on March 31, 2020, the federal banking agencies issued an interim final rule (issued as final on August 26, 2020) that provided the option to delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period (“CECL capital transition provisions”).
The final rule provides a uniform approach for estimating the effects of CECL compared to the legacy incurred loss model during the first two years of the transition period (the “day 2” transition amount), whereby the Firm may exclude from CET1 capital 25% of the change in the allowance for credit losses (excluding allowances on PCD loans). The cumulative day 2 transition amount as at December 31, 2021 that is not recognized in CET1 capital, as well as the $2.7 billion day 1 impact, will be phased into CET1 capital at 25% per year beginning January 1, 2022. The Firm has elected to apply the CECL capital transition provisions, and accordingly, for the year ended December 31, 2020, the capital metrics of the Firm exclude $5.7 billion, which is the $2.7 billion day 1 impact to retained earnings and 25% of the $12.2 billion increase in the allowance for credit losses (excluding allowances on PCD loans).
The impacts of the CECL capital transition provisions have also been incorporated into Tier 2 capital, adjusted average assets, and total leverage exposure. Refer to Note 1 for further information on the CECL accounting guidance.
Money Market Mutual Fund Liquidity Facility ("MMLF"). The Federal Reserve established the MMLF facility on March 18, 2020, authorized through at least March 31, 2021, to enhance the liquidity and functioning of money markets. Under the MMLF, the Federal Reserve proposedBank of Boston (“FRBB”) makes nonrecourse advances to participating financial institutions to purchase certain types of assets from eligible money market mutual fund clients. These assets, which are reflected in other assets on the introductionFirm’s Consolidated balance sheets, are pledged to the FRBB as collateral. On March 23, 2020, the federal banking agencies issued an interim final rule (issued as final on
September 29, 2020) to neutralize the effects of purchasing assets through the program on risk-based and leverage-based capital ratios. As of December 31, 2020, the Firm excluded assets purchased from money market mutual fund clients pursuant to nonrecourse advances provided under the MMLF in the amount of $187 million from its RWA and $358 million from adjusted three month average assets and total leverage exposure.
Supplementary leverage ratio temporary revision. On April 1, 2020, the Federal Reserve issued an interim final rule that requires, on a stress buffertemporary basis, the calculation of total leverage exposure for purposes of calculating the SLR for bank holding companies, to exclude the on-balance sheet amounts of U.S. Treasury securities and deposits at Federal Reserve Banks. These exclusions became effective April 1, 2020, and will remain in effect through March 31, 2021.
On June 1, 2020, the Federal Reserve, OCC and FDIC issued an interim final rule that provides IDI subsidiaries with an option to apply this temporary exclusion subject to certain restrictions. As of December 31, 2020, JPMorgan Chase Bank, N.A. has not elected to apply this exclusion.
Paycheck Protection Program. On April 13, 2020, the federal banking agencies issued an interim final rule (issued as final on September 29, 2020) to neutralize the regulatory capital effects of participating in the PPP on risk-based capital ratios by applying a zero percent risk weight to loans originated under the program. Given that PPP loans are guaranteed by the SBA, the Firm does not expect to realize material credit losses on these loans. As of December 31, 2020, the Firm had approximately $27 billion of loans under the program.
The rule also provides that if a PPP loan is pledged as collateral for a non-recourse loan under the Federal Reserve’s Paycheck Protection Program Lending (“PPPL”) Facility, the PPP loan can be excluded from leverage-based capital ratios. As of December 31, 2020, the Firm had not participated in the PPPL Facility.
Refer to Regulatory Developments Relating to the COVID-19 Pandemic on pages 52-53 for additional information on regulatory actions and significant financing programs that the U.S. government and regulators have introduced to address the effects of the COVID-19 pandemic.
Stress Capital Buffer. On March 4, 2020, the Federal Reserve issued the final rule introducing the SCB framework for the Basel III Standardized approach that would create a single, integrated set of capital requirements by combiningis designed to more closely integrate the supervisory stress test results of the quantitative assessment in the annual CCAR assessment and thosewith the ongoing minimum capital requirements for BHCs under the Dodd-Frank ActU.S. Basel III rules. The final rule replaces the fixed 2.5% CET1 capital conservation buffer in the Standardized approach with current point-in-timea dynamic institution-specific SCB. The final rule does not apply to the U.S. Basel III Advanced approach capital requirements. The U.S. banking regulatorsSCB requirement for BHCs will be proposingeffective on October 1 of each year and is expected to remain in effect until September 30 of the following year.
JPMorgan Chase & Co./2020 Form 10-K93
Management’s discussion and analysis
TLAC Holdings rule. On October 20, 2020, the federal banking agencies issued a final requirements applicablerule prescribing the regulatory capital treatment for holdings of TLAC debt instruments by certain large banking organizations, such as the Firm and JPMorgan Chase Bank, N.A. This rule expands the scope of the existing capital deductions rule around the
holdings of capital instruments of financial institutions to U.S. financial institutions.
Also in April 2018, the Federal Reserve and the OCC released a proposal to revise the enhanced supplementary leverage ratio (“eSLR”) requirements applicable to the U.S. globalalso include TLAC debt instruments issued by systemically important banks (“GSIBs”)banking organizations. The final rule will become effective on April 1, 2021 and their IDIs andis not expected to make conforming changes tohave a material impact on the rules which are applicable to U.S. GSIBs relating to TLAC and external long-term debt that must satisfy certain eligibility criteria.Firm’s risk-based capital metrics.
Risk-based Capital Regulatory Minimums
The following chart presents the Firm’s Basel III minimum CET1 capital ratio during the transitional periods and on a fully phased-in basis under the Basel III rules currently in effect.a2018newcapratioa03.jpg
jpm-20201231_g4.jpg
The capital adequacy of the Firm and its IDI subsidiaries, both during the transitional period and upon full phase-in, is evaluated against the Basel III approach (Standardized or Advanced) which, for each quarter, results in the lower ratio. The Firm’s Basel III Standardized Fully Phased-In risk-based ratios are currently more binding than the Basel III Advanced Fully Phased-In risk-based ratios, and the Firm expects that this will remain the case for the foreseeable future.ratios.
Additional information regarding the Firm’s capital ratios, as well as the U.S. federal regulatory capital standards to which the Firm is subject, is presented in Note 26. For further information on the Firm’s Basel III measures, refer to the Firm’s Pillar 3 Regulatory Capital Disclosures reports, which are available on the Firm’s website (https://jpmorganchaseco.gcs-web.com/financial-information/basel-pillar-3-us-lcr-disclosures).
All banking institutions are currently required to have a minimum CET1 capital ratio of 4.5% of risk weightedrisk-weighted assets.
Certain banking organizations, including the Firm, are required to hold additional amountslevels of capital to serve as a “capital conservation buffer”. The capital conservation buffer is intended to be used to absorb potential losses in times of financial or economic stress.Theincorporates a global systemically important bank (“GSIB”) surcharge, a discretionary countercyclical capital buffer and a fixed capital conservation buffer was subject toof 2.5% for Advanced regulatory capital requirements and a phase-in period thatvariable SCB requirement, floored at 2.5%, for Standardized regulatory capital requirements.

began January 1, 2016 and continued through the end of 2018.
As an expansion of the capital conservation buffer, the Firm is also required to hold additional levels of capital in the form of a GSIB surcharge and a countercyclical capital buffer.
Under the Federal Reserve’s finalGSIB rule, the Firm is required to calculateassess its GSIB surcharge on an annual basis under two separately prescribed methods based on data for the previous fiscal year-end, and is subject to the higher of the two. The first (“Method 1”), reflects the GSIB surcharge as prescribed by the Basel Committee’s assessment methodology, and is calculated across five criteria: size, cross-jurisdictional activity, interconnectedness, complexity and substitutability. The second (“Method 2”), modifies the Method 1 requirements to include a measure of short-term wholesale funding in place of substitutability, and introduces a GSIB score “multiplication factor”. The following table represents the Firm’s GSIB surcharge.

 2018
2017
Fully Phased-In:  
Method 12.50%2.50%
Method 23.50%3.50%
   
Transitional(a)
2.625%1.75%
(a)The GSIB surcharge is subject to transition provisions (in 25% increments) through the end of 2018.

94JPMorgan Chase & Co./20182020 Form 10-K87
Management’s discussion and analysis

The following table presents the Firm’s effective GSIB surcharge asfor the years ended December 31, 2020 and 2019.
20202019
Fully Phased-In:
Method 12.50 %2.50 %
Method 23.50 %3.50 %
The Firm’s effective regulatory minimum GSIB surcharge calculated under Method 2 remains unchanged at 3.5% for 20192021. On November 11, 2020, the Financial Stability Board (“FSB”) released its annual GSIB list, which published the Firm’s Method 1 GSIB surcharge of 2.0% (down from 2.5%) effective January 1, 2021, based upon data as of December 31, 2019.
The Firm’s estimated Method 2 surcharge calculated using data as of December 31, 2020 is anticipated4.0%. Accordingly, based on the GSIB rule currently in effect, the Firm’s effective regulatory minimum GSIB surcharge is expected to be 3.5%.increase to 4.0% on January 1, 2023 unless the Firm’s Method 2 GSIB surcharge calculation based upon data as of December 31, 2021 is lower.
The Federal Reserve'sU.S. federal regulatory capital standards include a framework for setting thea discretionary countercyclical capital buffer takestaking into account the macro financial environment in which large, internationally active banks function. As of December 31, 2018,2020, the U.S. countercyclical capital buffer remained at 0%. The Federal Reserve will continue to review the buffer at least annually. The buffer can be increased if the Federal Reserve, FDIC and OCC determine that credit growth in the economy has become excessivesystemic risks are meaningfully above normal and can be calibrated up to an additional 2.5% of RWA subject to a 12-month implementation period.
Failure to maintain regulatory capital equal to or in excess of the risk-based regulatory capital minimum plus the capital conservation buffer (inclusive of the GSIB surcharge) and any countercyclical buffer maywill result in limitations to the amount of capital that the Firm may distribute,, such as through dividends and common equity repurchases.
share repurchases, as well as certain executive discretionary bonus payments.
The Firm has a target Basel III CET1 capital ratio of 12%. However, the Firm may remain above that level in order to satisfy leverage-based capital requirements if deposits continue to grow due to actions taken by the Federal Reserve and the U.S. government in response to the COVID-19 pandemic.
Total Loss-Absorbing Capacity
The Federal Reserve’s TLAC rule requires the U.S. GSIB top-tier holding companies, including the Firm, to maintain minimum levels of external TLAC and eligible long-term debt (“eligible LTD”). Refer to TLAC on page 100 for additional information.
Leverage-based Capital Regulatory Minimums
Supplementary leverage ratio
Banking organizations subject to the Basel III Advanced approach are currently required to have a minimum SLR of
3.0%. Certain banking organizations, including the Firm, are also required to hold an additional 2.0% leverage buffer.
The SLR is defined as Tier 1 capital under Basel III divided by the Firm’s total leverage exposure. Total leverage exposure is calculated by taking the Firm’s total average on balanceon-balance sheet assets, less amounts permitted to be deducted for Tier 1 capital, and adding certain off-balance sheet exposures, such as undrawn commitments and derivatives potential future exposure.
Failure to maintain an SLR ratio equal to or greater than the regulatory minimum maywill result in limitations on the amount of capital that the Firm may distribute.distribute such as through dividends and common share repurchases.
Other regulatory capital
In addition to meeting the capital ratio requirements of Basel III, the Firm and its IDI subsidiaries also must maintain minimum capital and leverage ratios in order to be “well-capitalized” under the regulations issued by the Federal Reserve and the Prompt Corrective Action (“PCA”) requirements of the FDIC Improvement Act (“FDICIA”), respectively. For additional information, referRefer to Note 26.27 for additional information.
Additional information regarding the Firm’s capital ratios, as well as the U.S. federal regulatory capital standards to which the Firm is subject, is presented in Note 27. Refer to the Firm’s Pillar 3 Regulatory Capital Disclosures reports, which are available on the Firm’s website, for further information on the Firm’s Basel III measures.


88JPMorgan Chase & Co./20182020 Form 10-K95

Management’s discussion and analysis

The following tables presenttable presents the Firm’s Transitional and Fully Phased-In risk-based and leverage-based capital metrics under both the Basel III Standardized and Advanced Approaches. The Firm’s Basel IIIapproaches.
StandardizedAdvanced
(in millions, except ratios)
December 31, 2020(c)(d)
December 31, 2019
Minimum capital ratios(e)
December 31, 2020(c)(d)
December 31, 2019
Minimum capital ratios(e)
Risk-based capital metrics:
CET1 capital$205,078 $187,753 $205,078 $187,753 
Tier 1 capital234,844 214,432 234,844 214,432 
Total capital269,923 242,589 257,228 232,112 
Risk-weighted assets1,560,609 1,515,869 1,484,431 1,397,878 
CET1 capital ratio13.1 %12.4 %11.3 %13.8 %13.4 %10.5 %
Tier 1 capital ratio15.0 14.1 12.8 15.8 15.3 12.0 
Total capital ratio17.3 16.0 14.8 17.3 16.6 14.0 
Leverage-based capital metrics:
Adjusted average assets(a)
$3,353,319 $2,730,239 $3,353,319 $2,730,239 
Tier 1 leverage ratio7.0 %7.9 %4.0 %7.0 %7.9 %4.0 %
Total leverage exposure(b)
NANA$3,401,542 $3,423,431 
SLR(b)
NANANA6.9 %6.3 %5.0 %

(a)Adjusted average assets, for purposes of calculating the leverage ratios, exceeded both the Transitionalincludes total quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill and Fully Phased-In regulatory minimums asother intangible assets.
(b)As of December 31, 20182020, total leverage exposure for purposes of calculating the SLR excludes U.S. Treasury securities and 2017.deposits at Federal Reserve Banks, as provided by the interim final rule issued by the Federal Reserve on April 1, 2020.
(c)As of December 31, 2020, the capital metrics reflect the CECL capital transition provisions.
(d)As of December 31, 2020, the capital metrics reflect the exclusion of assets purchased from money market mutual fund clients pursuant to nonrecourse advances provided under the MMLF. Additionally, loans originated under the PPP receive a zero percent risk weight.
(e)Represents minimum requirements and regulatory buffers applicable to the Firm. For the period ended December 31, 2019, the CET1, Tier 1, Total, Tier 1 leverage and SLR minimum capital ratios applicable to the Firm were 10.5%, 12.0%, 14.0%, 4.0% and 5.0%, respectively. Refer to Note 27 for additional information.
 
Transitional/Fully Phased-In(c)
 Transitional Fully Phased-In 
December 31, 2018
(in millions, except ratios)
Standardized Advanced Minimum capital ratios Minimum capital ratios 
Risk-based capital metrics:        
CET1 capital$183,474
 $183,474
     
Tier 1 capital209,093
 209,093
     
Total capital237,511
 227,435
     
Risk-weighted assets1,528,916
 1,421,205
     
CET1 capital ratio12.0% 12.9% 9.0% 10.5% 
Tier 1 capital ratio13.7
 14.7
 10.5
 12.0
 
Total capital ratio15.5
 16.0
 12.5
 14.0
 
         
 Leverage-based capital metrics:        
Adjusted average assets(a)
$2,589,887
 $2,589,887
     
Tier 1 leverage ratio8.1% 8.1% 4.0% 4.0% 
Total leverage exposureNA
 $3,269,988
     
SLR(b)
NA
 6.4% NA
 5.0%
(b) 
 TransitionalFully Phased-In 
December 31, 2017
(in millions, except ratios)
Standardized Advanced Minimum capital ratios Standardized Advanced Minimum capital ratios 
Risk-based capital metrics:            
CET1 capital$183,300
 $183,300
   $183,244
 $183,244
   
Tier 1 capital208,644
 208,644
   208,564
 208,564
   
Total capital238,395
 227,933
   237,960
 227,498
   
Risk-weighted assets1,499,506
 1,435,825
   1,509,762
 1,446,696
   
CET1 capital ratio12.2% 12.8% 7.50% 12.1% 12.7% 10.5% 
Tier 1 capital ratio13.9
 14.5
 9.00
 13.8
 14.4
 12.0
 
Total capital ratio15.9
 15.9
 11.00
 15.8
 15.7
 14.0
 
Leverage based capital metrics:            
             
Adjusted average assets(a)
$2,514,270
 $2,514,270
   $2,514,822
 $2,514,822
   
Tier 1 leverage ratio8.3% 8.3% 4.0% 8.3% 8.3% 4.0% 
Total leverage exposureNA
 $3,204,463
   NA
 $3,205,015
   
SLRNA
 6.5% NA
 NA
 6.5% 5.0%
(b) 
(a)Adjusted average assets, for purposes of calculating the Tier 1 leverage ratio, includes total quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill and other intangible assets.
(b)Effective January 1, 2018, the SLR was fully phased-in under Basel III. The December 31, 2017 amounts were calculated under the Basel III Transitional rules.
(c)The Firm’s capital ratios as of December 31, 2018 were equivalent whether calculated on a transitional or fully phased-in basis.
The Firm believes that it will operate with a Basel III CET1 capital ratio between 11% and 12% over the medium term.
For additional information on the Firm, JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A.’s capital, RWA and capital ratios under Basel III Standardized and Advanced Fully Phased-In rules and the SLR calculated under the Basel III Advanced Fully Phased-In rules, all of which are considered key regulatory capital measures, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 57-59.

96JPMorgan Chase & Co./20182020 Form 10-K89
Management’s discussion and analysis

Capital components
The following table presents reconciliations of total stockholders’ equity to Basel III Fully Phased-In CET1 capital, Tier 1 capital and Basel III Advanced and Standardized Fully Phased-In Total capital as of December 31, 20182020 and 2017.2019.
(in millions)December 31,
2020		December 31,
2019
Total stockholders’ equity$279,354 $261,330 
Less: Preferred stock30,063 26,993 
Common stockholders’ equity249,291 234,337 
Add:
Certain deferred tax liabilities(a)
2,453 2,381 
Less:
Goodwill49,248 47,823 
Other intangible assets904 819 
Other CET1 capital adjustments(b)
(3,486)323 
Standardized/Advanced CET1 capital205,078 187,753 
Preferred stock30,063 26,993 
Less: Other Tier 1 adjustments297 314 
Standardized/Advanced Tier 1 capital$234,844 $214,432 
Long-term debt and other instruments qualifying as Tier 2 capital$16,645 $13,733 
Qualifying allowance for credit losses(c)
18,372 14,314 
Other62 110 
Standardized Tier 2 capital$35,079 $28,157 
Standardized Total capital$269,923 $242,589 
Adjustment in qualifying allowance for credit losses for Advanced Tier 2 capital(d)
(12,695)(10,477)
Advanced Tier 2 capital$22,384 $17,680 
Advanced Total capital$257,228 $232,112 
(a)Represents deferred tax liabilities related to tax-deductible goodwill and to identifiable intangibles created in nontaxable transactions, which are netted against goodwill and other intangibles when calculating CET1 capital.
(b)As of December 31, 2020, the impact of the CECL capital transition provision was an increase in CET1 capital of $5.7 billion.
(c)Represents the allowance for credit losses eligible for inclusion in Tier 2 capital up to 1.25% of credit risk RWA, including the impact of the CECL capital transition provision with any excess deducted from RWA.
(d)Represents an adjustment to qualifying allowance for credit losses for the excess of eligible credit reserves over expected credit losses up to 0.6% of credit risk RWA, including the impact of the CECL capital transition provision with any excess deducted from RWA.

(in millions)
December 31, 2018


December 31, 2017


Total stockholders’ equity$256,515
$255,693
Less: Preferred stock26,068
26,068
Common stockholders’ equity230,447
229,625
Less:  
Goodwill47,471
47,507
Other intangible assets748
855
Other CET1 capital adjustments1,034
223
Add:  
Deferred tax liabilities(a)
2,280
2,204
Standardized/Advanced Fully Phased-In CET1 capital183,474
183,244
Preferred stock26,068
26,068
Less:  
Other Tier 1 adjustments449
748
Standardized/Advanced Fully Phased-In Tier 1 capital209,093
208,564
Long-term debt and other instruments qualifying as Tier 2 capital13,772
14,827
Qualifying allowance for credit losses14,500
14,672
Other146
(103)
Standardized Fully Phased-In Tier 2 capital28,418
29,396
Standardized Fully Phased-in Total capital237,511
237,960
Adjustment in qualifying allowance for credit losses for Advanced Tier 2 capital(10,076)(10,462)
Advanced Fully Phased-In Tier 2 capital18,342
18,934
Advanced Fully Phased-In Total capital$227,435
$227,498
(a)Represents certain deferred tax liabilities related to tax-deductible goodwill and identifiable intangibles created in nontaxable transactions, which are netted against goodwill and other intangibles when calculating TCE.

Capital rollforward
The following table presents the changes in Basel III Fully Phased-In CET1 capital, Tier 1 capital and Tier 2 capital for the year ended December 31, 2018.2020.
Year Ended December 31, (in millions)2018
Standardized/Advanced CET1 capital at December 31, 2017$183,244
Net income applicable to common equity30,923
Dividends declared on common stock(9,214)
Net purchase of treasury stock(17,899)
Changes in additional paid-in capital(1,417)
Changes related to AOCI(1,203)
Adjustment related to DVA(a)
(1,165)
Changes related to other CET1 capital adjustments205
Increase in Standardized/Advanced CET1 capital230
Standardized/Advanced CET1 capital at
December 31, 2018
183,474
  
Standardized/Advanced Tier 1 capital at
December 31, 2017
208,564
Change in CET1 capital230
Net issuance of noncumulative perpetual preferred stock—
Other299
Increase in Standardized/Advanced Tier 1 capital529
Standardized/Advanced Tier 1 capital at
December 31, 2018
209,093
  
Standardized Tier 2 capital at December 31, 201729,396
Change in long-term debt and other instruments qualifying as Tier 2(1,055)
Change in qualifying allowance for credit losses(172)
Other249
Decrease in Standardized Tier 2 capital(978)
Standardized Tier 2 capital at December 31, 201828,418
Standardized Total capital at December 31, 2018237,511
Advanced Tier 2 capital at December 31, 201718,934
Change in long-term debt and other instruments qualifying as Tier 2(1,055)
Change in qualifying allowance for credit losses214
Other249
Decrease in Advanced Tier 2 capital(592)
Advanced Tier 2 capital at December 31, 201818,342
Advanced Total capital at December 31, 2018$227,435
Year Ended December 31, (in millions)2020
Standardized/Advanced CET1 capital at December 31, 2019$187,753 
Net income applicable to common equity27,548 
Dividends declared on common stock(11,119)
Net purchase of treasury stock(5,135)
Changes in additional paid-in capital(128)
Changes related to AOCI6,417 
Adjustment related to AOCI(a)
(1,829)
Changes related to other CET1 capital adjustments(b)
1,571 
Change in Standardized/Advanced CET1 capital17,325 
Standardized/Advanced CET1 capital at
December 31, 2020
$205,078
(a)
Standardized/Advanced Tier 1 capital at
December 31, 2019
Includes DVA related to structured notes recorded$214,432 
Change in AOCI.CET1 capital(b)
17,325 
Net issuance of noncumulative perpetual preferred stock3,070 
Other17 
Change in Standardized/Advanced Tier 1 capital20,412 
Standardized/Advanced Tier 1 capital at
December 31, 2020
$234,844
Standardized Tier 2 capital at December 31, 2019$28,157 
Change in long-term debt and other instruments qualifying as Tier 22,912 
Change in qualifying allowance for credit losses(b)
4,058 
Other(48)
Change in Standardized Tier 2 capital6,922 
Standardized Tier 2 capital at December 31, 2020$35,079
Standardized Total capital at December 31, 2020$269,923
Advanced Tier 2 capital at December 31, 2019$17,680 
Change in long-term debt and other instruments qualifying as Tier 22,912 
Change in qualifying allowance for credit losses(b)
1,840 
Other(48)
Change in Advanced Tier 2 capital4,704 
Advanced Tier 2 capital at December 31, 2020$22,384
Advanced Total capital at December 31, 2020$257,228
(a)Includes cash flow hedges and DVA related to structured notes recorded in AOCI.
(b)Includes the impact of the CECL capital transition provisions.




90JPMorgan Chase & Co./20182020 Form 10-K97

Management’s discussion and analysis

RWA rollforward
The following table presents changes in the components of RWA under Basel III Standardized and Advanced Fully Phased-Inapproaches for the year ended December 31, 2018.2020. The amounts in the rollforward categories are estimates, based on the predominant driver of the change.
StandardizedAdvanced
Year ended December 31, 2020
(in millions)		Credit risk RWAMarket risk RWATotal RWACredit risk RWAMarket risk RWAOperational risk
RWA		Total RWA
December 31, 2019$1,440,220 $75,649 $1,515,869 $932,948 $75,652 $389,278 $1,397,878 
Model & data changes(a)
(800)(16,320)(17,120)(6,100)(16,320)— (22,420)
Portfolio runoff(b)
(4,450)— (4,450)(4,000)— — (4,000)
Movement in portfolio levels(c)
29,249 37,061 66,310 79,482 37,578 (4,087)112,973 
Changes in RWA23,999 20,741 44,740 69,382 21,258 (4,087)86,553 
December 31, 2020$1,464,219 $96,390 $1,560,609 $1,002,330 $96,910 $385,191 $1,484,431 
 Standardized Advanced
Year ended December 31, 2018
(in millions)
Credit risk RWAMarket risk RWATotal RWA Credit risk RWAMarket risk RWA
Operational risk
RWA
Total RWA
December 31, 2017$1,386,060
$123,702
$1,509,762
 $922,905
$123,791
$400,000
$1,446,696
Model & data changes(a)
(10,431)(13,191)(23,622) 3,750
(13,191)—
(9,441)
Portfolio runoff(b)
(8,381)—
(8,381) (10,161)—
—
(10,161)
Movement in portfolio levels(c)
55,805
(4,648)51,157
 10,153
(4,624)(11,418)(5,889)
Changes in RWA36,993
(17,839)19,154
 3,742
(17,815)(11,418)(25,491)
December 31, 2018$1,423,053
$105,863
$1,528,916
 $926,647
$105,976
$388,582
$1,421,205
(a)Model & data changes refer to material movements in levels of RWA as a result of revised methodologies and/or treatment per regulatory guidance (exclusive of rule changes).
(a)Model & data changes refer to material movements in levels of RWA as a result of revised methodologies and/or treatment per regulatory guidance (exclusive of rule changes).
(b)Portfolio runoff for credit risk RWA primarily reflects reduced risk from position rolloffs in legacy portfolios in Home Lending.
(c)Movement in portfolio levels (inclusive of rule changes) refers to: changes in book size, composition, credit quality, and market movements for credit risk RWA; changes in position and market movements for market risk RWA; and updates to cumulative losses for operational risk RWA.

(b)Portfolio runoff for credit risk RWA primarily reflects reduced risk from position rolloffs in legacy portfolios in Home Lending.
(c)Movement in portfolio levels (inclusive of rule changes) refers to: changes in book size, composition, credit quality, and market movements for credit risk RWA; changes in position and market movements for market risk RWA; updates to cumulative losses for operational risk RWA; and deductions to credit risk RWA for excess eligible credit reserves not eligible for inclusion in Tier 2 capital.
Supplementary leverage ratio
The following table presents the components of the Firm’s Fully Phased-InSLR.
Three months ended
(in millions, except ratio)
December 31,
2020		December 31,
2019
Tier 1 capital$234,844 214,432 
Total average assets3,399,818 2,777,270 
Less: Regulatory capital adjustments(a)
46,499 47,031 
Total adjusted average assets(b)
3,353,319 2,730,239 
Add: Off-balance sheet exposures(c)
729,978 693,192 
Less: Exclusion for U.S. Treasuries and Federal Reserve Bank deposits681,755 — 
Total leverage exposure$3,401,542 $3,423,431 
SLR6.9 %6.3 %
(a)For purposes of calculating the SLR, asincludes total quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill and other intangible assets. As of December 31, 20182020, includes adjustments for the CECL capital transition provisions and 2017.the exclusion of average assets purchased from money market mutual fund clients pursuant to nonrecourse advances provided under the MMLF.
(b)Adjusted average assets used for the calculation of Tier 1 leverage ratio.
(in millions, except ratio)December 31, 2018
December 31, 2017
Tier 1 capital$209,093
$208,564
Total average assets2,636,505
$2,562,155
Less: Adjustments for deductions from Tier 1 capital46,618
47,333
Total adjusted average assets(a)
2,589,887
2,514,822
Off-balance sheet exposures(b)
680,101
690,193
Total leverage exposure$3,269,988
$3,205,015
SLR6.4%6.5%
(c)Off-balance sheet exposures are calculated as the average of the three month-end spot balances during the reporting quarter.
(a)
Adjusted average assets,
Refer to Note 27 for purposes of calculating the SLR, includes total quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill and other intangible assets.
(b)
Off-balance sheet exposures are calculated as the average of the three month-end spot balances during the reporting quarter.
For JPMorgan Chase Bank, N.A.’s and Chase Bank USA, N.A.’s SLR ratios, refer to Note 26.SLR.

Line of business equity
Each business segment is allocated capital by taking into consideration a variety of factors including capital levels of similarly rated peers and applicable regulatory capital requirements. ROE is measured and internal targets for expected returns are established as key measures of a business segment’s performance.
The Firm’s allocation methodology incorporates Basel III Standardized RWA, Basel III Advanced RWA, leverage, the GSIB surcharge, and a simulation of capital in a severe stress environment. On at leastAs of January 1, 2021, the Firm has changed its line of business capital allocations primarily as a result of changes in exposures for each LOB and an annual basis,increase in the relative risk weighting toward Standardized RWA. The assumptions and methodologies used into allocate capital allocation are periodically assessed and as a result, the capital allocated to lines of businessthe LOBs may change.As of January 1, 2019, line of business capital allocations have increased duechange from time to a combination of changes in the relative weights toward Standardized RWA and stress, a higher capitalization rate, updated stress simulations, and general business growth.  time. 
The following table below presents the Firm’s assessed level of capital allocated to each line of business as of the dates indicated.segment.
Line of business equity (Allocated capital)
   December 31,
(in billions)
January 1,
 2019

 2018
2017
Consumer & Community Banking$52.0
 $51.0
$51.0
Corporate & Investment Bank80.0
 70.0
70.0
Commercial Banking22.0
 20.0
20.0
Asset & Wealth Management10.5
 9.0
9.0
Corporate65.9
 80.4
79.6
Total common stockholders’ equity$230.4
 $230.4
$229.6

Capital actions
Line of business equity (Allocated capital)
December 31,
(in billions)January 1,
2021		20202019
Consumer & Community Banking$50.0 $52.0 $52.0 
Corporate & Investment Bank83.0 80.0 80.0 
Commercial Banking24.0 22.0 22.0 
Asset & Wealth Management14.0 10.5 10.5 
Corporate78.3 84.8 69.8 
Total common stockholders’ equity$249.3 $249.3 $234.3 
Preferred stock
Preferred stock dividends declared were $1.6 billion for the year ended December 31, 2018.
On January 24, 2019, the Firm issued $1.85 billion of 6.00% non-cumulative preferred stock, Series EE, and on January 30, 2019, the Firm announced that it will redeem all $925 million of its outstanding 6.70% non-cumulative preferred stock, Series T, on March 1, 2019.On September 21, 2018, the Firm issued $1.7 billion of 5.75% non-cumulative preferred stock, Series DD. On October 30, 2018, the Firm redeemed $1.7 billion of its fixed-to-floating rate non-cumulative perpetual preferred stock, Series I.
On October 20, 2017, the Firm issued $1.3 billion of fixed-to-floating rate non-cumulative preferred stock, Series CC, with an initial dividend rate of 4.625%. On December 1, 2017, the Firm redeemed all $1.3 billion of its outstanding 5.50% non-cumulative preferred stock, Series O.
For additional information on the Firm’s preferred stock, refer to Note 20.









98JPMorgan Chase & Co./20182020 Form 10-K91
Management’s discussion and analysis

Trust preferred securities
On September 10, 2018, the Firm’s last remaining issuer of outstanding trust preferred securities (“issuer trust”) was liquidated, resulting in $475 million of trust preferred securities and $15 million of trust common securities originally issued by the issuer trust being cancelled.
On December 18, 2017, the Delaware trusts that issued
seven series of outstanding trust preferred securities were
liquidated, and $1.6 billion of trust preferred and $56 million of trust common securities originally issued by those trusts were cancelled.
For additional information, refer to Note 19.Capital actions
Common stock dividends
The Firm’s common stock dividends are planned as part of the Capital Management governance framework in line with the Firm’s capital management objectives.
On September 18, 2018, the Firm announced that its Board of Directors increased theThe Firm’s quarterly common stock dividend from $0.56is currently $0.90 per share to $0.80 per share, effective with the dividend paid on October 31, 2018.share. The Firm’s dividends are subject to the Board of Directors’ approval on a quarterly basis.
ForRefer to Note 21 and Note 26 for information regarding dividend restrictions, refer to Note 20 and Note 25.restrictions.
The following table shows the common dividend payout ratio based on net income applicable to common equity.
Year ended December 31,2018
 2017
 2016
Year ended December 31,202020192018
Common dividend payout ratio30% 33% 30%Common dividend payout ratio40 %31 %30 %
Common equitystock
DuringOn March 15, 2020, in response to the year endedeconomic disruptions caused by the COVID-19 pandemic, the Firm temporarily suspended repurchases of its common stock. Subsequently, the Federal Reserve directed all large banks, including the Firm, to discontinue net share repurchases through the end of 2020. On December 31, 2018, warrant holders exercised their right to purchase 14.9 million shares18, 2020, the Federal Reserve announced that all large banks, including the Firm, could resume share repurchases commencing in the first quarter of 2021. As directed by the Federal Reserve, total net repurchases and common stock dividends in the first quarter of 2021 are restricted and cannot exceed the average of the Firm’s common stock.net income for the four preceding calendar quarters. The Firm issued from treasury stock 9.4 million shares of its common stock as a result of these exercises. There were no warrants outstanding at December 31, 2018, as any warrants that were not exercised on or before October 29, 2018, have expired. At December 31, 2017, the Firm had 15.0 million warrants outstanding.
Effective June 28, 2018, the Firm’sFirm's Board of Directors has authorized thea new common share repurchase ofprogram for up to $20.7 billion of common equity between July 1, 2018 and June 30, 2019, as part of its annual capital plan. As of December 31, 2018, $10.4 billion of authorized repurchase capacity remained under the common equity repurchase program.$30 billion.
The following table sets forth the Firm’s repurchases of common equitystock for the years ended December 31, 2018, 20172020, 2019 and 2016. There were no repurchases of warrants during the years ended December 31, 2018, 2017 and 2016.2018.
Year ended December 31, (in millions)202020192018
Total number of shares of common stock repurchased50.0 213.0 181.5 
Aggregate purchase price of common stock repurchases$6,397 $24,121 $19,983 

Year ended December 31, (in millions) 2018
 2017
 2016
Total number of shares of common stock repurchased 181.5
 166.6
 140.4
Aggregate purchase price of common stock repurchases $19,983
 $15,410
 $9,082
The Firm from time to time enters into written trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934 to facilitate repurchases in accordance with the common equity repurchase program. A Rule 10b5-1 repurchase plan allows the Firm to repurchase its equity during periods when it would not otherwise be repurchasing common equity — for example, during internal trading blackout periods. All purchases under Rule 10b5-1 plans must be made according to predefined schedules established when the Firm is not aware of material nonpublic information.
The authorization to repurchase common equity will beshares is utilized at management’s discretion, and the timing of purchases and the exact amount of common equityshares that may be repurchased is subject to various factors, including market conditions; legal and regulatory considerations affecting the amount and timing of repurchase activity; the Firm’s capital position (taking into account goodwill and intangibles); internal capital generation; and alternative investment opportunities. The repurchase program does not include specific price targets or timetables; may be suspended by management at any time; and may be executed through open market purchases or privately negotiated transactions, or utilizing Rule 10b5-1 plans; andplans, which are written trading plans that the Firm may be suspended by management at any time.
For additional information regarding repurchasesenter into from time to time under Rule 10b5-1 of the Firm’s equity securities, referSecurities Exchange Act of 1934 and which allow the Firm to repurchase its common shares during periods when it may otherwise not be repurchasing common shares — for example, during internal trading blackout periods.
Refer to Part II, Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities on page 30.34 of the 2020 Form 10-K for additional information regarding repurchases of the Firm’s equity securities.
Preferred stock
Preferred stock dividends declared were $1.6 billion for the year ended December 31, 2020.
The Firm has not issued or redeemed any preferred stock since the first quarter of 2020. Refer to Note 21 for additional information on the Firm’s preferred stock, including the issuance and redemption of preferred stock.
Subordinated Debt
On May 13, 2020, the Firm issued $3.0 billion of fixed-to-floating rate subordinated notes due 2031. Refer to Long-term funding and issuance on page 107 and Note 20 for additional information.


92JPMorgan Chase & Co./20182020 Form 10-K99
Management’s discussion and analysis


Other capital requirements
Total Loss-Absorbing Capacity (“TLAC”)
On December 15, 2016, theThe Federal Reserve issued its finalReserve’s TLAC rule which requires the top-tier holding companies of eight U.S. GSIB top-tier holding companies, including the Firm, to maintain minimum levels of external TLAC and externaleligible long-term debt that satisfies certain eligibility criteria (“eligible LTD”), effective January 1, 2019.debt.
The minimum external TLAC and the minimum level of eligible long-term debt requirements are shown below:
jpm-20201231_g5.jpg
(a) RWA is the greater of Standardized and Advanced.Advanced compared to their respective minimum capital ratios.
Failure to maintain TLAC equal to or in excess of the regulatory minimum plus applicable buffers maywill result in limitations to the amount of capital that the Firm may distribute, such as through dividends and common equityshare repurchases.
The finalfollowing table presents the TLAC rule permanently grandfathered alland external long-term debt issued before December 31, 2016, to the extent these securities would be ineligible because they contained impermissible acceleration rights or were governed by non-U.S. law. Asminimum requirements including applicable regulatory buffers, as of December 31, 2018, the Firm exceeded the minimum requirements under the rule to which it became subject to on2020 and 2019.
Minimum Requirements
TLAC to RWA23.0 %
TLAC to leverage exposure9.5 
External long-term debt to RWA9.5 
External long-term debt to leverage4.5 
Effective January 1, 2019.2021, Method 1 GSIB surcharge is 2.0% (down from 2.5%). As a result, the Firm’s TLAC to RWA requirement will become 22.5%. Refer to Risk-based Capital Regulatory Minimums on pages 94-95 for further information on the GSIB surcharge.
The following table presents the eligible external TLAC and eligible LTD amounts, as well as a representation of the amounts as a percentage of the Firm’s total RWA and total leverage exposure.exposure applying the impact of the CECL capital transition provisions as of December 31, 2020 and 2019.
December 31, 2020December 31, 2019
(in billions, except ratio)External TLACLTDExternal TLACLTD
Total eligible amount$421.0 $181.4 $386.4 $161.8 
% of RWA27.0 %11.6 %25.5 %10.7 %
Surplus/(shortfall)$62.1 $33.1 $37.7 $17.8 
% of total leverage exposure12.4 %5.3 %11.3 %4.7 %
Surplus/(shortfall)$97.9 $28.3 $61.2 $7.8 
Refer to Part I, Item 1A: Risk Factors on pages 8-32 of the 2020 Form 10-K
December 31, 2018 
(in billions, except ratio)Eligible External TLACEligible LTD
Total eligible TLAC & LTD$380.5
$160.5
% of RWA24.9%10.5%
Minimum requirement23.0
9.5
Surplus/(shortfall)$28.9
$15.3
   
% of total leverage exposure11.6%4.9%
Minimum requirement(a)
9.5
4.5
Surplus/(shortfall)$69.9
$13.4
Forfor information on the financial consequences to holders of the Firm’s debt and equity securities in a resolution scenario, refer to Part I, Item 1A: Risk Factors on pages 7-28 of the Firm’s 2018 Form 10-K.scenario.


100JPMorgan Chase & Co./20182020 Form 10-K93

Management’s discussion and analysis

Broker-dealer regulatory capital
J.P. Morgan Securities
JPMorgan Chase’s principal U.S. broker-dealer subsidiary is J.P. Morgan Securities. J.P. Morgan Securities is subject to Rule 15c3-1 under the Securities Exchange Act of 1934 (the “Net Capital Rule”). J.P. Morgan Securities is also registered as a futures commission merchant and is subject to Rule 1.17 ofregulatory capital requirements, including those imposed by the CFTC.SEC, Commodity Futures Trading Commission (“CFTC”), Financial Industry Regulatory Authority (“FINRA”) and the National Futures Association (“NFA”).
J.P. Morgan Securities has elected to compute its minimum net capital requirements in accordance with the “Alternative Net Capital Requirements” of the Net Capital Rule.
The following table presents J.P. Morgan Securities’ net capital:
December 31, 2020
(in millions)
Actual(a)
Minimum
Net Capital$27,651 $5,024 
Under(a)Net capital reflects the exclusion of assets purchased from money market and credit risk standards of Appendix E ofmutual fund clients pursuant to nonrecourse advances provided under the Net Capital Rule,MMLF.
In addition to its alternative minimum net capital requirements, J.P. Morgan Securities is eligiblerequired to use the alternative methodhold “tentative net capital” in excess of computing net capital if, in addition to meeting its minimum net capital requirements, it maintains tentative net capital of at least $1.0 billion. J.P. Morgan Securitiesbillion and is also required to notify the SEC in the event that its tentative net capital is less than $5.0 billion. Tentative net capital is net capital before deducting market and credit risk charges as defined by the Net Capital Rule. As of December 31, 2018,2020, J.P. Morgan Securities maintained tentative net capital in excess of the minimum and notification requirements.
The following table presents J.P.Morgan Securities’ net capital information:
December 31, 2018Net capital
(in millions)Actual
Minimum
J.P. Morgan Securities$16,648
$3,069
J.P. Morgan Securities plc
J.P. Morgan Securities plc is a wholly-owned subsidiary of JPMorgan Chase Bank, N.A. and is the Firm’s principal operating subsidiary in the U.K. It has authority to engage in banking, investment banking and broker-dealer activities. J.P. Morgan Securities plc is jointly regulated by the PRAU.K. Prudential Regulation Authority (“PRA”) and the FCA.Financial Conduct Authority (“FCA”). J.P. Morgan Securities plc is subject to the European Union Capital Requirements Regulation and the PRA capital rules, each of which implementedimplement Basel III and thereby subject J.P. Morgan Securities plc to its requirements. Effective January 1, 2021, J.P. Morgan Securities plc is subject to the amended EU Capital Requirement Regulation, as adopted in the U.K.
The Bank of England requires, on a transitional basis, that U.K. banks, including U.K. regulated subsidiaries of overseas groups, maintain a minimum requirement for own funds and eligible liabilities (“MREL”). As of December 31, 2020, J.P. Morgan Securities plc was compliant with the requirements of the MREL rule.
The following table presents J.P. Morgan Securities plc’s capital information:metrics:
December 31, 2020
(in millions, except ratios)EstimatedMinimum ratios
Total capital$55,156 
CET1 ratio17.9 %4.5 %
Total capital ratio22.8 %8.0 %




December 31, 2018
Total capital(a)
 CET1 ratio Total capital ratio
(in millions, except ratios)Estimated EstimatedMinimum EstimatedMinimum
J.P. Morgan Securities plc$53,086
 17.44.5 22.58.0
(a)Includes the tier 2 qualifying subordinated debt securities issued to meet the MREL requirements to which J.P. Morgan Securities plc became subject to on January 1, 2019. For additional information on MREL, refer to Supervision & Regulation on pages 1-6





94JPMorgan Chase & Co./2018 Form 10-K


JPMorgan Chase & Co./2020 Form 10-K101
Management’s discussion and analysis
LIQUIDITY RISK MANAGEMENT
Liquidity risk is the risk that the Firm will be unable to meet its contractual and contingent financial obligations as they arise or that it does not have the appropriate amount, composition and tenor of funding and liquidity to support its assets and liabilities.
Liquidity risk oversight
The Firm has a liquidity risk oversightLiquidity Risk Oversight function whose primary objective is to provide assessment, measurement, monitoring, and controloversight of liquidity risk across the Firm. Liquidity risk oversight is managed through a dedicated firmwide Liquidity Risk Oversight group. The CTC CRO, who reports to the Firm’s CRO, is responsible for firmwide Liquidity Risk Oversight. Liquidity Risk Oversight’s responsibilities include:
•Defining, monitoring and reporting liquidity risk metrics;
•Establishing and monitoring limits and indicators, including liquidity risk appetite;
•Developing a process to classify, monitor and report limit breaches;
•Performing an independent review of liquidity risk management processes;
•Monitoring and reporting internal Firmwide and legal entity liquidity stress tests as well as regulatory defined liquidity stress tests;
•Approving or escalating for review new or updated liquidity stress assumptions; and
•
Establishing and monitoring limits and indicators, including liquidity risk appetite tolerances;
•
Monitoring and reporting internal firmwide and legal entity liquidity stress tests as well as regulatory defined liquidity stress tests;
•
Approving or escalating for review new or updated liquidity stress assumptions;
Monitoring liquidity positions, balance sheet variances and funding activities;
•
Conducting ad hoc analysis to identify potential emerging liquidity risks; and
•
Performing independent review of liquidity risk management processes.
Liquidity management
Treasury and CIO is responsible for liquidity management. The primary objectives of effectivethe Firm’s liquidity management are to:
•Ensure that the Firm’s core businesses and material legal entities are able to operate in support of client needs and meet contractual and contingent financial obligations through normal economic cycles as well as during stress events, and
•Manage an optimal funding mix and availability of liquidity sources.
As part of the Firm’s overall liquidity management strategy, the Firm manages liquidity and funding using a centralized, global approach in order to:
•Optimize liquidity sources and uses;
•
Optimize liquidity sources and uses;
•
Monitor exposures;
•
Identify constraints on the transfer of liquidity between the Firm’s legal entities; and  
•
Maintain the appropriate amount of surplus liquidity at a firmwide and legal entity level, where relevant.
•Monitor exposures;
•Identify constraints on the transfer of liquidity between the Firm’s legal entities; and
•Maintain the appropriate amount of surplus liquidity at a Firmwide and legal entity level, where relevant.
In the context of the Firm’s liquidity management, Treasury and CIO is responsible for:
•
Analyzing and understanding the liquidity characteristics of the assets and liabilities of the Firm, lines of business
LOBs and legal entities, taking into account legal, regulatory, and operational restrictions;
•
Developing internal liquidity stress testing assumptions;
•
Defining and monitoring firmwide and legal entity-specific liquidity strategies, policies, reporting and contingency funding plans;
•
Managing liquidity within the Firm’s approved liquidity risk appetite tolerances and limits;
•
Managing compliance with regulatory requirements related to funding and liquidity risk; and
•
Setting transfer pricing in accordance with underlying liquidity characteristics of balance sheet assets and liabilities as well as certain off-balance sheet items.
Risk governance
•Developing internal liquidity stress testing assumptions;
•Defining and monitoring Firmwide and legal entity-specific liquidity strategies, policies, reporting and contingency funding plans;
•Managing liquidity within the Firm’s approved liquidity risk appetite tolerances and limits;
•Managing compliance with regulatory requirements related to funding and liquidity risk; and
•Setting transfer pricing in accordance with underlying liquidity characteristics of balance sheet assets and liabilities as well as certain off-balance sheet items.
Governance
Committees responsible for liquidity governance include the firmwideFirmwide ALCO as well as line of businessLOB and regional ALCOs, the Treasurer Committee, and the CTC Risk Committee. In addition, the DRPC Board Risk Committee reviews and recommends to the Board of Directors, for formal approval, the Firm’s liquidity risk tolerances, liquidity strategy, and liquidity policy at least annually. Forpolicy. Refer to Firmwide Risk Management on pages 85-89 for further discussion of ALCO and other risk-related committees, refer to Enterprise-wide Risk Management on pages 79–140.committees.
Internal stress testing
Liquidity stress tests are intended to ensure that the Firm has sufficient liquidity under a variety of adverse scenarios, including scenarios analyzed as part of the Firm’s resolution and recovery planning. Stress scenarios are produced for JPMorgan Chase & Co. (“Parent Company”) and the Firm’s material legal entities on a regular basis, and ad hocother stress tests are performed as needed, in response to specific market events or concerns. Liquidity stress tests assume all of the Firm’s contractual financial obligations are met and take into consideration:
•Varying levels of access to unsecured and secured funding markets,
•
Varying levels of access to unsecured and secured funding markets,
•
Estimated non-contractual and contingent cash outflows, and
•
Potential impediments to the availability and transferability of liquidity between jurisdictions and material legal entities such as regulatory, legal or other restrictions.
•Estimated non-contractual and contingent cash outflows, and
•Potential impediments to the availability and transferability of liquidity between jurisdictions and material legal entities such as regulatory, legal or other restrictions.
Liquidity outflow assumptions are modeled across a range of time horizons and currency dimensions and contemplate both market and idiosyncratic stresses.
Results of stress tests are considered in the formulation of the Firm’s funding plan and assessment of its liquidity position. The Parent Company acts as a source of funding for the Firm through equity and long-term debt issuances, and the IHCits intermediate holding company, JPMorgan Chase Holdings LLC (the “IHC”) provides funding support to the ongoing operations of the Parent Company and its subsidiaries, as necessary.subsidiaries. The Firm maintains liquidity at the Parent Company, IHC, and the IHC, in addition to liquidity held at the

JPMorgan Chase & Co./2018 Form 10-K95
Management’s discussion and analysis

operating subsidiaries at levels sufficient to comply with liquidity risk tolerances and minimum liquidity requirements, and to manage through periods of
102JPMorgan Chase & Co./2020 Form 10-K

stress wherewhen access to normal funding sources ismay be disrupted.
Contingency funding plan
The Firm’s contingency funding planContingency Funding Plan (“CFP”), which is approved by sets out the firmwide ALCOstrategies for addressing and the DRPC, is a compilation of procedures and action plans for managing liquidity throughresource needs during a liquidity stress events.event and incorporates liquidity risk limits, indicators and risk appetite tolerances that make up Liquidity Escalation Points. The CFP incorporates the limits and indicators set by the Liquidity Risk Oversight group. These limits and indicators are reviewed regularly to identify emerging risks or vulnerabilities in the Firm’s liquidity position. The CFPalso identifies the alternative contingent funding and liquidity resources available to the Firm and its legal entities in a period of stress.
Liquidity Coverage Ratio
The LCR rule requires that the Firm toand JPMorgan Chase Bank, N.A. maintain an amount of unencumbered High Quality Liquid Assets (“HQLA”)eligible HQLA that is sufficient to meet its estimated total net cash outflows over a prospective 30 calendar-day period of significant stress. Eligible HQLA, for purposes of calculating the LCR, is the amount of liquid assetsunencumbered HQLA that qualify for inclusionsatisfy certain operational considerations as defined in the LCR.LCR rule. HQLA primarily consist of unencumbered cash and certain high qualityhigh-quality liquid securities as defined in the LCR rule.
Under the LCR rule, the amountsamount of eligible HQLA held by JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A that areis in excess of each entity’s standaloneits stand-alone 100% minimum LCR requirement, and that areis not transferable to non-bank affiliates, must be excluded from the Firm’s reported eligible HQLA.
Estimated net cash outflows are based on standardized stress outflow and inflow rates prescribed in the LCR rule, which are applied to the balances of the Firm’s assets, sources of funds, and obligations. The LCR for both the Firm and JPMorgan Chase Bank, N.A. is required to be a minimum of 100%.
The following table summarizes the Firm’sFirm and JPMorgan Chase Bank, N.A.’s average LCR for the three months ended December 31, 2018,2020, September 30, 20182020 and December 31, 20172019 based on the Firm’s current interpretation of the finalized LCR framework.
Three months ended
Average amount
(in millions)		December 31, 2020September 30, 2020December 31,
2019
JPMorgan Chase & Co.:
Eligible HQLA
Eligible cash(a)
$455,612 $458,336 $203,296 
Eligible securities(b)(c)
241,447 211,841 341,990 
Total eligible HQLA(d)
$697,059 $670,177 $545,286 
Net cash outflows$634,037 $587,811 $469,402 
LCR110 %114 %116 %
Net excess eligible HQLA(d)
$63,022 $82,366 $75,884 
JPMorgan Chase Bank, N.A.:
LCR160 %157 %116 %
Net excess eligible HQLA$401,903 $366,096 $79,483 
 Three months ended
Average amount
(in millions)
December 31, 2018September 30, 2018December 31,
2017
HQLA   
Eligible cash(a)
$297,069
$344,660
$370,126
Eligible securities(b)(c)
232,201
190,349
189,955
Total HQLA(d)
$529,270
$535,009
$560,081
Net cash outflows$467,704
$466,803
$472,078
LCR113%115%119%
Net excess HQLA (d)
$61,566
$68,206
$88,003
(a)Represents cash on deposit at central banks, primarily the Federal Reserve Banks.
(a)Represents cash on deposit at central banks, primarily Federal Reserve Banks.
(b)Predominantly U.S. Treasuries, U.S. Agency MBS, and sovereign bonds net of applicable haircuts under the LCR rules.
(c)HQLA eligible securities may be reported in securities borrowed or purchased under resale agreements, trading assets, or investment securities on the Firm’s Consolidated balance sheets.
(d)Excludes average excess HQLA at JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. that are not transferable to non-bank affiliates.
(b)Predominantly U.S. Treasuries, U.S. GSE and government agency MBS, and sovereign bonds net of applicable haircuts under the LCR rule.
(c)Eligible HQLA securities may be reported in securities borrowed or purchased under resale agreements, trading assets, or investment securities on the Firm’s Consolidated balance sheets.
(d)Excludes average excess eligible HQLA at JPMorgan Chase Bank, N.A. that are not transferable to non-bank affiliates.
The Firm’s average LCR decreased during the three months ended December 31, 2018,2020, compared with the three monththree-month period ended September 30, 2018 due to2020, predominantly driven by a decrease in cash from long-term debt maturities, including the average amountearly termination of reportable HQLA. Although HQLA increased in JPMorgan Chase Bank, N.A. duringcertain of the period,
Firm's debt at the end of the third quarter 2020.
there was a decrease in the amount of HQLA in JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. that was determined to be transferable to non-bank affiliates.  This decrease was based on a change in the Firm’s interpretation of amounts available for transfer.
The Firm’sFirm's average LCR decreased forduring the three months ended December 31, 2018,2020, compared with the prior year period primarily due to a reductionthe relative impact on net cash outflows from the significant increase in deposits as well as elevated market activities in the CIB.
JPMorgan Chase Bank, N.A.’s average HQLALCR increased during the three months ended December 31, 2020, compared with both the three month periods ended September 30, 2020 and December 31, 2019 primarily due to growth in deposits. Deposits continued to increase in the fourth quarter primarily driven by (a) long-term debt maturitiesthe COVID-19 pandemic and CIB activities, and (b) a decreasethe related effect of certain government actions. The increase in the amount of HQLAexcess liquidity in JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A that was determined to be transferable to non-bank affiliates based on a change inis excluded from the Firm’s interpretation of amounts available for transfer.reported LCR under the LCR rule.
The Firm’s average LCR may fluctuatefluctuates from period to period, due to changes in its eligible HQLA and estimated net cash outflows under the LCR as a result of ongoing business activity. The Firm’s HQLA are expected to be available to meet its liquidity needs in a time of stress. For a further discussion of the Firm’s LCR, referRefer to the Firm’s USU.S. LCR Disclosure reports, which are available on the Firm’s website at: (https://jpmorganchaseco.gcs-web.com/financial-information/basel-pillar-3-us-lcr-disclosures).for a further discussion of the Firm’s LCR.
JPMorgan Chase & Co./2020 Form 10-K103
Management’s discussion and analysis
Other liquidity sources
As of December 31, 2018, inIn addition to the assets reported in the Firm’s eligible HQLA under the LCR rule,above, the Firm had approximately $226 billion of unencumbered marketable securities, such as equity securities and fixed income debt securities, that the Firm believes would be available to raise liquidity, if required.liquidity. This includes HQLA-eligible securities included as part of the excess liquidityeligible HQLA at JPMorgan Chase Bank, N.A. that are not transferable to non-bank affiliates. The fair value of these securities was approximately
As$740 billion and $315 billion as of December 31, 2018,2020 and 2019, respectively, although the amount of liquidity that could be raised would be dependent on prevailing market conditions. The fair value increased compared to December 31, 2019, due to an increase in excess eligible HQLA at JPMorgan Chase Bank, N.A. which was primarily a result of increased deposits. the
The Firm also had approximately $276 billion of available borrowing capacity at various FHLBs and the discount windowswindow at the Federal Reserve Banks and various other central banksBank as a result of collateral pledged by the Firm to such banks.banks of approximately $307 billion and $322 billion as of December 31, 2020 and 2019, respectively. This borrowing capacity excludes the benefit of cash and securities reported in the Firm’s eligible HQLA or other unencumbered securities that are currently pledged at the Federal Reserve Bank discount windows.window and other central banks. Available borrowing capacity decreased from December 31, 2019 primarily due to lower pledged credit card receivable balances driven by the COVID-19 pandemic and a decrease in pledged mortgage collateral as a result of paydown and maturity activity. Although available, the Firm does not view thethis borrowing capacity at the Federal Reserve Bank discount windowswindow and the various other central banks as a primary source of liquidity.

NSFR

The net stable funding ratio (“NSFR”) is a liquidity requirement for large banking organizations that is intended to measure the adequacy of “available” and “required” amounts of stable funding over a one-year horizon. On October 20, 2020, the federal banking agencies issued a final NSFR rule under which large banking organizations such as the Firm will be required to maintain an NSFR of at least 100% on an ongoing basis. The final NSFR rule will become effective on July 1, 2021, and the Firm will be required to publicly disclose its quarterly average NSFR semi-annually beginning in 2023.




As of December 31, 2020 the Firm estimates that it was compliant with the 100% minimum NSFR based on its current understanding of the final rule.

96104JPMorgan Chase & Co./20182020 Form 10-K



Funding
Sources of funds
Management believes that the Firm’s unsecured and secured funding capacity is sufficient to meet its on- and off-balance sheet obligations.
The Firm funds its global balance sheet through diverse sources of funding including a stable deposit franchise as well asdeposits, secured and unsecured funding in the capital markets. The Firm’s loan portfolio is funded with a portionmarkets and stockholders’ equity. Deposits are the primary funding source for JPMorgan Chase Bank, N.A. Additionally, JPMorgan Chase Bank, N.A. may also access funding through short- or long-term secured borrowings, through the issuance of the Firm’s deposits, through securitizations and, with respect to a portion of the Firm’s real estate-related loans, with secured
unsecured long-term debt, or from borrowings from the FHLBs. Deposits in excess ofParent Company or the amount utilized to fund loansIHC. The Firm’s non-bank subsidiaries are primarily funded from long-term unsecured borrowings and short-term secured borrowings, primarily securities loaned or sold under repurchase agreements. Excess funding is invested by Treasury and CIO in the Firm’s investment securities portfolio or deployed in cash or other short-term liquid investments based on their interest rate and liquidity risk characteristics.
characteristics. Securities borrowed or purchased under resale agreements and trading assets-debt and equity instruments are primarily funded by the Firm’s securities loaned or sold under agreements to repurchase, trading liabilities–debt and equity instruments, and a portion of the Firm’s long-term debt and stockholders’ equity. In addition to funding securities borrowed or purchased under resale agreements and trading assets-debt and equity instruments, proceeds from the Firm’s debt and equity issuances are used to fund certain loans and other financial and non-financial assets, or may be invested in the Firm’s investment securities portfolio. Refer to the discussion below for additional information relating to Deposits, Short-term funding, and Long-term funding and issuance.

Deposits
The table below summarizes, by line of business,LOB and Corporate, the period-end and average deposit balances as of and for the years ended December 31, 20182020 and 2017.2019.
As of or for the year ended December 31,Average
(in millions)2020201920202019
Consumer & Community Banking$958,706 $723,418 (a)$851,390 $698,378 (a)
Corporate & Investment Bank702,215 511,905 (a)655,095 515,938 (a)
Commercial Banking284,263 184,115 237,645 172,666 
Asset & Wealth Management198,755 142,740 (a)161,955 135,265 (a)
Corporate318 253 666 820 
Total Firm$2,144,257 $1,562,431 $1,906,751 $1,523,067 
Deposits  Year ended December 31,
As of or for the year ended December 31,   Average
(in millions)20182017 20182017
Consumer & Community Banking$678,854
$659,885
 $670,388
$640,219
Corporate & Investment Bank482,084
455,883
 477,250
447,697
Commercial Banking170,859
181,512
 170,822
176,884
Asset & Wealth Management138,546
146,407
 137,272
148,982
Corporate323
295
 729
3,604
Total Firm$1,470,666
$1,443,982
 $1,456,461
$1,417,386
(a)In the fourth quarter of 2020, the Firm realigned certain wealth management clients from AWM to the J.P. Morgan Wealth Management business unit within CCB. In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. Prior-period amounts have been revised to conform with the current presentation.
A key strength of the Firm is its diversified deposit franchise, through each of its lines of business, which providesDeposits provide a stable source of funding and limitsreduce the Firm’s reliance on the wholesale funding markets. A significant portion of the Firm’s deposits are consumer deposits and wholesale operating deposits, which are both considered to be stable sources of liquidity. Wholesale operating deposits are considered to be stable sources of liquidity because they are generated from customers that maintain operating service relationships with the Firm.
The table below shows the loan and deposit balances, the loans-to-deposits ratios, and deposits as a percentage of total liabilities, as of December 31, 20182020 and 2017.2019.
As of December 31,
(in billions except ratios)
20202019
Deposits$2,144.3 $1,562.4 
Deposits as a % of total liabilities69 %64 %
Loans1,012.9 997.6 
Loans-to-deposits ratio47 %64 %
As of December 31,
(in billions except ratios)
  
20182017
Deposits$1,470.7
$1,444.0
Deposits as a % of total liabilities62%63%
Loans984.6
930.7
Loans-to-deposits ratio67%64%
The Firm believes that average deposit balances are generally more representative of deposit trends than period-end deposit balances.balances, over time. However, during periods of market disruption those trends could be affected.
Average deposits increased for the year ended December 31, 2018 in CCB and CIB, partially offset by decreases in AWM, CB and Corporate.
The increase in CCB reflects2020, reflecting significant inflows across the continuation of growth from new accounts, and in CIB reflects growth in operating deposits in both Treasury Services and Securities ServicesLOBs primarily driven by growththe impact of the COVID-19 pandemic and the related effect of certain government actions. In the wholesale businesses, while the inflows principally occurred in client activity. 
The decrease in AWMMarch as clients sought to remain liquid as a result of market conditions, balances continued to increase through the end of 2020. In CCB, the increase was driven by balance migration predominantly into the Firm’s investment-related products. The decrease in CB was driven by a reduction in non-operating deposits. The decrease in Corporate was predominantly due to maturities of wholesale non-operating deposits, consistent with the Firm’s efforts to reduce such deposits.lower spending and higher cash balances across both consumer and small business customers, as well as growth from existing and new accounts.
For further information on deposit and liability balance trends, referRefer to the discussion of the Firm’s Business Segment Results and the Consolidated Balance Sheets Analysis on pages 60-7865–84 and pages 52–53, respectively.

57-58, respectively, for further information on deposit and liability balance trends.

JPMorgan Chase & Co./20182020 Form 10-K97105
Management’s discussion and analysis

The following table summarizes short-term and long-term funding, excluding deposits, as of December 31, 20182020 and 2017,2019, and average balances for the years ended December 31, 20182020 and 2017. For additional information, refer2019. Refer to the Consolidated Balance Sheets Analysis on pages 52–5357-58 and Note 19.20 for additional information.
Sources of funds (excluding deposits)
As of or for the year ended December 31,Average
(in millions)2020201920202019
Commercial paper$12,031 $14,754 $12,129 $22,977 
Other borrowed funds8,510 7,544 9,198 10,369 
Total short-term unsecured funding$20,541 $22,298 $21,327 $33,346 
Securities sold under agreements to repurchase(a)
$207,877 $175,709 $246,354 $217,807 
Securities loaned(a)
4,886 5,983 6,536 8,816 
Other borrowed funds(b)
24,667 18,622 23,812 26,050 
Obligations of Firm-administered multi-seller conduits(c)
10,523 9,223 11,430 10,929 
Total short-term secured funding$247,953 $209,537 $288,132 $263,602 
Senior notes$166,089 $166,185 $171,509 $168,546 
Subordinated debt21,608 17,591 20,789 17,387 
Structured notes(d)
75,325 74,724 73,056 65,487 
Total long-term unsecured funding$263,022 $258,500 $265,354 $251,420 
Credit card securitization(c)
$4,943 $6,461 $5,520 $9,707 
FHLB advances14,123 28,635 27,076 34,143 
Other long-term secured funding(e)
4,540 4,363 4,460 4,643 
Total long-term secured funding$23,606 $39,459 $37,056 $48,493 
Preferred stock(f)
$30,063 $26,993 $29,899 $27,511 
Common stockholders’ equity(f)
$249,291 $234,337 $236,865 $232,907 
(a)Primarily consists of short-term securities loaned or sold under agreements to repurchase.
(b)Effective March 2020, includes nonrecourse advances provided under the MMLF.
(c)Included in beneficial interests issued by consolidated variable interest entities on the Firm’s Consolidated balance sheets.
(d)Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company.
(e)Includes long-term structured notes which are secured.
(f)Refer to Capital Risk Management on pages 91-101, Consolidated statements of changes in stockholders’ equity on page 165, Note 21 and Note 22 for additional information on preferred stock and common stockholders’ equity.
Sources of funds (excluding deposits)    
As of or for the year ended December 31,   Average
(in millions)20182017 20182017
Commercial paper$30,059
$24,186
 $27,834
$19,920
Other borrowed funds(a)
8,789
10,727
 11,369
10,755
Total short-term unsecured funding(a)
$38,848
$34,913
 $39,203
$30,675
      
Securities sold under agreements to repurchase(a)(b)
$171,975
$147,713
 $177,629
$173,450
Securities loaned(a)(b)
9,481
9,211
 10,692
12,798
Other borrowed funds(a)(c)
30,428
16,889
 24,320
15,857
Obligations of Firm-administered multi-seller conduits(d)
4,843
3,045
 3,396
3,206
Total short-term secured funding(a)
$216,727
$176,858
 $216,037
$205,311
      
Senior notes$162,733
$155,852
 $153,162
$154,352
Trust preferred securities—
690
 471
2,276
Subordinated debt16,743
16,553
 16,178
18,832
Structured notes(e)
53,090
45,727
 49,640
42,918
Total long-term unsecured funding$232,566
$218,822
 $219,451
$218,378
      
Credit card securitization(d)
$13,404
$21,278
 $15,900
$25,933
Other securitizations(d)(f)
—
—
 —
626
Federal Home Loan Bank (“FHLB”) advances44,455
60,617
 52,121
69,916
Other long-term secured funding(g)
5,010
4,641
 4,842
3,195
Total long-term secured funding$62,869
$86,536
 $72,863
$99,670
      
Preferred stock(h)
$26,068
$26,068
 $26,249
$26,212
Common stockholders’ equity(h)
$230,447
$229,625
 $229,222
$230,350
(a)The prior period amounts have been revised to conform with the current period presentation.
(b)Primarily consists of short-term securities loaned or sold under agreements to repurchase.
(c)Includes FHLB advances with original maturities of less than one year of $11.4 billion as of December 31, 2018; there were no FHLB advances with original maturities of less than one year as of December 31, 2017.
(d)Included in beneficial interests issued by consolidated variable interest entities on the Firm’s Consolidated balance sheets.
(e)Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company.
(f)Other securitizations includes securitizations of student loans. The Firm deconsolidated the student loan securitization entities in the second quarter of 2017 as it no longer had a controlling financial interest in these entities as a result of the sale of the student loan portfolio. The Firm’s wholesale businesses also securitize loans for client-driven transactions, which are not considered to be a source of funding for the Firm and are not included in the table.
(g)Includes long-term structured notes which are secured.
(h)For additional information on preferred stock and common stockholders’ equity refer to Capital Risk Management on pages 85-94, Consolidated statements of changes in stockholders’ equity, Note 20 and Note 21.

Short-term funding
The Firm’s sources of short-term secured funding primarily consist of securities loaned or sold under agreements to repurchase. These instruments are secured predominantly by high-quality securities collateral, including government-issued debt and U.S. GSE and government agency MBS, and constitute a significant portion of the federal funds purchased and securities loaned orMBS. Securities sold under agreements to repurchase agreements on the Consolidated balance sheets. The increaseincreased at December 31, 2018,2020, compared towith December 31, 2017, was primarily due to2019, reflecting higher client-driven market-making activities and higher secured financing of AFS investment securities in Treasury and CIO, as well as trading assets-debt and equity instrumentsassets in CIB, partially offset by. a decline in client-driven market-making activities in CIB, including the Firm's non-participation in the Federal Reserve's open market operations.
The balances associated with securities loaned or sold under agreements to repurchase fluctuate over time due to customers’ investment and financing activities;activities of clients, the Firm’s demand for financing;financing, the ongoing management of the mix of the Firm’s liabilities, including its secured and unsecured financing (for both the investment
securities and market-making portfolios);, and other market and portfolio factors.
As of December 31, 2020, the Firm participated in the MMLF government facility. The secured nonrecourse advances under the MMLF are included in other borrowed funds. Refer to Capital Risk Management on pages 91-101 for additional information on the MMLF.
The Primary Dealer Credit Facility ("PDCF") was established by the Federal Reserve on March 20, 2020. Under the PDCF, the Federal Reserve Bank of New York (“FRBNY”) provides collateralized financing on a term basis to primary dealers. These financing transactions were reported as securities sold under agreements to repurchase. The Firm participated in the PDCF in the first quarter of 2020, and ceased its participation in May 2020 as the secured financing market normalized.
The Firm’s sources of short-term unsecured funding primarily consist of other borrowed funds and issuance of wholesale commercial paper. The increasedecrease in commercial papershort-term unsecured funding at December 31, 2020, from December 31, 2019 and for the average year ended December 31, 2020 compared to the prior year period, was due to higherlower net commercial paper issuance primarily for short-term liquidity management.

106JPMorgan Chase & Co./2020 Form 10-K

Long-term funding and issuance
Long-term funding provides an additional sourcessource of stable funding and liquidity for the Firm. The Firm’s long-term funding plan is driven primarily by expected client activity, liquidity considerations, and regulatory requirements, including TLAC. Long-term funding objectives include maintaining diversification, maximizing market access and optimizing funding costs. The Firm evaluates various funding markets, tenors and currencies in creating its optimal long-term funding plan.


98JPMorgan Chase & Co./2018 Form 10-K


The significant majority of the Firm’s long-term unsecured funding is issued by the Parent Company to provide maximum flexibility in support of both bank and non-bank subsidiary funding needs. The Parent Company advances substantially all net funding proceeds to its subsidiary, the IHC. The IHC does not issue debt to external counterparties. The following table summarizes long-term unsecured issuance and maturities or redemptions for the years ended December 31, 20182020 and 2017. For2019. Refer to Note 20 for additional information refer to Note 19.on long-term debt.
Long-term unsecured funding
Year ended December 31,2020201920202019
(Notional in millions)Parent CompanySubsidiaries
Issuance
Senior notes issued in the U.S. market$25,500 $14,000 $60 $1,750 
Senior notes issued in non-U.S. markets1,355 5,867 — — 
Total senior notes26,855 19,867 60 1,750 
Subordinated debt3,000 — — — 
Structured notes(a)
7,596 5,844 24,185 33,563 
Total long-term unsecured funding – issuance$37,451 $25,711 $24,245 $35,313 
Maturities/redemptions
Senior notes$28,719 $18,098 $7,701 $5,367 
Subordinated debt135 183 — — 
Structured notes5,340 2,944 30,002 19,271 
Total long-term unsecured funding – maturities/redemptions$34,194 $21,225 $37,703 $24,638 
(a)Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company.

Long-term unsecured funding    
Year ended December 31,20182017 20182017
(Notional in millions)
Parent Company(b)
 
Subsidiaries(b)
Issuance     
Senior notes issued in the U.S. market$22,000
$21,250
 $9,562
$62
Senior notes issued in non-U.S. markets1,502
2,220
 —
—
Total senior notes23,502
23,470
 9,562
62
Structured notes(a)
2,444
2,516
 25,410
26,524
Total long-term unsecured funding – issuance$25,946
$25,986
 $34,972
$26,586
      
Maturities/redemptions     
Senior notes$19,141
$20,971
 $4,466
$1,366
Subordinated debt136
3,401
 —
3,500
Structured notes2,678
5,440
 15,049
17,141
Total long-term unsecured funding – maturities/redemptions$21,955
$29,812
 $19,515
$22,007
(a)Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company.
(b)The prior period amounts have been revised to conform with the current period presentation.

The Firm raises can also raise secured long-term funding through securitization of consumer credit card loans and advances from the FHLBs.through FHLB advances. The following table summarizes the securitization issuance and FHLB advances and their respective maturities or redemptions for the years ended December 31, 20182020 and 2017.2019.
Long-term secured funding
Year ended December 31,IssuanceMaturities/Redemptions
(in millions)2020201920202019
Credit card securitization$1,000 $— $2,525 $6,975 
FHLB advances15,000 — 29,509 15,817 
Other long-term secured funding(a)
1,130 204 1,048 927 
Total long-term secured funding$17,130 $204 $33,082 $23,719 
(a)Includes long-term structured notes which are secured.
Long-term secured funding   
Year ended December 31,Issuance Maturities/Redemptions
(in millions)20182017 20182017
Credit card securitization$1,396
$1,545
 $9,250
$11,470
Other securitizations(a)
—
—
 —
55
FHLB advances9,000
—
 25,159
18,900
Other long-term secured funding(b)
377
2,354
 289
731
Total long-term secured funding$10,773
$3,899
 $34,698
$31,156
(a)Other securitizations includes securitizations of student loans. The Firm deconsolidated the student loan securitization entities in the second quarter of 2017 as it no longer had a controlling financial interest in these entities as a result of the sale of the student loan portfolio.
(b)Includes long-term structured notes which are secured.
The Firm’s wholesale businesses also securitize loans for client-driven transactions; those client-driven loan securitizations are not considered to be a source of funding for the Firm and are not included in the table above. ForRefer to Note 14 for a further description of the client-driven loan securitizations, refer to Note 14.securitizations.


JPMorgan Chase & Co./20182020 Form 10-K99107
Management’s discussion and analysis

Credit ratings
The cost and availability of financing are influenced by credit ratings. Reductions in these ratings could have an adverse effect on the Firm’s access to liquidity sources, increase the cost of funds, trigger additional collateral or funding requirements and decrease the number of investors and counterparties willing to lend to the Firm. The nature and magnitude of the impact of ratings downgrades depends on numerous contractual and behavioral factors,
which the Firm believes are incorporated in its liquidity risk and stress testing metrics. The Firm believes that it maintains sufficient liquidity to withstand a potential decrease in funding capacity due to ratings downgrades.
Additionally, the Firm’s funding requirements for VIEs and other third-
partythird-party commitments may be adversely affected by a decline in credit ratings. For additional information on the impact of a credit ratings downgrade on the funding requirements for VIEs, and on derivatives and collateral agreements, refer to SPEs on page 55, and liquidity risk and credit-related contingent features in Note 5.

The credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries as of December 31, 2018,2020 were as follows.
follows:
JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.
Chase Bank USA, N.A.
J.P. Morgan Securities LLC

J.P. Morgan Securities plc
December 31, 20182020Long-term issuerShort-term issuerOutlookLong-term issuerShort-term issuerOutlookLong-term issuerShort-term issuerOutlook
Moody’s Investors ServiceA2P-1StableAa2P-1StableAa3P-1Stable
Standard & Poor’sA-A-2StableA+A-1StableA+A-1Stable
Fitch Ratings(a)
AA-F1+StableNegativeAAF1+StableNegativeAAF1+StableNegative

(a)On October 25, 2018, Moody’s upgradedApril 18, 2020, Fitch affirmed the credit ratings of the Parent Company’s long-term issuer ratingCompany and the Firm’s principal bank and non-bank subsidiaries but revised the outlook on the credit ratings from stable to A2 (previously A3) and short-term issuer rating to P-1 (previously P-2). The long-term issuer ratings were also upgraded for JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. to Aa2 (previously Aa3), and for J.P. Morgan Securities LLC and J.P. Morgan Securities plc to Aa3 (previously A1).
On June 21, 2018, Fitch upgraded the Parent Company’s long-term issuer rating to AA- (previously A+) and short-term issuer rating to F1+ (previously F1). The long-term issuer ratings were also upgraded to AA for JPMorgan Chase Bank, N.A, Chase Bank USA, N.A., J.P. Morgan Securities LLC and J.P. Morgan Securities plc (all previously AA-).
Downgradesnegative given expectations that credit fundamentals will deteriorate as a result of the Firm’s long-term ratings by one or two notches could result in an increase in its cost of funds, and access to certain funding markets could be reduced. The nature and magnitude of the impact of ratings downgrades depends on numerous contractual and behavioral factors which the Firm believes are incorporated in its liquidity risk and stress testing metrics. The Firm believes that it
COVID-19 pandemic.
maintains sufficient liquidity to withstand a potential decrease in funding capacity due to ratings downgrades.
JPMorgan Chase’s unsecured debt does not contain requirements that would call for an acceleration of payments, maturities or changes in the structure of the existing debt, provide any limitations on future borrowings or require additional collateral, based on unfavorable changes in the Firm’s credit ratings, financial ratios, earnings, or stock price.

Critical factors in maintaining high credit ratings include a stable and diverse earnings stream, strong capital and liquidity ratios, strong credit quality and risk management controls, and diverse funding sources. Rating agencies continue to evaluate economic and geopolitical trends, regulatory developments, future profitability, risk management practices, and litigation matters, as well as their broader ratings methodologies. Changes in any of these factors could lead to changes in the Firm’s credit ratings.




100JPMorgan Chase & Co./2018 Form 10-K


108JPMorgan Chase & Co./2020 Form 10-K

REPUTATION RISK MANAGEMENT
Reputation risk is the potentialrisk that an action or inaction transaction, investment or event willmay negatively impact perception of the Firm’s integrity and reduce trustconfidence in the Firm’s integrity or competence by its various constituents, including clients, counterparties, customers, investors, regulators, employees, communities or the broader public.
Organization and management
Reputation Risk Management is an independent risk management function that establishes the governance framework for managing reputation risk across the Firm. The Firmwide Risk Executive for Reputation Risk reportsAs reputation risk is inherently challenging to the Firm’s CRO.identify, manage, and quantify, a reputation risk management function is critical.
The Firm’s reputation risk management function includes the following activities:
Establishing•Maintaining a firmwideFirmwide Reputation Risk Governance policy and standards consistent with the reputation risk framework
•Managing the governance infrastructure and processes that support consistent identification, escalation, management and monitoring of reputation risk issues firmwideFirmwide
•Providing oversightguidance to LOB Reputation Risk Offices (“RRO”) on certain situations that have the potential to damage the reputation of the LOB or the Firm, as appropriate
The types of events that give rise to reputation risk are broadwide-ranging and could be introduced in various ways, including by the Firm’s employees and the clients, customers and counterparties with which the Firm does business.business with. These events could result in financial losses, litigation and regulatory fines, as well as other damages to the Firm. As reputation risk is inherently difficult to identify, manage, and quantify, an independent reputation risk management governance function is critical.
Governance and oversight
The Firm’s Reputation Risk Governance policy establishes the principles for managing reputation risk for the Firm, and is approved annually by the Directors’ Risk Policy Committee.Firm. It is the responsibility of employees in each LOB and Corporate to consider the reputation of the Firm when deciding whether to offer a new product, engage in a transaction or client relationship, enter a new jurisdiction, initiate a business process or other matters. Increasingly, sustainability,Sustainability, social responsibility and environmental impacts are important considerations in assessing the Firm’s reputation risk, and are considered as parta component of the Firm’s reputation risk governance.
The Firm’s reputation risk governance framework applies to each LOB and Corporate. Each LOB RRO advises their business on potential reputation risk issues and provides oversight of policy and standards created to guide the identification and assessment of reputation risk. LOB Reputation Risk Committees and forums review and assess reputation risk for their respective businesses. Each function also applies appropriate diligence to reputation risk arising from their day-to-day activities. Reputation risk issues deemed significant materialare escalated to the appropriate LOB Risk Committee and/or to the Firmwide Risk Committee.



as appropriate.

JPMorgan Chase & Co./2018 Form 10-K101
Management’s discussion and analysis

JPMorgan Chase & Co./2020 Form 10-K109
Management’s discussion and analysis

CREDIT AND INVESTMENT RISK MANAGEMENT
Credit and investment risk is the risk associated with the default or change in credit profile of a client, counterparty or customer; or loss of principal or a reduction in expected returns on investments, including consumer credit risk, wholesale credit risk, and investment portfolio risk.
Credit risk management
Credit risk is the risk associated with the default or change in credit profile of a client, counterparty or customer. The Firm provides credit to a variety of customers, ranging from large corporate and institutional clients to individual consumers and small businesses. In its consumer businesses, the Firm is exposed to credit risk primarily through its home lending, credit card, auto, and business banking businesses. In its wholesale businesses, the Firm is exposed to credit risk through its underwriting, lending, market-making, and hedging activities with and for clients and counterparties, as well as through its operating services activities (such as cash management and clearing activities), and securities financing activities,activities. The Firm is also exposed to credit risk through its investment securities portfolio and cash placed with banks.
Credit Risk Management is an independent risk management function that monitors, measures and manages credit risk throughout the Firm and defines credit risk policies and procedures. The credit risk function reports to the Firm’s CRO. The Firm’s credit risk management governance includes the following activities:
Establishing•Maintaining a comprehensive credit risk policy framework
•Monitoring, measuring and managing credit risk across all portfolio segments, including transaction and exposure approval
•Setting industry and geographic concentration limits, as appropriate, and establishing underwriting guidelines
•Assigning and managing credit authorities in connection with the approval of all credit exposure
•Managing criticized exposures and delinquent loans and
•Estimating credit losses and ensuring appropriate credit risk-based capital management
Risk identification and measurement
The Credit Risk Management function monitors, measures, manages and limits credit risk across the Firm’s businesses. To measure credit risk, the Firm employs several methodologies for estimating the likelihood of obligor or counterparty default. Methodologies for measuring credit risk vary depending on several factors, including type of asset (e.g., consumer versus wholesale), risk measurement parameters (e.g., delinquency status and borrower’s credit score versus wholesale risk-rating) and risk management and collection processes (e.g., retail collection center versus centrally managed workout groups). Credit risk measurement is based on the probability of default of an obligor or counterparty, the loss severity given a default event and the exposure at default.
Based on these factors and related market-based inputs,the methodology and estimates described in Note 13 and Note 10, the Firm estimates credit losses for its exposures. ProbableThe allowance for loan losses reflects credit losses inherent inrelated to the consumer and wholesale held-for-investment loan portfolios, are reflected in the allowance for loan losses, and probable credit losses inherent in lending-related commitments are reflected in the allowance for lending-related commitments. Thesecommitments reflects credit losses are estimated using statistical analysesrelated to the Firm’s lending-related commitments and other factors as described inthe allowance for investment securities reflects the credit losses related to the Firm’s HTM and AFS securities. Refer to Note 13. 13, Note 10 and Critical Accounting Estimates used by the Firm on pages 152-155 for further information.
In addition, potential and unexpected credit losses are reflected in the allocation of credit risk capital and represent the potential volatility of actual losses relative to the established allowances for loan losses and lending-related commitments. The analyses for these losses include stress testing that considers alternative economic scenarios as described in the Stress testing section below. For further information, refer to Critical Accounting Estimates used by the Firm on pages 141-143.
The methodologies used to estimate credit losses depend on the characteristics of the credit exposure, as described below.
Scored exposure
The scored portfolio is generally held in CCB and predominantly includes residential real estate loans, credit card loans, and certain auto and business banking loans. For the scored portfolio, credit loss estimates are based on statistical analysis of credit losses over discrete periods of time. The statistical analysis uses portfolio modeling, credit scoring, and decision-support tools, which consider loan-level factors such as delinquency status, credit scores, collateral values, and other risk factors. Credit loss analyses also consider, as appropriate, uncertainties and other factors, including those related to current macroeconomic and political conditions, the quality of underwriting standards, and other internal and external factors. The factors and analysis are updated on a quarterly basis or more frequently as market conditions dictate.

102JPMorgan Chase & Co./2018 Form 10-K


Risk-rated exposure
Risk-rated portfolios are generally held in CIB, CB and AWM, but also include certain business banking and auto dealer loans held in CCB that are risk-rated because they have characteristics similar to commercial loans. For the risk-rated portfolio, credit loss estimates are based on estimates of the probability of default (“PD”) and loss severity given a default. The probability of default is the likelihood that a borrower will default on its obligation; the loss given default (“LGD”) is the estimated loss on the loan that would be realized upon default and takes into consideration collateral and structural support for each credit facility. The estimation process includes assigning risk ratings to each borrower and credit facility to differentiate risk within the portfolio. These risk ratings are reviewed regularly by Credit Risk Management and revised as needed to reflect the borrower’s current financial position, risk profile and related collateral. The calculations and assumptions are based on both internal and external historical experience and management judgment and are reviewed regularly.
Stress testing
Stress testing is important in measuring and managing credit risk in the Firm’s credit portfolio. The stress testing process assesses the potential impact of alternative economic and business scenarios on estimated credit losses for the Firm. Economic scenarios and the underlying parameters are defined centrally, articulated in terms of macroeconomic factors and applied across the businesses. The stress test results may indicate credit migration, changes in delinquency trends and potential losses in the credit portfolio. In addition to the periodic stress testing processes, management also considers additional stresses outside these scenarios, including industry and country- specific stress scenarios, as necessary. The Firm uses stress testing to inform decisions on setting risk appetite both at a Firm and LOB level, as well as to assess the impact of stress on individual counterparties.
110JPMorgan Chase & Co./2020 Form 10-K

Risk monitoring and management
The Firm has developed policies and practices that are designed to preserve the independence and integrity of the approval and decision-making process of extending credit to ensure credit risks are assessed accurately, approved properly, monitored regularly and managed actively at both the transaction and portfolio levels. The policy framework establishes credit approval authorities, concentration limits, risk-rating methodologies, portfolio review parameters and guidelines for management of distressed exposures. In addition, certain models, assumptions and inputs used in evaluating and monitoring credit risk are independently validated by groups that are separate from the line of businesses.LOBs.
Consumer credit risk is monitored for delinquency and other trends, including any concentrations at the portfolio level, as certain of these trends can be modified through changes in underwriting policies and portfolio guidelines. Consumer Risk Management evaluates delinquency and other trends against business expectations, current and forecasted economic conditions, and industry benchmarks. Historical and forecasted economic performance and trends are incorporated into the modeling of estimated consumer credit losses and are part of the monitoring of the credit risk profile of the portfolio.
Wholesale credit risk is monitored regularly at an aggregate portfolio, industry, and individual client and counterparty level with established concentration limits that are reviewed and revised periodically as deemed appropriate by management, typically on an annual basis.management. Industry and counterparty limits, as measured in terms of exposure and economic risk appetite, are subject to stress-based loss constraints. In addition, wrong-wayWrong-way risk —is the risk that exposure to a counterparty is positively correlated with the impact of a default by the same counterparty, which could cause exposure to increase at the same time as the counterparty’s capacity to meet its obligations is decreasing — is actively monitored as this risk could result in greater exposure at default compared with a transaction with another counterparty that does not have this risk.decreasing.
Management of the Firm’s wholesale credit risk exposure is accomplished through a number of means, including:
•Loan underwriting and credit approval process
•Loan syndications and participations
•Loan sales and securitizations
•Credit derivatives
•Master netting agreements, and
•Collateral and other risk-reduction techniques

JPMorgan Chase & Co./2018 Form 10-K103
Management’s discussion and analysis

In addition to Credit Risk Management, an independent Credit Review function is responsible for:
•Independently validating or changing the risk grades assigned to exposures in the Firm’s wholesale credit portfolio, and assessing the timeliness of risk grade changes initiated by responsible business units; and
•
Independently validating or changing the risk grades assigned to exposures in the Firm’s wholesale and commercial-oriented retail credit portfolios, and assessing the timeliness of risk grade changes initiated by responsible business units; and
•
Evaluating the effectiveness of business units’ credit management processes, including the adequacy of credit analyses and risk grading/LGDrationales, proper monitoring and management of credit exposures, and compliance with applicable grading policies and underwriting guidelines.
For•Evaluating the effectiveness of business units’ credit management processes, including the adequacy of credit analyses and risk grading/LGD rationales, proper monitoring and management of credit exposures, and compliance with applicable grading policies and underwriting guidelines.
Refer to Note 12 for further discussion of consumer and wholesale loans, refer to Note 12.loans.
Risk reporting
To enable monitoring of credit risk and effective decision-making, aggregate credit exposure, credit quality forecasts, concentration levels and risk profile changes are reported regularly to senior members of Credit Risk Management. Detailed portfolio reporting of industry;industry, clients, counterparties and customers;customers, product and geographic concentrations occurs monthly,geography are prepared, and the appropriateness of the allowance for credit losses is reviewed by senior management at least on a quarterly basis. Through the risk reporting and governance structure, credit risk trends and limit exceptions are provided regularly to, and discussed with, risk committees, senior management and the Board of Directors as appropriate.Directors.


104JPMorgan Chase & Co./2018 Form 10-K


JPMorgan Chase & Co./2020 Form 10-K111
Management’s discussion and analysis

CREDIT PORTFOLIO
Credit risk isEffective January 1, 2020, the riskFirm adopted the CECL accounting guidance. The adoption resulted in a change in the accounting for PCI loans, which are considered PCD loans under CECL. In conjunction with the adoption of CECL, the Firm reclassified risk-rated loans and lending-related commitments from the consumer, excluding credit card portfolio segment to the wholesale portfolio segment, to align with the methodology applied when determining the allowance. Prior-period amounts have been revised to conform with the current presentation. Refer to Note 1 for further information.
The Firm has provided various forms of assistance to customers and clients impacted by the COVID-19 pandemic, including payment deferrals and covenant modifications. The majority of the Firm’s COVID-19 related loan modifications have not been considered troubled debt restructurings (“TDRs”) because:
•they represent short-term or other insignificant modifications, whether under the Firm’s regular loan modification assessments or the IA Statement guidance, or
•the Firm has elected to apply the option to suspend the application of accounting guidance for TDRs provided by the CARES Act and extended by the Consolidated Appropriations Act.
To the extent that certain modifications do not meet any of the above criteria, the Firm accounts for them as TDRs. The Firm considers expected losses of principal and accrued interest associated with all COVID-19 related loan modifications in its allowance for credit losses. Refer to Business Developments on pages 50-51 for more information on customer and client assistance granted. Refer to Notes 12 and 13 for further information on the defaultFirm’s accounting policies on loan modifications and the allowance for credit losses.
The effectiveness of the Firm’s actions in helping borrowers recover and in mitigating the Firm’s credit losses remains uncertain in light of the unpredictable nature and duration of the COVID-19 pandemic. Assistance provided in response to the COVID-19 pandemic could delay the recognition of delinquencies, nonaccrual status, and net charge-offs for those customers and clients who would have otherwise moved into past due or change
in credit profilenonaccrual status. Refer to Consumer Credit Portfolio on pages 114-120 and Wholesale Credit Portfolio on pages 121-131 for information on loan modifications as of a client, counterparty or customer.

December 31, 2020.
In the following tables, reported loans include loans retained (i.e., held-for-investment); loans held-for-sale; and certain loans accounted for at fair value. The following tables do not include loans which the Firm accounts for at fair value and classifies as trading assets. For further information regarding these loans,assets; refer to Notes 2 and 3. For3 for further information regarding these loans. Refer to Notes 12, 28, and 5 for additional information on the Firm’s loans, lending-related commitments and derivative receivables, including the Firm’s accounting policies, referpolicies.
Refer to Notes 12, 27, and 5, respectively.

For further information regarding the credit risk inherent in the Firm’s cash placed with banks, refer to Wholesale credit exposure – industry exposures on pages 113–115 ;Note 10 for information regarding the credit risk inherent in the Firm’s investment securities portfolio,portfolio; and refer to Note 10; and11 for information regarding credit risk inherent in the securities financing portfolio, referportfolio. Refer to Consumer Credit Portfolio on pages 114-120 and Note 11.

For a12 for further discussiondiscussions of the consumer credit environment and consumer loans, referloans. Refer to ConsumerWholesale Credit Portfolio on pages 106–111121-131 and Note 12. For a12 for further discussiondiscussions of the wholesale credit environment and wholesale loans, refer to Wholesale Credit Portfolio on pages 112–119 and Note 12.

loans.
Total credit portfolio    
December 31,
(in millions)
Credit exposure 
Nonperforming(d)(e)
20182017 20182017
Loans retained$969,415
$924,838
 $4,611
$5,943
Loans held-for-sale11,988
3,351
 —
—
Loans at fair value3,151
2,508
 220
—
Total loans – reported984,554
930,697
 4,831
5,943
Derivative receivables54,213
56,523
 60
130
Receivables from customers and other(a)
30,217
26,272
 —
—
Total credit-related assets1,068,984
1,013,492
 4,891
6,073
Assets acquired in loan satisfactions     
Real estate ownedNA
NA
 269
311
OtherNA
NA
 30
42
Total assets acquired in loan satisfactions
NA
NA
 299
353
Lending-related commitments1,039,258
991,482
 469
731
Total credit portfolio$2,108,242
$2,004,974
 $5,659
$7,157
Credit derivatives used in credit portfolio management activities(b)
$(12,682)$(17,609) $—
$—
Liquid securities and other cash collateral held against derivatives(c)
(15,322)(16,108) NA
NA
Year ended December 31,
(in millions, except ratios)
 20182017
Net charge-offs(f)
 $4,856
$5,387
Average retained loans   
Loans 936,829
898,979
Loans – reported, excluding
  residential real estate PCI loans
 909,386
865,887
Net charge-off rates(f)
   
Loans 0.52%0.60%
Loans – excluding PCI 0.53
0.62
(a)Receivables from customers and other primarily represents held-for-investment margin loans to brokerage customers.
(b)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, refer to Credit derivatives on page 119 and Note 5.
(c)Includes collateral related to derivative instruments where an appropriate legal opinion has not been either sought or obtained.
(d)Excludes PCI loans. The Firm is recognizing interest income on each pool of PCI loans as each of the pools is performing.
(e)At December 31, 2018 and 2017, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $2.6 billion and $4.3 billion, respectively, and real estate owned (“REO”) insured by U.S. government agencies of $75 million and $95 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”).
(f)For the year ended December 31, 2017, excluding net charge-offs of $467 million related to the student loan portfolio transfer, the net charge-off rate for loans would have been 0.55% and for loans - excluding PCI would have been 0.57%.



JPMorgan Chase & Co./2018 Form 10-K105
Management’s discussion and analysis

112JPMorgan Chase & Co./2020 Form 10-K

Total credit portfolio
December 31,
(in millions)		Credit exposure
Nonperforming(f)(g)
2020201920202019
Loans retained$960,506 $945,601 $8,782 $3,983 
Loans held-for-sale7,873 7,064 284 7 
Loans at fair value (a)
44,474 44,955 1,507 647 
Total loans – reported1,012,853 997,620 10,573 4,637 
Derivative receivables79,630 49,766 56 30 
Receivables from customers(b)
47,710 33,706 — — 
Total credit-related assets1,140,193 1,081,092 10,629 4,667 
Assets acquired in loan satisfactions
Real estate ownedNANA256 344 
OtherNANA21 43 
Total assets acquired in loan satisfactions
NANA277 387 
Lending-related commitments(a)
1,165,688 1,108,399 577 474 
Total credit portfolio$2,305,881 $2,189,491 $11,483 $5,528 
Credit derivatives used in credit portfolio management activities(c)(d)
$(22,239)$(18,530)$— $— 
 Liquid securities and other cash collateral held against derivatives(e)
(14,806)(13,052)NANA
Year ended December 31,
(in millions, except ratios)		20202019
Net charge-offs$5,259 $5,629 
Average retained loans958,303 941,919 
Net charge-off rates0.55 %0.60 %
(a) In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans, which resulted in a corresponding reclassification of certain off-balance sheet commitments. Prior-period amounts have been revised to conform with the current presentation.
(b)    Receivables from customers reflect held-for-investment margin loans to brokerage clients in CIB, CCB and AWM; these are reported within accrued interest and accounts receivable on the Consolidated balance sheets.
(c)    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. Refer to Credit derivatives on page 131 and Note 5 for additional information.
(d) Prior-period amount has been revised to conform with the current presentation.
(e)    In the fourth quarter of 2020, the Firm refined its approach for disclosing additional collateral held by the Firm that may be used as security when the fair value of the client’s exposure is in the Firm’s favor. Prior-period amounts have been revised to conform with the current presentation.
(f)    At December 31, 2020 and 2019, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $874 million and $1.1 billion, respectively, and real estate owned (“REO”) insured by U.S. government agencies of $9 million and $41 million, respectively. Prior-period amount of mortgage loans 90 or more days past due and insured by U.S. government agencies excluded from nonperforming assets has been revised to conform with the current presentation; refer to footnote (a) for additional information. 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.
(g) At December 31, 2020, nonperforming loans included $1.6 billion of PCD loans on nonaccrual status. Prior to the adoption of CECL, nonaccrual loans excluded PCI loans as the Firm recognized interest income on each pool of PCI loans as each of the pools was performing.
Paycheck Protection Program
The PPP, established by the CARES Act and implemented by the SBA, provided the Firm with delegated authority to process and originate PPP loans. When certain criteria are met, PPP loans are subject to forgiveness and the Firm will receive payment of the forgiveness amount from the SBA. PPP loans have a contractual term of two or five years and provide borrowers with an automatic payment deferral of principal and interest. Given that PPP loans are guaranteed by the SBA, the Firm does not expect to realize material credit losses on these loans. PPP processing fees are deferred and accreted into interest income over the contractual life of the loans, but may be accelerated upon forgiveness or prepayment. The impact on interest income related to PPP loans was not material for the year ended December 31, 2020.
The Firm was in the early stages of the PPP loan forgiveness process at December 31, 2020.
At December 31, 2020, the Firm had approximately $27 billion of loans under the PPP, of which $19 billion are in the consumer portfolio and $8 billion are in the wholesale portfolio.
JPMorgan Chase & Co./2020 Form 10-K113
Management’s discussion and analysis

CONSUMER CREDIT PORTFOLIO
The Firm’s retained consumer portfolio consists primarily of residential real estate loans, credit card loans, scored auto loans, and business banking loans, as well as associated lending-related commitments. The Firm’s focus is on serving primarily the prime segment of the consumer credit market. Originated mortgage loans are retained in the mortgageresidential real estate portfolio, securitized or sold to U.S. government agencies and U.S. government-sponsored enterprises; other types of consumer loans are typically retained on the balance sheet. The credit performance of the consumer portfolio continuesRefer to benefit from discipline in credit underwriting as well as improvement in the economy driven by low unemployment and increasing home prices. The total amount of residential real estate loans delinquent 30+ days, excluding government guaranteed and purchased credit-impaired loans, decreased from December 31, 2017 due to improved credit performance and the impact of loans that were delinquent in 2017 due to hurricanes. The Credit Card 30+ day delinquency rate and the net charge-off rate increased from the prior year, in line with expectations. ForNote 12 for further information on the consumer loans, referloan portfolio. Refer to Note 12. For28 for further information on lending-related commitments, refercommitments.
In 2020, the allowance for credit losses increased, reflecting the deterioration in and uncertainty around the future macroeconomic environment as a result of the impact of the COVID-19 pandemic. Net charge-offs for the year ended December 31, 2020 decreased when compared to Note 27.
December 31, 2019, benefiting from payment assistance and government stimulus. The potential for increased infection rates and related lock downs, as well as the duration and effectiveness of government and other consumer relief measures remains uncertain which could have a longer term impact on delinquency rates and net charge-offs.

106114JPMorgan Chase & Co./20182020 Form 10-K


The following table presents consumer credit-related information with respect to the scored credit portfolio held byin CCB, primeAWM, CIB and Corporate.
Consumer credit portfolio
As of or for the year ended December 31,
(in millions, except ratios)		Credit exposure
Nonaccrual loans(j)(k)(l)
Net charge-offs/(recoveries)
Net charge-off/
(recovery) rate(m)
20202019202020192020201920202019
Consumer, excluding credit card
Residential real estate(a)
$225,302 $243,317 $5,313 $2,780 $(164)$(92)(0.07)%(0.04)%
Auto and other(b)(c)(d)
76,825 51,682 151 $146 338 $456 0.51 (d)0.88 
Total loans - retained302,127 294,999 5,464 2,926 174 364 0.06 0.12 
Loans held-for-sale1,305 3,002 — 2 NANANANA
Loans at fair value(e)(f)
15,147 19,816 1,003 438 NANANANA
Total consumer, excluding credit card loans318,579 317,817 6,467 3,366 174 364 0.06 0.12 
Lending-related commitments(g)
57,319 40,169 
Total consumer exposure, excluding credit card375,898 357,986 
Credit Card
Loans retained(h)
143,432 168,924 NANA4,286 4,848 2.93 3.10 
Loans held-for-sale784 — NANANANANANA
Total credit card loans144,216 168,924 NANA4,286 4,848 2.93 3.10 
Lending-related commitments(g)(i)
658,506 650,720 
Total credit card exposure(i)
802,722 819,644 
Total consumer credit portfolio(i)
$1,178,620 $1,177,630 $6,467 $3,366 $4,460 $5,212 0.99 %1.11 %
(a)Includes scored mortgage and home equity loans held byin CCB and AWM, and primescored mortgage loans held by Corporain Corporatete..
(b) For further information aboutAt December 31, 2020 and 2019, excluded operating lease assets of $20.6 billion and $22.8 billion, respectively. These operating lease assets are included in other assets on the Firm’s Consolidated balance sheets. Refer to Note 18 for further information.
(c)Includes scored auto and business banking loans and overdrafts.
(d)At December 31, 2020, included $19.2 billion of loans in Business Banking under the PPP. Given that PPP loans are guaranteed by the SBA, the Firm does not expect to realize material credit losses on these loans. Refer to Credit Portfolio on pages 112-113 for a further discussion of the PPP.
(e)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans. Prior-period amounts have been revised to conform with the current presentation.
(f)Includes scored mortgage loans held in CCB and CIB.
(g)Credit card, home equity and certain business banking lending-related commitments represent the total available lines of credit for these products. The Firm has not experienced, and does not anticipate, that all available lines of credit would be used at the same time. For credit card commitments, and if certain conditions are met, home equity commitments and certain business banking commitments, the Firm can reduce or cancel these lines of credit by providing the borrower notice or, in some cases as permitted by law, without notice. Refer to Note 28 for further information.
(h)Includes billed interest and fees.
(i)Also includes commercial card lending-related commitments primarily in CB and CIB.
(j)At December 31, 2020 and 2019, nonaccrual loans excluded mortgage loans 90 or more days past due and charge-off accounting policies,insured by U.S. government agencies of $874 million and $1.1 billion, respectively. Prior-period amount of mortgage loans 90 or more days past due and insured by U.S. government agencies excluded from nonaccrual loans has been revised to conform with the current presentation; refer to Note 12.footnote (e) for additional information. These amounts have been excluded from nonaccrual loans 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.
(k)At December 31, 2020, nonaccrual loans included $1.6 billion of PCD loans. Prior to the adoption of CECL, nonaccrual loans excluded PCI loans as the Firm recognized interest income on each pool of PCI loans as each of the pools was performing.
Consumer credit portfolio
As of or for the year ended December 31,
(in millions, except ratios)
Credit exposure 
Nonaccrual loans(i)(j)
 
Net charge-offs/(recoveries)(d)(k)
 
Net charge-off/(recovery) rate(d)(k)(l)
2018 2017 20182017 20182017 20182017
Consumer, excluding credit card            
Loans, excluding PCI loans and loans held-for-sale            
Residential mortgage$231,078
 $216,496
 $1,765
$2,175
 $(291)$(10) (0.13)%—%
Home equity28,340
 33,450
 1,323
1,610
 (5)69
 (0.02)0.19
Auto(a)(b)
63,573
 66,242
 128
141
 243
331
 0.38
0.51
Consumer & Business Banking(b)(c)
26,612
 25,789
 245
283
 236
257
 0.90
1.03
Student(d)
—
 —
 —
—
 —
498
 —
NM
Total loans, excluding PCI loans and loans held-for-sale349,603
 341,977
 3,461
4,209
 183
1,145
 0.05
0.34
Loans – PCI            
Home equity8,963
 10,799
 NA
NA
 NA
NA
 NA
NA
Prime mortgage4,690
 6,479
 NA
NA
 NA
NA
 NA
NA
Subprime mortgage1,945
 2,609
 NA
NA
 NA
NA
 NA
NA
Option ARMs(e)
8,436
 10,689
 NA
NA
 NA
NA
 NA
NA
Total loans – PCI24,034
 30,576
 NA
NA
 NA
NA
 NA
NA
Total loans – retained373,637
 372,553
 3,461
4,209
 183
1,145
 0.05
0.31
Loans held-for-sale95
 128
 —
—
 —
—
 —
—
Total consumer, excluding credit card loans373,732
 372,681
 3,461
4,209
 183
1,145
 0.05
0.31
Lending-related commitments(f)
46,066
 48,553
         
Receivables from customers(g)
154
 133
         
Total consumer exposure, excluding credit card419,952
 421,367
         
Credit Card            
Loans retained(h)
156,616
 149,387
 —
—
 4,518
4,123
 3.10
2.95
Loans held-for-sale16
 124
 —
—
 —
—
 —
—
Total credit card loans156,632
 149,511
 —
—
 4,518
4,123
 3.10
2.95
Lending-related commitments(f)
605,379
 572,831
         
Total credit card exposure762,011
 722,342
         
Total consumer credit portfolio$1,181,963
 $1,143,709
 $3,461
$4,209
 $4,701
$5,268
 0.90 %1.04%
Memo: Total consumer credit portfolio, excluding PCI$1,157,929
 $1,113,133
 $3,461
$4,209
 $4,701
$5,268
 0.95 %1.11%
(l)Generally excludes loans under payment deferral programs offered in response to the COVID-19 pandemic. Includes loans to customers that have exited COVID-19 payment deferral programs and are 90 or more days past due, predominantly all of which were also at least 150 days past due and therefore considered collateral-dependent. Collateral-dependent loans are charged down to the lower of amortized cost or fair value of the underlying collateral less costs to sell.
(a)At December 31, 2018 and 2017, excluded operating lease assets of $20.5 billion and $17.1 billion, respectively. These operating lease assets are included in other assets on the Firm’s Consolidated balance sheets. The risk of loss on these assets relates to the residual value of the leased vehicles, which is managed through projection of the lease residual value at lease origination, periodic review of residual values, and through arrangements with certain auto manufacturers that mitigates this risk.
(b)Includes certain business banking and auto dealer risk-rated loans that apply the wholesale methodology for determining the allowance for loan losses; these loans are managed by CCB, and therefore, for consistency in presentation, are included within the consumer portfolio.
(c)Predominantly includes Business Banking loans.
(d)For the year ended December 31, 2017, excluding net charge-offs of $467 million related to the student loan portfolio sale, the net charge-off rate for Total consumer, excluding credit card and PCI loans and loans held-for-sale would have been 0.20%; Total consumer - retained excluding credit card loans would have been 0.18%; Total consumer credit portfolio would have been 0.95%; and Total consumer credit portfolio, excluding PCI loans would have been 1.01%.
(e)At December 31, 2018 and 2017, approximately 69% and 68%, respectively, of the PCI option adjustable rate mortgages (“ARMs”) portfolio has been modified into fixed-rate, fully amortizing loans.
(f)Credit card and home equity lending-related commitments represent the total available lines of credit for these products. The Firm has not experienced, and does not anticipate, that all available lines of credit would be used at the same time. For credit card commitments, and if certain conditions are met, home equity commitments, the Firm can reduce or cancel these lines of credit by providing the borrower notice or, in some cases as permitted by law, without notice. For further information, refer to Note 27.
(g)Receivables from customers represent held-for-investment margin loans to brokerage customers that are collateralized through assets maintained in the clients’ brokerage accounts. These receivables are reported within accrued interest and accounts receivable on the Firm’s Consolidated balance sheets.
(h)Includes billed interest and fees net of an allowance for uncollectible interest and fees.
(i)At December 31, 2018 and 2017, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $2.6 billion and $4.3 billion, respectively. These amounts have been excluded from nonaccrual loans 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 FFIEC.
(j)Excludes PCI loans. The Firm is recognizing interest income on each pool of PCI loans as each of the pools is performing.
(k)Net charge-offs/(recoveries) and net charge-off/(recovery) rates excluded write-offs in the PCI portfolio of $187 million and $86 million for the years ended December 31, 2018 and 2017, respectively. These write-offs decreased the allowance for loan losses for PCI loans. Refer to Allowance for Credit Losses on pages 120–122 for further information.
(l)Average consumer loans held-for-sale were $387 million and $1.5 billion for the years ended December 31, 2018 and 2017, respectively. These amounts were excluded when calculating net charge-off/(recovery) rates.
(m)Average consumer loans held-for-sale and loans at fair value were $18.3 billion and $20.4 billion for the years ended December 31, 2020 and 2019, respectively. Prior-period amounts have been revised to conform with the current presentation; refer to footnote (e) for additional information. These amounts were excluded when calculating net charge-off/(recovery) rates.







JPMorgan Chase & Co./20182020 Form 10-K107115
Management’s discussion and analysis

Consumer assistance
In March 2020, the Firm began providing assistance to customers in response to the COVID-19 pandemic, predominantly in the form of payment deferrals.
As of December 31, 2020, the Firm had $10.7 billion of retained loans under payment deferral programs, which represented a decrease of approximately $1.5 billion from September 30, 2020 and $17.5 billion from June 30, 2020. During the fourth quarter of 2020, there were approximately $1.4 billion of new enrollments in payment deferral
programs predominantly in residential real estate and credit card. Predominantly all borrowers that exited payment deferral programs are current. The Firm continues to monitor the credit risk associated with loans subject to payment deferrals throughout the deferral period and on an ongoing basis after the borrowers are required to resume making regularly scheduled payments and considers expected losses of principal and accrued interest on these loans in its allowance for credit losses.
December 31, 2020September 30, 2020June 30, 2020
(in millions, except ratios)Loan balance
Percent of loan class balance(e)
Percent of accounts who exited payment deferral and are currentLoan balanceLoan balanceType of assistance
Residential real estate(a)(b)
$10,106 4.5 %95 %$11,458 $20,548 
Rolling three month payment deferral up to one year; in most cases, deferred payments will be due at the end of the loan term
Auto and other(c)
377 0.5 94 457 3,357 
•Auto: Currently offering one month payment deferral (initially offered three month payment deferral). Maturity date is extended by number of months deferred
•Business Banking: Three month deferral with automatic deferment to either maturity (loan) or one year forward (line)
Credit card264 0.2 90 (f)368 4,384 Currently offering deferral of one month minimum payment (initially offered three month minimum payment deferral). Interest continues to accrue during the deferral period and is added to the principal balance
Total consumer(d)
$10,747 2.4 %91 %$12,283 $28,289 
(a)Excludes $13.4 billion, $17.1 billion and $34.0 billion of third-party mortgage loans serviced at December 31, 2020, September 30, 2020 and June 30, 2020, respectively.
(b)The weighted average LTV ratio of residential real estate loans under payment deferral at December 31, 2020 was 57%.
(c)Excludes risk-rated business banking and auto dealer loans held in CCB and auto operating lease assets that were still under payment deferral programs as of December 31, 2020, September 30, 2020 and June 30, 2020. Auto operating lease asset payment assistance is currently offering one month payment deferral (initially offered three month payment deferral). Deferrals do not extend the term of the lease and all deferred payments are due at the end of the lease term.
(d)Includes $3.8 billion, $3.8 billion and $5.7 billion of loans that were accounted for as TDRs prior to payment deferral as of December 31, 2020, September 30, 2020 and June 30, 2020, respectively.
(e)Represents the unpaid principal balance of retained loans which were still under payment deferral programs, divided by the total unpaid principal balance of the respective loan classes retained loans.
(f)85% of the balance that exited deferral were current at December 31, 2020.
Of the $10.7 billion of loans still under payment deferral programs as of December 31, 2020, approximately $4.0 billion were accounted for as TDRs, either because they were accounted for as TDRs prior to payment deferral, or because they did not qualify for or the Firm did not elect the option to suspend TDR accounting guidance provided by the CARES Act and extended by the Consolidated Appropriations Act. A portion of the remaining $6.7 billion of loans could become TDRs in future periods, depending on the nature and timing of further modifications or payment arrangements offered to these borrowers. If the remaining $6.7 billion of loans were considered TDRs, the Firm estimates that it would result in an increase in standardized RWA of as much as $2.5 billion.
Predominantly all borrowers, including those accounted for as TDRs, were current upon enrollment in payment deferral programs and are expected to exit payment deferral programs in a current status, either because no payments are contractually due during the deferral period or because payments originally contractually due during the deferral period will be due at maturity upon exit. For those borrowers that are unable to resume making payments in accordance with the original or modified contractual terms of their agreements upon exit from deferral programs, they will be placed on nonaccrual status in line with the Firm’s nonaccrual policy, except for credit cards as permitted by regulatory guidance, and charged off or down in accordance with the Firm’s charge-off policies. Refer to Note 12 for additional information on the Firm’s nonaccrual and charge-off policies.
116JPMorgan Chase & Co./2020 Form 10-K

Consumer, excluding credit card
Portfolio analysis
Consumer loanLoan balances increasedwere flat from December 31, 2017 predominantly due to2019 as PPP loan originations of high-quality prime mortgage loans that have been retained on the balance sheet, largelyin Business Banking were offset by paydowns and the charge-off or liquidation of delinquent loans.lower residential real estate loans, reflecting paydowns.
PCI loans are excluded from theThe following discussions ofprovide information concerning individual loan products and are addressed separately below. Forproducts. Refer to Note 12 for further information about the Firm’s consumerthis portfolio, including information about delinquencies, loan modifications and other credit quality indicators, refer to
Note 12.indicators.
Residential mortgage:real estate: The residential mortgagereal estate portfolio, including loans held-for-sale and loans at fair value, predominantly consists of high-quality prime mortgage loans with approximately 1% consistingand home equity lines of subprimecredit. The portfolio decreased from December 31, 2019 driven by paydowns largely offset by originations of prime mortgage loans which continuethat have been retained on the balance sheet. The 30+ delinquency rate decreased to run off. The residential mortgage portfolio0.98% at December 31, 2020, from 1.35% at December 31, 2019, primarily due to payment assistance and government stimulus. Nonaccrual loans increased from December 31, 2017 driven by2019 due primarily to loans placed on nonaccrual status related to the retentionimpact of originated high-quality prime mortgagethe COVID-19 pandemic as well as the adoption of CECL, as PCD loans which exceeded paydowns and mortgage loan sales. Residential mortgage 30+ day delinquencies decreased from December 31, 2017. Nonaccrual loans decreased from December 31, 2017 duebecame subject to lower delinquencies.nonaccrual treatment. Net recoveries for the year ended December 31, 2018 improved2020 were higher when compared with the prior year reflectingas the current year benefited from a recovery on a loan sales and continued improvement in home prices and delinquencies.sale.
At December 31, 2018 and 2017, the Firm’s residential mortgage portfolio included $21.6 billion and $20.2 billion, respectively, of interest-only loans. These loans have an interest-only payment period generally followed by an adjustable-rate or fixed-rate fully amortizing payment period to maturity and are typically originated as higher-balance loans to higher-income borrowers. Performance of this portfolio for the year ended December 31, 2018 was in line with the performance of the broader residential mortgage portfolio for the same period. The Firm continues to monitor the risks associated with these loans.
The following table provides a summary of the Firm’s
residential mortgage portfolio insured and/or guaranteed
by U.S. government agencies, including loans held-for-sale.
The Firm monitors its exposure to certain potential unrecoverable claim payments related to government insured loans and considers this exposure in estimating the allowance for loan losses.
(in millions)December 31, 2018
December 31, 2017
Current$2,884
$2,401
30-89 days past due1,528
1,958
90 or more days past due2,600
4,264
Total government guaranteed loans$7,012
$8,623
Home equity: The home equity portfolio declined from December 31, 2017 primarily reflecting loan paydowns. The amount of 30+ day delinquencies decreased from December 31, 2017. Nonaccrual loans decreased from December 31, 2017 due to lower delinquencies. There was a net recovery for the year ended December 31, 2018 compared to a net charge-off for the prior year, as a result of continued improvement in home prices and lower delinquencies.
At December 31, 2018, approximately 90% of the Firm’s home equity portfolio consistscarrying value of home equity lines of credit (“HELOCs”) and the remainder consisted of home equity loans (“HELOANs”). HELOANs are generally fixed-rate, closed-end, amortizing loans, with terms ranging from 3–30 years. In general, HELOCs originated by the Firm are revolving loans for a 10-year period, after which time the HELOC recasts into a loan with a 20-year amortization period.
The carrying value of HELOCs outstanding was $26$23.7 billion at December 31, 2018.2020. This amount included $12$8.6 billion of HELOCs that have recast from interest-only to fully amortizing payments or have been modified and $4$7.7 billion of interest-only balloon HELOCs, which primarily mature after 2030. The Firm manages the risk of HELOCs during their revolving period by closing or reducing the undrawn line to the extent permitted by law when borrowers are exhibiting a material deterioration in their credit risk profile.

108JPMorgan Chase & Co./2018 Form 10-K


The Firm monitors risks associated with junior lien loans where the borrower has a senior lien loan that is either delinquent or has been modified. These loans are considered “high-risk seconds” and are classified as nonaccrual as they are considered to pose a higher risk of default than other junior lien loans. At December 31, 2018, the Firm estimated that2020 and 2019, the carrying value of its home equity portfolio contained approximately $550 million of current junior lien loans that were considered high-risk seconds, compared with approximately $725 million at December 31, 2017.
Auto: The auto loan portfolio, which predominantly consists of prime-quality loans, declined when compared with December 31, 2017, as paydowns and the charge-off or liquidation of delinquentinterest-only residential mortgage loans were $25.6 billion and $22.5 billion, respectively. These loans have an interest-only payment period generally followed by an adjustable-rate or fixed-rate fully amortizing payment period to maturity and are typically originated as higher-balance loans to higher-income borrowers, predominantly offset by new originations. Nonaccrual loans decreased from December 31, 2017. Net charge-offsin AWM. The net charge-off rate for the year ended December 31, 2018 declined when compared2020 was consistent with the prior year primarilyrate of the broader residential mortgage portfolio as a resultthe performance of an incremental adjustment recordedthis portfolio is generally in 2017 in accordance with regulatory guidance regarding the timing of loss recognition for certain loans in bankruptcy and loans where assets were acquired in loan satisfactions.
Consumer & Business banking: Consumer & Business Banking loans increased when compared with December 31, 2017 due to loan originations, predominantly offset by paydowns and charge-offs of delinquent loans. Nonaccrual loans and net charge-offs decreased when comparedline with the prior year.
Purchased credit-impaired loans: PCI loans represent certain loans that were acquired and deemed to be credit-impaired on the acquisition date. PCI loans decreased from December 31, 2017 due to portfolio run off and loan sales. As of December 31, 2018, approximately 10%performance of the option ARM PCI loans were delinquent and approximately 69% of the portfolio had been modified into fixed-rate, fully amortizing loans. The borrowers for substantially all of the remaining option ARM loans are making amortizing payments, although such payments are not necessarily fully amortizing. This latter group of loans is subject to the risk of payment shock due to future payment recast. Default rates generally increase on option ARM loans when payment recast results in a payment increase. The expected increase in default rates is considered in the Firm’s quarterly impairment assessment.
broader residential mortgage portfolio.

The following table provides a summary of lifetime principal loss estimates includedthe Firm’s
residential mortgage portfolio insured and/or guaranteed
by U.S. government agencies, predominantly loans held-for-sale and loans at fair value. The Firm monitors its exposure to certain potential unrecoverable claim payments related to government-insured loans and considers this exposure in either the nonaccretable difference orestimating the allowance for loan losses.
Summary of PCI loans lifetime principal loss estimates
 
Lifetime loss estimates(a)
 
Life-to-date liquidation losses(b)
December 31, (in billions)2018 2017 2018 2017
Home equity$14.1
 $14.2
 $13.0
 $12.9
Prime mortgage4.1
 4.0
 3.9
 3.8
Subprime mortgage3.3
 3.3
 3.2
 3.1
Option ARMs10.3
 10.0
 9.9
 9.7
Total$31.8
 $31.5
 $30.0
 $29.5
(in millions)December 31, 2020December 31, 2019
Current$669 $1,432 
30-89 days past due235 704 
90 or more days past due874 1,090 
Total government guaranteed loans(a)
$1,778 $3,226 
(a)Includes the original nonaccretable difference established in purchase accounting of $30.5 billion for principal losses plus additional principal losses recognized subsequent to acquisition through the provision and allowance for loan losses. The remaining nonaccretable difference for principal losses was $512 million and $842 million at December 31, 2018 and 2017, respectively.
(b)Represents both realization of loss upon loan resolution and any principal forgiven upon modification.
For further information on(a)In the Firm’s PCI loans, including write-offs, referthird quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to Note 12.loans. Prior-period amounts have been revised to conform with the current presentation.
Geographic composition and current estimated loan-to-value ratio of residential real estate loans
At December 31, 2018, $160.32020, $146.6 billion, or 63%65% of the total retained residential real estate loan portfolio, excluding mortgage loans insured by U.S. government agencies, and PCI loans, were concentrated in California, New York, Illinois,Florida, Texas and Florida,Illinois, compared with $152.8$157.9 billion, or 63%65%, at December 31, 2017. For additional information on the geographic composition of the Firm’s residential real estate loans, refer to Note 12.
Current estimated loan-to-values of residential real estate loans2019.
Average current estimated loan-to-value (“LTV”) ratios have declined consistent with recent improvements in home prices, customer pay downs,pay-downs, and charge-offs or liquidations of higher LTV loans. For further
Refer to Note 12 for information on the geographic composition and current estimated LTVs of the Firm’s residential real estate loans, refer to Note 12.loans.

Loan modification activities for residential real estate loans
The performance of modified loans generally differs by product type due to differences in both the credit quality and the types of modifications provided. Performance metrics for modifications to the residential real estate portfolio, excluding PCI loans, that have been seasoned more than six months show weighted-average redefault rates of 22% for residential mortgages and 20% for home equity. Performance metrics for modifications to the PCI residential real estate portfolio that have been seasoned more than six months show weighted average redefault rates of 19% for home equity, 18% for prime mortgages, 16% for option ARMs and 32% for subprime mortgages. The cumulative redefault rates reflect the performance of modifications completed from October 1, 2009 through December 31, 2018.

JPMorgan Chase & Co./20182020 Form 10-K109117
Management’s discussion and analysis


Certain modifiedModified residential real estate loans have interest rate reset provisions (“step-rate modifications”) where the interest rates on these loans generally began to increase commencing in 2014 by 1% per year, and will continue to do so until the rate reaches a specified cap. The cap on these loans is typically at a prevailing market interest rate for a fixed-rate mortgage loan as of the modification date. At December 31, 2018, the carrying value of non-PCI loans and the unpaid principal balance of PCI loans modified in step-rate modifications, which have not yet met their specified caps, were $2 billion and $3 billion, respectively. The Firm continues to monitor this risk exposure and the impact of these potential interest rate increases is considered in the Firm’s allowance for loan losses.
The following table presents information as of December 31, 2018 and 2017, relating to modified retained residential real estate loans for which concessions have been granted to borrowers experiencing financial difficulty. Fordifficulty, which include both TDRs and modified loans accounted for as PCI loans prior to the adoption of CECL. The following table does not include loans with short-term or other insignificant modifications that are not considered concessions and, therefore, are not TDRs, or loans for which the Firm has elected to apply the option to suspend the application of accounting guidance for TDRs as provided by the CARES Act and extended by the Consolidated Appropriations Act. Refer to Note 12 for further information on modifications for the years ended December 31, 20182020 and 2017, refer2019.
(in millions)December 31, 2020December 31, 2019
Retained loans(a)
$15,406 5,926 
PCI loansNA12,372 (d)
Nonaccrual retained loans(b)(c)
$3,899 2,332 
(a)At December 31, 2020 and 2019, $7 million and $14 million, respectively, of loans modified subsequent to repurchase from Ginnie Mae in accordance with the standards of the appropriate government agency (i.e., Federal Housing Administration (“FHA”), U.S. Department of Veterans Affairs (“VA”), Rural Housing Service of the U.S. Department of Agriculture (“RHS”)) are not included in the table above. When such loans perform subsequent to modification in accordance with Ginnie Mae guidelines, they are generally sold back into Ginnie Mae loan pools. Modified loans that do not re-perform become subject to foreclosure. Refer to Note 12.14 for additional information about sales of loans in securitization transactions with Ginnie Mae.
(b)At December 31, 2020 and 2019, nonaccrual loans included $3.0 billion and $1.9 billion, respectively, of TDRs for which the borrowers were less than 90 days past due. Refer to Note 12 for additional information about loans modified in a TDR that are on nonaccrual status.
(c)At December 31, 2020, nonaccrual loans included $1.3 billion of PCD loans. Prior to the adoption of CECL, nonaccrual loans excluded PCI loans as the Firm recognized interest income on each pool of PCI loans as each of the pools was performing.
(d)Amount represents the unpaid principal balance of modified PCI loans at December 31, 2019, which were moved to retained loans upon the adoption of CECL.
Auto and other: The auto and other loan portfolio predominantly consists of prime-quality scored auto and business banking loans, as well as overdrafts. The portfolio increased when compared with December 31, 2019, predominantly due to PPP loan originations of $21.9 billion in Business Banking of which $19.2 billion remained outstanding at December 31, 2020 as well as from growth in the auto portfolio from loan originations, partially offset by paydowns and charge-offs or liquidation of delinquent loans. The 30+ delinquency rate decreased to 0.60% at December 31, 2020, from 1.31% at December 31, 2019, primarily due to payment assistance and government stimulus, as well as PPP loan originations as these loans are all considered current. The scored auto portfolio net charge-off rates were 0.25% and 0.44% for the years ended December 31, 2020 and 2019, respectively. Auto charge-offs for the year ended December 31, 2020
benefited from payment assistance programs and high vehicle collateral values.
Modified residential real estate loans
 20182017
December 31,
(in millions)
Retained loans
Nonaccrual retained
loans(d)
Retained loans
Nonaccrual retained
 loans(d)
Modified residential real estate loans, excluding PCI loans(a)(b)
    
Residential mortgage$4,565
$1,459
$5,620
$1,743
Home equity2,012
955
2,118
1,032
Total modified residential real estate loans, excluding PCI loans$6,577
$2,414
$7,738
$2,775
Modified PCI loans(c)
    
Home equity$2,086
NA
$2,277
NA
Prime mortgage3,179
NA
4,490
NA
Subprime mortgage2,041
NA
2,678
NA
Option ARMs6,410
NA
8,276
NA
Total modified PCI loans$13,716
NA
$17,721
NA
(a)Amounts represent the carrying value of modified residential real estate loans.
(b)At December 31, 2018 and 2017, $4.1 billion and $3.8 billion, respectively, of loans modified subsequent to repurchase from Ginnie Mae in accordance with the standards of the appropriate government agency (i.e., Federal Housing Administration (“FHA”), U.S. Department of Veterans Affairs (“VA”), Rural Housing Service of the U.S. Department of Agriculture (“RHS”)) are not included in the table above. When such loans perform subsequent to modification in accordance with Ginnie Mae guidelines, they are generally sold back into Ginnie Mae loan pools. Modified loans that do not re-perform become subject to foreclosure. For additional information about sales of loans in securitization transactions with Ginnie Mae, refer to Note 14.
(c)Amounts represent the unpaid principal balance of modified PCI loans.
(d)As of December 31, 2018 and 2017, nonaccrual loans included $2.0 billion and $2.2 billion, respectively, of troubled debt restructurings (“TDRs”) for which the borrowers were less than 90 days past due. For additional information about loans modified in a TDR that are on nonaccrual status, refer to Note 12.
Nonperforming assets
The following table presents information as of December 31, 20182020 and 2017,2019, about consumer, excluding credit card, nonperforming assets.
Nonperforming assets(a)
December 31, (in millions)20202019
Nonaccrual loans
Residential real estate(b)(c)(d)
$6,316 $3,220 
Auto and other151 146 
Total nonaccrual loans6,467 3,366 
Assets acquired in loan satisfactions
Real estate owned(e)
131 229 
Other21 24 
Total assets acquired in loan satisfactions152 253 
Total nonperforming assets$6,619 $3,619 
Nonperforming assets(a)
   
December 31, (in millions)2018
 2017
Nonaccrual loans(b)
   
Residential real estate$3,088
 $3,785
Other consumer373
 424
Total nonaccrual loans3,461
 4,209
Assets acquired in loan satisfactions   
Real estate owned210
 225
Other30
 40
Total assets acquired in loan satisfactions240
 265
Total nonperforming assets$3,701
 $4,474
(a)(a)At December 31, 2018 and 2017, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $2.6 billion and $4.3 billion, respectively, and real estate owned (“REO”) insured by U.S. government agencies of $75 million and $95 million, respectively. These amounts have been excluded based upon the government guarantee.
(b)Excludes PCI loans which are accounted for on a pool basis. Since each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, the past-due status of the pools, or that of individual loans within the pools, is not meaningful. The Firm is recognizing interest income on each pool of loans as each of the pools is performing.
Nonaccrual loans in the residential real estate portfolio at December 31, 20182020 and 2019, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $874 million and $1.1 billion, respectively, and REO insured by U.S. government agencies of $9 million and $41 million, respectively. Prior-period amount of mortgage loans 90 or more days past due and insured by U.S. government agencies excluded from nonperforming assets has been revised to conform with the current presentation; refer to footnote (b) for additional information. These amounts have been excluded based upon the government guarantee.
(b) decreasedIn the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to $3.1 billion from $3.8 billion at December 31, 2017,loans. Prior-period amounts have been revised to conform with the current presentation.
(c)Generally excludes loans under payment deferral programs offered in response to the COVID-19 pandemic. Includes loans to customers that have exited COVID-19 payment deferral programs and are 90 or more days past due, predominantly all of which 24% and 26% were greater than also at least 150 days past due respectively. In the aggregate, the unpaid principal balance of residential real estateand therefore considered collateral-dependent. Collateral-dependent loans greater than 150 days past due wasare charged down by approximately 32% and 40% to the estimated net realizablelower of amortized cost or fair value of the underlying collateral atless costs to sell.
(d)At December 31, 2018 and 2017, respectively.2020, nonaccrual loans included $1.6 billion of PCD loans. Prior to the adoption of CECL, nonaccrual loans excluded PCI loans as the Firm recognized interest income on each pool of PCI loans as each of the pools was performing.
(e)Prior-period amount has been revised to conform with the current presentation.
118JPMorgan Chase & Co./2020 Form 10-K

Nonaccrual loans: loans
The following table presents changes in the consumer, excluding credit card, nonaccrual loans for the years ended December 31, 20182020 and 2017.
2019.
Nonaccrual loan activity  
Nonaccrual loan activity(a)
Nonaccrual loan activity(a)
Year ended December 31,  Year ended December 31,
(in millions) 2018
2017
(in millions)20202019
Beginning balance $4,209
$4,820
Beginning balance$3,366 $3,853 
Additions 2,799
3,525
Additions:Additions:
PCD loans, upon adoption of CECLPCD loans, upon adoption of CECL708 NA
Other additionsOther additions5,184 (c)2,174 
Total additionsTotal additions5,892 2,174 
Reductions:  Reductions:
Principal payments and other(a)
 1,407
1,577
Principal payments and other(b)
Principal payments and other(b)
983 1,167 
Charge-offs 468
699
Charge-offs390 371 
Returned to performing status 1,399
1,509
Returned to performing status1,024 751 
Foreclosures and other liquidations 273
351
Foreclosures and other liquidations394 372 
Total reductions 3,547
4,136
Total reductions2,791 2,661 
Net changes (748)(611)Net changes3,101 (487)
Ending balance $3,461
$4,209
Ending balance$6,467 $3,366 
(a)Other reductions includes loan sales.
(a)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans. Prior-period amounts have been revised to conform with the current presentation.
(b)Other reductions includes loan sales.
(c)Includes loans to customers that have exited COVID-19 payment deferral programs and are 90 or more days past due, predominantly all of which were also at least 150 days past due and therefore considered collateral-dependent. Collateral-dependent loans are charged down to the lower of amortized cost or fair value of the underlying collateral less costs to sell.
Active and suspended foreclosure: ForRefer to Note 12 for information on loans that were in the process of active or suspended foreclosure, referforeclosure.
Refer to Note 12.12 for further information about the consumer credit portfolio, including information about delinquencies, loan modifications and other credit quality indicators.
Purchased credit deteriorated (“PCD”) loans
The following tables provide credit-related information for PCD loans, which were accounted for as PCI loans prior to the adoption of CECL. PCI loans are considered PCD loans under CECL and are subject to the Firm’s nonaccrual and charge-off policies. PCD loans are now reported in the consumer, excluding credit card portfolio’s residential real estate class. Refer to Note 1 for further information.
(in millions, except ratios)December 31, 2020December 31, 2019
Loan delinquency(a)
Current$16,036 $18,571 
30-149 days past due432 970 
150 or more days past due(b)
573 822 
Total PCD loans$17,041 $20,363 
% of 30+ days past due to total retained PCD loans5.90 %8.80 %
Nonaccrual loans(c)
$1,609 NA
(in millions, except ratios)Twelve months ended December 31, 2020
Net charge-offs$74
Net charge-off rate0.39%
(a)At December 31, 2020, loans under payment deferral programs offered in response to the COVID-19 pandemic which are still within their deferral period and performing according to their modified terms are generally not considered delinquent.
(b)Includes loans to customers that have exited COVID-19 payment deferral programs and are 150 or more days past due and therefore considered collateral-dependent. Collateral dependent loans are charged down to the lower of amortized cost or fair value of the underlying collateral less costs to sell.
(c)Includes loans to customers that have exited COVID-19 payment deferral programs and are 90 or more days past due, predominantly all of which were also at least 150 days past due and therefore considered collateral-dependent.


110JPMorgan Chase & Co./20182020 Form 10-K119
Management’s discussion and analysis


Credit card
Total credit card loans increaseddecreased from December 31, 2017 due to new account growth and higher2019 reflecting a decline in sales volume.volume that began in March as a result of the impact of the COVID-19 pandemic. The December 31, 20182020 30+ and 90+ day delinquency rate increasedrates of 1.68% and 0.92%, respectively, decreased compared to 1.83% from 1.80% at December 31, 2017, but the December 31, 20182019 30+ and 90+ day delinquency raterates of 0.92% was flat compared to December 31, 2017.1.87% and 0.95%, respectively. The delinquency rates were positively impacted by borrowers who received payment assistance and government stimulus. Net charge-offs increaseddecreased for the year ended December 31, 2018 when2020 compared with the prior year reflecting lower charge-offs and higher recoveries primarily due to the seasoning of more recent vintages with higher loss rates, as anticipated given underwriting standards at the time of origination.benefiting from payment assistance and government stimulus.
Consistent with the Firm’s policy, all credit card loans typically remain on accrual status until charged off. However, the Firm establishes anFirm’s allowance which is offset against loans and reduces interest income, for loan losses includes the estimated uncollectible portion of accrued and billed interest and fee income. Refer to Note 12 for further information about this portfolio, including information about delinquencies.
Geographic and FICO composition of credit card loans
At December 31, 2018, $71.22020, $65.0 billion, or 45% of the total retained credit card loan portfolio, werewas concentrated in California, Texas, New York, Florida and Illinois, compared with $67.2$77.5 billion, or 45%46%, at December 31, 2017. For2019. Refer to Note 12 for additional information on the geographic and FICO composition of the Firm’s credit card loans, refer to Note 12.loans.
Modifications of credit card loans
At December 31, 2018 and 2017,2020, the Firm had $1.3$1.4 billion and $1.2 billion, respectively, of credit card loans outstanding that have been modified in TDRs. ForTDRs, which does not include loans with short-term or other insignificant modifications that are not considered TDRs, compared to $1.5 billion at December 31, 2019. Refer to Note 12 for additional information about loan modification programs to borrowers, refer to Note 12.
for borrowers.

JPMorgan Chase & Co./2018 Form 10-K111
Management’s discussion and analysis

120JPMorgan Chase & Co./2020 Form 10-K

WHOLESALE CREDIT PORTFOLIO
In its wholesale businesses, the Firm is exposed to credit risk primarily through its underwriting, lending, market-making, and hedging activities with and for clients and counterparties, as well as through various operating services (such as cash management and clearing activities), securities financing activities and cash placed with banks. A portion of the loans originated or acquired by the Firm’s wholesale businesses is generally retained on the balance sheet. The Firm distributes a significant percentage of the loans that it originates into the market as part of its syndicated loan business and to manage portfolio concentrations and credit risk.

The credit quality of the wholesale portfolio was stable for the year ended December 31, 2018, characterized by low levels of criticized exposure, nonaccrual loans and charge-offs. Refer to the industry discussion on pages 113–115 for further information. Retained loans increased across all wholesale lines of business, primarily driven by commercial and industrial and financial institution clients in CIB, and Wealth Management clients globally in AWM. The wholesale portfolio is actively managed, in part by conducting ongoing, in-depth reviews of client credit quality and transaction structure inclusive of collateral where applicable, and of industry, product and client concentrations.
Refer to the industry discussion on pages 123-127 for further information.
In the following tables, theThe Firm’s wholesale credit portfolio includes exposure held in CIB, CB, AWM and Corporate, as well as risk-rated business banking and excludes allauto dealer exposures held in CCB for which the wholesale methodology is applied when determining the allowance for credit losses.
In 2020, the impacts of the COVID-19 pandemic resulted in broad-based credit deterioration and an increase in the allowance for credit losses. As of December 31, 2020, the investment-grade percentage of the portfolio decreased from 74% to 71%, and criticized exposure managedincreased $26.5 billion from $15.1 billion to $41.6 billion. The increase in criticized exposure was largely driven by CCB.downgrades in Consumer & Retail, Oil & Gas and Real Estate, and to a lesser extent, net portfolio activity in Technology, Media & Telecommunications. The continuation or worsening of the effects of the COVID-19 pandemic on the macroeconomic environment could result in further impacts to credit quality metrics, including investment-grade percentages, as well as to criticized and nonperforming exposures and charge-offs.
As of December 31, 2020 retained loans were up $33.3 billion predominantly driven by AWM and CIB, and lending-related commitments were up $32.4 billion, predominantly driven by CIB and CB.
Wholesale credit portfolio
December 31,
(in millions)		Credit exposure
Nonperforming(f)
2020201920202019
Loans retained$514,947 $481,678 $3,318 $1,057 
Loans held-for-sale5,784 4,062 284 5 
Loans at fair value (a)
29,327 25,139 504 209 
Loans – reported550,058 510,879 4,106 1,271 
Derivative receivables79,630 49,766 56 30 
Receivables from customers(b)
47,710 33,706 — — 
Total wholesale credit-related assets677,398 594,351 4,162 1,301 
Assets acquired in loan satisfactions
Real estate owned (c)
NANA125 115 
OtherNANA— 19 
Total assets acquired in loan satisfactions
NANA125 134 
Lending-related commitments (a)
449,863 417,510 577 474 
Total wholesale credit portfolio$1,127,261 $1,011,861 $4,864 $1,909 
Credit derivatives used
in credit portfolio management activities(c)(d)
$(22,239)$(18,530)$— $— 
Liquid securities and other cash collateral held against derivatives(e)
(14,806)(13,052)NANA
(a)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans, which resulted in a corresponding reclassification of certain off-balance sheet commitments. Prior-period amounts have been revised to conform with the current presentation.
(b)Receivables from customers reflect held-for-investment margin loans to brokerage clients in CIB, CCB and AWM; these are reported within accrued interest and accounts receivable on the Consolidated balance sheets.
(c)Prior-period amounts have been revised to conform with the current presentation.
(d)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. Refer to Credit derivatives on page 131 and Note 5 for additional information.
(e)In the fourth quarter of 2020, the Firm refined its approach for disclosing additional collateral held by the Firm that may be used as security when the fair value of the client’s exposure is in the Firm’s favor. Prior-period amounts have been revised to conform with the current presentation.
(f)Loans that were modified in response to the COVID-19 pandemic continue to be risk-rated in accordance with the Firm’s overall credit risk management framework. As of December 31, 2020, predominantly all of these loans were considered performing.

Wholesale credit portfolio
December 31,
(in millions)
Credit exposure 
Nonperforming(c)
20182017 20182017
Loans retained$439,162
$402,898
 $1,150
$1,734
Loans held-for-sale11,877
3,099
 —
—
Loans at fair value3,151
2,508
 220
—
Loans – reported454,190
408,505
 1,370
1,734
Derivative receivables54,213
56,523
 60
130
Receivables from customers and other(a)
30,063
26,139
 —
—
Total wholesale credit-related assets538,466
491,167
 1,430
1,864
Lending-related commitments387,813
370,098
 469
731
Total wholesale credit exposure$926,279
$861,265
 $1,899
$2,595
Credit derivatives used
in credit portfolio management activities(b)
$(12,682)$(17,609) $—
$—
Liquid securities and other cash collateral held against derivatives(15,322)(16,108) NA
NA
(a)Receivables from customers and other include $30.1 billion and $26.0 billion of held-for-investment margin loans at December 31, 2018 and 2017, respectively, to prime brokerage customers in CIB and AWM; these are classified in accrued interest and accounts receivable on the Consolidated balance sheets.
(b)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, refer to Credit derivatives on page 119, and Note 5.
(c)Excludes assets acquired in loan satisfactions.

112JPMorgan Chase & Co./20182020 Form 10-K121
Management’s discussion and analysis


Wholesale assistance
In March 2020, the Firm began providing assistance to clients in response to the COVID-19 pandemic, predominantly in the form of payment deferrals and covenant modifications.
As of December 31, 2020, the Firm had approximately $1.6 billion of retained loans still under payment deferral, which has decreased approximately $4.6 billion from the third quarter, and $15.1 billion from the second quarter. Predominantly all clients that exited deferral are current or
have paid down their loans, and the Firm has not experienced significant new payment deferral requests. The Firm continues to monitor the credit risk associated with loans subject to deferrals throughout the deferral period and on an ongoing basis after the borrowers are required to resume making regularly scheduled payments and considers expected losses of principal and accrued interest on these loans in its allowance for credit losses.

(in millions, except ratios)		December 31, 2020September 30, 2020June 30, 2020
IndustryLoan balance
Percent of total industry loan balance(a)
IG percentage of loan balance in payment deferralLoan balanceLoan balance
Real Estate$550 0.46 %36 %$4,385 $5,211 
Individuals and Individual Entities402 0.37 4 691 809 
Transportation394 5.99 92 346 294 
Consumer & Retail82 0.21 2 413 690 
Automotive22 0.13 — 15 8,827 
Industrials19 0.09 — 91 335 
Healthcare7 0.04 — 100 300 
All Other industries147 0.08 99 233 309 
Total wholesale$1,623 

0.32 %45 %$6,274 $16,775 
(a)Represents the balance of the retained loans which were still under payment deferral, divided by the respective industry total retained loans balance.
In addition, the Firm granted assistance in the form of covenant modifications. These types of assistance, both payment deferrals and covenant modifications, are generally not reported as TDRs, either because the modifications were insignificant or they qualified for the option to suspend the application of accounting guidance for TDRs as provided by the CARES Act and extended by the Consolidated Appropriations Act. A portion of the $1.6 billion of loans under payment deferral as December 31,
2020 could become TDRs in future periods, depending on the nature and timing of further modifications or payment arrangements offered to these borrowers. If the $1.6 billion of loans under payment deferral were considered TDRs, the Firm estimates that it would result in an increase in standardized RWA of as much as $500 million. Loans under assistance continue to be risk-rated in accordance with the Firm’s overall credit risk management framework. As of December 31, 2020, predominantly all of these loans were considered performing.
Wholesale credit exposure – maturity and ratings profile
The following tables present the maturity and internal risk ratings profiles of the wholesale credit portfolio as of December 31, 20182020 and 2017.2019. The Firm generally considers internal ratings scalewith qualitative characteristics equivalent to BBB-/Baa3 or higher as investment grade, and takes into consideration collateral and structural support when determining the internal risk rating for each credit facility. Refer to Note 12 for further information on internal risk ratings.
Maturity profile(g)
Ratings profile
1 year or less
1 year through
5 years		After 5 yearsTotalTotalTotal %
of IG
December 31, 2020
(in millions, except ratios)		Investment-gradeNoninvestment-grade
Loans retained$183,969 $197,905 $133,073 $514,947 $379,273 $135,674 $514,947 74 %
Derivative receivables79,630 79,630 
Less: Liquid securities and other cash collateral held against derivatives(b)
(14,806)(14,806)
Total derivative receivables, net of collateral18,456 17,599 28,769 64,824 38,941 25,883 64,824 60 
Lending-related commitments(c)
116,950 315,179 17,734 449,863 312,694 137,169 449,863 70 
Subtotal319,375 530,683 179,576 1,029,634 730,908 298,726 1,029,634 71 
Loans held-for-sale and loans at fair value(c)(d)
35,111 35,111 
Receivables from customers47,710 47,710 
Total exposure – net of liquid securities and other cash collateral held against derivatives$1,112,455 $1,112,455 
Credit derivatives used in credit portfolio management activities(e)(f)
$(6,190)$(13,223)$(2,826)$(22,239)$(17,860)$(4,379)$(22,239)80 %
122JPMorgan Chase & Co./2020 Form 10-K

Maturity profile(g)
Ratings profile
1 year or less
1 year through
5 years		After 5 yearsTotalTotalTotal %
of IG
December 31, 2019
(in millions, except ratios)		Investment-gradeNoninvestment-grade
Loans retained(a)
$159,006 $186,256 $136,416 $481,678 $363,444 $118,234 $481,678 75 %
Derivative receivables49,766 49,766 
Less: Liquid securities and other cash collateral held against derivatives(b)
(13,052)(13,052)
Total derivative receivables, net of collateral7,136 7,569 22,009 36,714 29,416 7,298 36,714 80 
Lending-related commitments(a)(c)
87,577 312,939 16,994 417,510 296,702 120,808 417,510 71 
Subtotal253,719 506,764 175,419 935,902 689,562 246,340 935,902 74 
Loans held-for-sale and loans at fair value(c)(d)
29,201 29,201 
Receivables from customers33,706 33,706 
Total exposure – net of liquid securities and other cash collateral held against derivatives$998,809 $998,809 
Credit derivatives used in credit portfolio management activities(a)(e)(f)
$(5,412)$(10,031)$(3,087)$(18,530)$(16,724)$(1,806)$(18,530)90 %
(a)Prior-period amounts have been revised to conform with the current presentation.
(b)In the fourth quarter of 2020, the Firm refined its approach for disclosing additional collateral held by the Firm that may be used as security when the fair value of the client’s exposure is in the Firm’s favor. Prior-period amounts have been revised to conform with the current presentation.
(c)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans, which resulted in a corresponding reclassification of certain off-balance sheet commitments. Prior-period amounts have been revised to conform with the current presentation.
(d)Represents loans held-for-sale, primarily related to syndicated loans and loans transferred from the retained portfolio, and loans at fair value.
(e)These derivatives do not qualify for hedge accounting under U.S. GAAP.
(f)The notional amounts are presented on a net basis by underlying reference entity and the ratings profile shown is based on the Firm’s internal risk ratings of the reference entity on which protection has been purchased. Predominantly all of the credit derivatives entered into by the Firm where it has purchased protection used in credit portfolio management activities are executed with investment-grade counterparties.
(g)The maturity profile of retained loans, lending-related commitments and derivative receivables is generally correspondbased on remaining contractual maturity. Derivative contracts that are in a receivable position at December 31, 2020, may become payable prior to the ratings assigned by S&P and Moody’s. For additional informationmaturity based on wholesale loan portfolio risk ratings, refer to Note 12.their cash flow profile or changes in market conditions.
Wholesale credit exposure – maturity and ratings profile       
 
Maturity profile(d)
 Ratings profile  
 Due in 1 year or less
Due after
1 year through
5 years
Due after 5 yearsTotal Investment-grade Noninvestment-grade Total
Total %
of IG
December 31, 2018
(in millions, except ratios)		 AAA/Aaa to BBB-/Baa3 BB+/Ba1 & below 
Loans retained$138,458
$196,974
$103,730
$439,162
 $339,729
 $99,433
 $439,162
77%
Derivative receivables   54,213
     54,213
 
Less: Liquid securities and other cash collateral held against derivatives   (15,322)     (15,322) 
Total derivative receivables, net of all collateral11,038
9,169
18,684
38,891
 31,794
 7,097
 38,891
82
Lending-related commitments79,400
294,855
13,558
387,813
 288,724
 99,089
 387,813
74
Subtotal228,896
500,998
135,972
865,866
 660,247
 205,619
 865,866
76
Loans held-for-sale and loans at fair value(a)
   15,028
     15,028
 
Receivables from customers and other   30,063
     30,063
 
Total exposure – net of liquid securities and other cash collateral held against derivatives   $910,957
     $910,957
 
Credit derivatives used in credit portfolio management activities(b)(c)
$(447)$(9,318)$(2,917)$(12,682) $(11,213) $(1,469) $(12,682)88%
 
Maturity profile(d)
 Ratings profile
 Due in 1 year or less
Due after
1 year through
5 years
Due after 5 yearsTotal Investment-grade Noninvestment-grade Total
Total %
of IG
December 31, 2017
(in millions, except ratios)		 AAA/Aaa to BBB-/Baa3 BB+/Ba1 & below 
Loans retained$121,643
$177,033
$104,222
$402,898
 $311,681
 $91,217
 $402,898
77%
Derivative receivables   56,523
     56,523
 
Less: Liquid securities and other cash collateral held against derivatives   (16,108)     (16,108) 
Total derivative receivables, net of all collateral9,882
10,463
20,070
40,415
 32,373
 8,042
 40,415
80
Lending-related commitments80,273
275,317
14,508
370,098
 274,127
 95,971
 370,098
74
Subtotal211,798
462,813
138,800
813,411
 618,181
 195,230
 813,411
76
Loans held-for-sale and loans at fair value(a)
   5,607
     5,607
 
Receivables from customers and other   26,139
     26,139
 
Total exposure – net of liquid securities and other cash collateral held against derivatives   $845,157
     $845,157
 
Credit derivatives used in credit portfolio management activities (b)(c)
$(1,807)$(11,011)$(4,791)$(17,609) $(14,984) $(2,625) $(17,609)85%
(a)Represents loans held-for-sale, primarily related to syndicated loans and loans transferred from the retained portfolio, and loans at fair value.
(b)These derivatives do not qualify for hedge accounting under U.S. GAAP.
(c)The notional amounts are presented on a net basis by underlying reference entity and the ratings profile shown is based on the ratings of the reference entity on which protection has been purchased. Predominantly all of the credit derivatives entered into by the Firm where it has purchased protection used in credit portfolio management activities are executed with investment-grade counterparties.
(d)The maturity profile of retained loans, lending-related commitments and derivative receivables is based on remaining contractual maturity. Derivative contracts that are in a receivable position at December 31, 2018, may become payable prior to maturity based on their cash flow profile or changes in market conditions.


Wholesale credit exposure – industry exposures
The Firm focuses on the management and diversification of its industry exposures, and pays particular attention to industries with actual or potential credit concerns.
Exposures deemed criticized align with the U.S. banking regulators’ definition of criticized exposures, which consist of the special mention, substandard and doubtful

categories. The totalTotal criticized component of the portfolio,exposure excluding loans held-for-sale and loans at fair value, was $12.1$41.6 billion at December 31, 2018,2020, compared with $15.6$15.1 billion at December 31, 2017.2019, representing approximately 4.0% and 1.5% of total wholesale credit exposure, respectively. The decreaseincrease in total criticized exposure was largely driven by downgrades in Consumer & Retail, Oil & Gas including credit quality improvementsand Real Estate due to impacts from the COVID-19 pandemic, and to a lesser extent, net portfolio activity in Technology, Media & Telecommunications. Predominantly all of the portfolio,$41.6 billion was performing and a loan sale in the first quarter of 2018.largely undrawn.









































JPMorgan Chase & Co./20182020 Form 10-K113123
Management’s discussion and analysis



Below are summaries ofThe table below summarizes by industry the Firm’s exposures as of December 31, 20182020 and 2017.2019. The industry of risk category is generally based on the client or counterparty’s primary business activity. ForRefer to Note 4 for additional information on industry concentrations, refer to Note 4.concentrations.
As a result of continued growth and the relative size of the portfolio, exposure to “Individuals,” which was previously disclosed in “All Other,” is now separately disclosed
Wholesale credit exposure – industries(a)
Selected metrics
30 days or more past due and accruing
loans(h)
Net charge-offs/
(recoveries)
Credit derivative hedges(i)
Liquid securities and other cash collateral held against derivative
receivables(k)
Noninvestment-grade
Credit
exposure(f)(g)
Investment-
grade(g)
Noncriticized(g)
Criticized performingCriticized
nonperforming
As of or for the year ended
December 31, 2020
(in millions)
Real Estate$148,498 $116,124 $27,576 $4,294 $504 $374 $94 $(110)$— 
Individuals and Individual Entities(b)
122,870 107,266 14,688 227 689 1,570 (17)— — 
Consumer & Retail108,437 57,580 41,624 8,852 381 203 55 (381)(5)
Technology, Media &
Telecommunications		72,150 36,435 27,770 7,738 207 10 73 (934)(56)
Asset Managers66,573 57,582 8,885 85 21 19 1 — (4,685)
Industrials66,470 37,512 26,881 1,852 225 278 70 (658)(61)
Healthcare60,118 44,901 13,356 1,684 177 96 104 (378)(191)
Banks & Finance Cos54,032 35,115 17,820 1,045 52 20 13 (555)(1,648)
Automotive43,331 25,548 15,575 2,149 59 152 22 (434)— 
Oil & Gas39,159 18,456 14,969 4,952 782 11 249 (238)(4)
State & Municipal Govt(c)
38,286 37,705 574 2 5 41 — — (41)
Utilities30,124 22,451 7,048 571 54 14 (7)(402)(1)
Chemicals & Plastics17,176 10,622 5,703 822 29 6 — (83)— 
Central Govt17,025 16,652 373 — — — — (8,364)(982)
Transportation16,232 7,549 6,340 2,137 206 30 117 (83)(26)
Metals & Mining15,542 5,958 8,699 704 181 8 16 (141)(13)
Insurance13,141 10,177 2,960 3 1 7 — — (1,771)
Securities Firms8,048 6,116 1,927 1 4 — 18 (49)(3,423)
Financial Markets Infrastructure6,515 6,449 66 — — — — — (10)
All other(d)
100,713 84,650 15,185 504 374 83 (9)(9,429)(1,889)
Subtotal$1,044,440 $744,848 $258,019 $37,622 $3,951 $2,922 $799 $(22,239)$(14,806)
Loans held-for-sale and loans at fair value35,111 
Receivables from customers47,710 
Total(e)
$1,127,261 


124JPMorgan Chase & Co./2020 Form 10-K



Selected metrics
30 days or more past due and accruing
loans		Net charge-offs/
(recoveries)
Credit derivative hedges(i)
Liquid securities and other cash collateral held against derivative
receivables(k)
Noninvestment-grade
Credit
exposure(f)(g)
Investment-
grade(g)
Noncriticized(g)
Criticized performingCriticized
nonperforming
As of or for the year ended
December 31, 2019
(in millions)
Real Estate$150,919 $121,625 $27,779 $1,457 $58 $104 $13 $(100)$— 
Individuals and Individual Entities(b)
105,027 93,181 11,617 192 37 388 33 — (287)
Consumer & Retail106,986 58,704 45,806 2,261 215 118 124 (235)(5)
Technology, Media &
Telecommunications		60,033 35,878 21,066 2,953 136 27 27 (658)(13)
Asset Managers54,304 47,569 6,716 6 13 18 — — (4,410)
Industrials62,483 39,434 21,673 1,157 219 172 48 (746)(1)
Healthcare50,824 36,988 12,544 1,141 151 108 14 (405)(144)
Banks & Finance Cos50,786 34,941 15,031 808 6 — — (834)(1,419)
Automotive35,118 24,255 10,246 615 2 8 1 (194)— 
Oil & Gas41,641 22,244 17,823 995 579 — 98 (429)(6)
State & Municipal Govt(c)
30,095 29,586 509 — — 33 7 — (16)
Utilities34,843 22,213 12,316 301 13 2 39 (414)(34)
Chemicals & Plastics17,499 12,033 5,243 221 2 5 — (10)(13)
Central Govt14,865 14,524 341 — — — — (9,018)(850)
Transportation14,497 8,734 5,336 353 74 30 8 (37)(37)
Metals & Mining15,586 7,095 7,789 661 41 2 (1)(33)(2)
Insurance12,348 9,458 2,867 19 4 3 — (36)(1,790)
Securities Firms7,381 6,010 1,344 27 — — — (48)(3,088)
Financial Markets Infrastructure4,121 3,969 152 — — — — — (4)
All other(d)
79,598 73,453 5,722 412 11 4 4 (5,333)(j)(933)
Subtotal$948,954 $701,894 $231,920 $13,579 $1,561 $1,022 $415 $(18,530)$(13,052)
Loans held-for-sale and loans at fair value29,201 
Receivables from customers33,706 
Total(e)
$1,011,861 
(a)The industry rankings presented in the table below as “Individualsof December 31, 2019, are based on the industry rankings of the corresponding exposures at December 31, 2020, not actual rankings of such exposures at December 31, 2019.
(b)Individuals and Individual Entities.” This categoryEntities predominantly consists of Wealth Management clients within AWM and includes exposure to personal investment companies and personal and testamentary trusts. Predominantly all
(c)In addition to the credit risk exposure to states and municipal governments (both U.S. and non-U.S.) at December 31, 2020 and 2019, noted above, the Firm held: $7.2 billion and $6.5 billion, respectively, of thistrading assets; $20.4 billion and $29.8 billion, respectively, of AFS securities; and $12.8 billion and $4.8 billion, respectively, of HTM securities, issued by U.S. state and municipal governments. Refer to Note 2 and Note 10 for further information.
(d)All other includes: SPEs and Private education and civic organizations, representing approximately 92% and 8%, respectively, at December 31, 2020 and 90% and 10%, respectively, at December 31, 2019 .
(e)Excludes cash placed with banks of $516.9 billion and $254.0 billion, at December 31, 2020 and 2019, respectively, which is predominantly placed with various central banks, primarily Federal Reserve Banks.
(f)Credit exposure is secured, largely bynet of risk participations and excludes the benefit of credit derivatives used in credit portfolio management activities held against derivative receivables or loans and liquid securities and other cash and marketable securities. collateral held against derivative receivables.
(g)In the table below, prior periodthird quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans, which resulted in a corresponding reclassification of certain off-balance sheet commitments. Prior-period amounts have been revised to conform with the current period presentation.
(h)Generally excludes loans under payment deferral programs offered in response to the COVID-19 pandemic.
Wholesale credit exposure – industries(a)
     
  Selected metrics
      30 days or more past due and accruing
loans
Net charge-offs/
(recoveries)
Credit derivative hedges(g)
Liquid securities
and other cash collateral held against derivative
receivables
   Noninvestment-grade
 
Credit
exposure(f)
Investment-
grade
NoncriticizedCriticized performing
Criticized
nonperforming
As of or for the year ended
December 31, 2018
(in millions)
Real Estate$143,316
$117,988
$24,174
$1,019
$135
$70
$(20)$(2)$(1)
Individuals and Individual Entities(b)
97,077
86,581
10,164
174
158
703
12
—
(915)
Consumer & Retail94,815
60,678
31,901
2,033
203
43
55
(248)(14)
Technology, Media &
Telecommunications		72,646
46,334
24,081
2,170
61
8
12
(1,011)(12)
Industrials58,528
38,487
18,594
1,311
136
171
20
(207)(29)
Banks & Finance Cos49,920
34,120
15,496
299
5
11
—
(575)(2,290)
Healthcare48,142
36,687
10,625
761
69
23
(5)(150)(133)
Asset Managers42,807
36,722
6,067
4
14
10
—
—
(5,829)
Oil & Gas42,600
23,356
17,451
1,158
635
6
36
(248)—
Utilities28,172
23,558
4,326
138
150
—
38
(142)(60)
State & Municipal Govt(c)
27,351
26,746
603
2
—
18
(1)—
(42)
Central Govt18,456
18,251
124
81
—
4
—
(7,994)(2,130)
Automotive17,339
9,637
7,310
392
—
1
—
(125)—
Chemicals & Plastics16,035
11,490
4,427
118
—
4
—
—
—
Transportation15,660
10,508
4,699
393
60
21
6
(31)(112)
Metals & Mining15,359
8,188
6,767
385
19
1
—
(174)(22)
Insurance12,639
9,777
2,830
—
32
—
—
(36)(2,080)
Financial Markets Infrastructure7,484
6,746
738
—
—
—
—
—
(26)
Securities Firms4,558
3,099
1,459
—
—
—
—
(158)(823)
All other(d)
68,284
64,664
3,606
12
2
2
2
(1,581)(804)
Subtotal$881,188
$673,617
$195,442
$10,450
$1,679
$1,096
$155
$(12,682)$(15,322)
Loans held-for-sale and loans at fair value15,028
        
Receivables from customers and other30,063
        
Total(e)
$926,279
        
(i)Represents the net notional amounts of protection purchased and sold through credit derivatives used to manage the credit exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP. The All other category includes purchased credit protection on certain credit indices.

(j)Prior-period amount has been revised to conform with the current presentation.

(k)In the fourth quarter of 2020, the Firm refined its approach for disclosing additional collateral held by the Firm that may be used as security when the fair value of the client’s exposure is in the Firm’s favor. Prior-period amounts have been revised to conform with the current presentation.
114JPMorgan Chase & Co./20182020 Form 10-K









          
      Selected metrics
      30 days or more past due and accruing
loans
Net charge-offs/
(recoveries)
Credit derivative hedges(g)
Liquid securities
and other cash collateral held against derivative
receivables
   Noninvestment-grade
 
Credit
exposure(f)
Investment-
grade
NoncriticizedCriticized performing
Criticized
nonperforming
As of or for the year ended
December 31, 2017
(in millions)
Real Estate$139,409
$115,401
$23,012
$859
$137
$254
$(4)$—
$(2)
Individuals and Individual Entities(b)
87,371
77,029
10,024
80
238
899
10
—
(762)
Consumer & Retail87,679
55,737
29,619
1,791
532
30
34
(275)(9)
Technology, Media & Telecommunications59,274
36,510
20,453
2,258
53
14
(12)(910)(19)
Industrials55,272
37,198
16,770
1,159
145
150
(1)(196)(21)
Banks & Finance Cos49,037
34,654
13,767
612
4
1
6
(1,216)(3,174)
Healthcare55,997
42,643
12,731
585
38
82
(1)—
(207)
Asset Managers32,531
28,029
4,484
4
14
27
—
—
(5,290)
Oil & Gas41,317
21,430
14,854
4,046
987
22
71
(747)(1)
Utilities29,317
24,486
4,383
227
221
—
11
(160)(56)
State & Municipal Govt(c)
28,633
27,977
656
—
—
12
5
(130)(524)
Central Govt19,182
18,741
376
65
—
4
—
(10,095)(2,520)
Automotive14,820
9,321
5,278
221
—
10
1
(284)—
Chemicals & Plastics15,945
11,107
4,764
74
—
4
—
—
—
Transportation15,797
9,870
5,302
527
98
9
14
(32)(131)
Metals & Mining14,171
6,989
6,822
321
39
3
(13)(316)(1)
Insurance14,089
11,028
2,981
—
80
1
—
(157)(2,195)
Financial Markets Infrastructure5,036
4,775
261
—
—
—
—
—
(23)
Securities Firms4,113
2,559
1,553
1
—
—
—
(274)(335)
All other(d)
60,529
57,081
3,259
180
9
2
(2)(2,817)(838)
Subtotal$829,519
$632,565
$181,349
$13,010
$2,595
$1,524
$119
$(17,609)$(16,108)
Loans held-for-sale and loans at fair value5,607
        
Receivables from customers and other26,139
        
Total(e)
$861,265
        
(a)
The industry rankings presented in the table as of December 31, 2017, are based on the industry rankings of the corresponding exposures at December 31, 2018, not actual rankings of such exposures at December 31, 2017.
(b)Individuals and Individual Entities predominantly consists of Wealth Management clients within AWM and includes exposure to personal investment companies and personal and testamentary trusts.
(c)In addition to the credit risk exposure to states and municipal governments (both U.S. and non-U.S.) at December 31, 2018 and 2017, noted above, the Firm held: $7.8 billion and $9.8 billion, respectively, of trading securities; $37.7 billion and $32.3 billion, respectively, of AFS securities; and $4.8 billion and $14.4 billion, respectively, of held-to-maturity (“HTM”) securities, issued by U.S. state and municipal governments. For further information, refer to Note 2 and Note 10.
(d)All other includes: SPEs and Private education and civic organizations, representing approximately 92% and 8%, respectively, at December 31, 2018 and 90% and 10%, respectively, at December 31, 2017.
(e)Excludes cash placed with banks of $268.1 billion and $421.0 billion, at December 31, 2018 and 2017, respectively, which is predominantly placed with various central banks, primarily Federal Reserve Banks.
(f)Credit exposure is net of risk participations and excludes the benefit of credit derivatives used in credit portfolio management activities held against derivative receivables or loans and liquid securities and other cash collateral held against derivative receivables.
(g)Represents the net notional amounts of protection purchased and sold through credit derivatives used to manage the credit exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP. The All other category includes purchased credit protection on certain credit indices.

JPMorgan Chase & Co./2018 Form 10-K115125
Management’s discussion and analysis



Real Estate
Presented below is additional informationdetail on certain of the Firm’s largest industry exposures and/or certain industries which present potential heightened credit concerns.
Real Estate industry to which the Firm has significant exposure.
Real Estate exposure increased $3.9was $148.5 billion to $143.3as of December 31, 2020, of which $85.6 billion duringwas multifamily lending as shown in the table below. During the year ended December 31, 2018, while 2020, the following changes were primarily driven by impacts from the COVID-19 pandemic:
•the investment-grade portion of the Real Estate portfolio decreased from 81% to 78%.
•the drawn percentage of thethis portfolio remained relatively flat at 82%. For further information on increased from 78% to 80%
•criticized exposure increased by $3.3 billion from $1.5 billion to $4.8 billion

December 31, 2020
(in millions, except ratios)
Loans and Lending-related Commitments(d)
Derivative ReceivablesCredit exposure% Investment-grade
% Drawn(e)
Multifamily(a)
$85,368 $183 $85,551 85 %92 %
Office16,372 475 16,847 76 70 
Other Income Producing Properties(b)
13,435 421 13,856 76 55 
Retail10,573 199 10,772 60 69 
Services and Non Income Producing9,242 22 9,264 62 47 
Industrial9,039 69 9,108 76 73 
Lodging3,084 16 3,100 24 57 
Total Real Estate Exposure(c)
147,113 1,385 148,498 78 80 
December 31, 2019
(in millions, except ratios)
Loans and Lending-related Commitments(d)
Derivative
Receivables		Credit exposure% Investment-
grade
% Drawn(e)
Multifamily(a)
$86,381 $58 $86,439 91 %92 %
Office15,734 231 15,965 80 70 
Other Income Producing Properties(b)
14,372 181 14,553 48 45 
Retail11,347 87 11,434 83 68 
Services and Non Income Producing9,922 19 9,941 57 47 
Industrial8,842 24 8,866 74 75 
Lodging3,702 19 3,721 51 38 
Total Real Estate Exposure150,300 619 150,919 81 78 
(a)Multifamily exposure is largely in California.
(b)Other Income Producing Properties consists of clients with diversified property types or other property types outside of multifamily, office, retail, industrial and lodging with less material exposures.
(c)Real Estate exposure is approximately 80% secured; unsecured exposure is approximately 78% investment-grade.
(d)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans, referwhich resulted in a corresponding reclassification of certain off-balance sheet commitments. Prior-period amounts have been revised to Note 12.conform with the current presentation.
(e)Represents drawn exposure as a percentage of credit exposure.

 December 31, 2018 
(in millions, except ratios)Loans and Lending-related Commitments Derivative Receivables Credit exposure % Investment-grade
% Drawn(c)
Multifamily(a)
$85,683
 $33
 $85,716
 89% 92% 
Other57,469
 131
 57,600
 72
 63
 
Total Real Estate Exposure(b)
143,152
 164
 143,316
 82
 81
 
           
 December 31, 2017 
(in millions, except ratios)Loans and Lending-related Commitments Derivative
Receivables		 Credit exposure % Investment-
grade
% Drawn(c)
Multifamily(a)
$84,635
 $34
 $84,669
 89% 92% 
Other54,620
 120
 54,740
 74
 66
 
Total Real Estate Exposure(b)
139,255
 154
 139,409
 83
 82
 
(a)126Multifamily exposure is largely in California.JPMorgan Chase & Co./2020 Form 10-K

Consumer & Retail
Consumer & Retail exposure was $108.4 billion as of December 31, 2020, and predominantly included Retail, Food and Beverage, and Business and Consumer Services as shown in the table below. During the year ended December 31, 2020, the following changes were primarily driven by impacts from the COVID-19 pandemic:
•the investment-grade portion of the Consumer & Retail portfolio decreased from 55% to 53%
•the drawn percentage of this portfolio increased from 35% to 36%
•criticized exposure increased by $6.7 billion from $2.5 billion to $9.2 billion
December 31, 2020
(in millions, except ratios)Loans and Lending-related CommitmentsDerivative ReceivablesCredit exposure% Investment-grade
% Drawn(d)
Retail(a)
$32,486 $887 $33,373 52 %33 %
Food and Beverage28,012 897 28,909 62 33 
Business and Consumer Services24,760 599 25,359 52 41 
Consumer Hard Goods12,937 178 13,115 59 36 
Leisure(b)
7,440 241 7,681 18 43 
Total Consumer & Retail(c)
105,635 2,802 108,437 53 36 
December 31, 2019
(in millions, except ratios)Loans and Lending-related CommitmentsDerivative
Receivables		Credit exposure% Investment-
grade
% Drawn(d)
Retail(a)
$29,290 $294 $29,584 54 %37 %
Food and Beverage27,956 625 28,581 67 36 
Business and Consumer Services24,242 249 24,491 51 37 
Consumer Hard Goods13,144 109 13,253 65 35 
Leisure(b)
10,930 147 11,077 21 19 
Total Consumer & Retail105,562 1,424 106,986 55 35 
(a)Retail consists of Home Improvement & Specialty Retailers, Restaurants, Supermarkets, Discount & Drug Stores, Specialty Apparel and Department Stores.
(b)Leisure consists of Gaming, Arts & Culture, Travel Services and Sports & Recreation. As of December 31, 2020 approximately 75% of the noninvestment-grade Leisure portfolio is secured.
(c)Approximately 80% of the noninvestment-grade portfolio is secured.
(d)Represents drawn exposure as a percent of credit exposure.
Oil & Gas
Oil & Gas exposure was $39.2 billion as of December 31, 2020, including $19.3 billion of Exploration & Production and Oil field Services as shown in the table below. During the year ended December 31, 2020, the following changes were driven by lower oil prices and impacts from the COVID-19 pandemic:
•the investment-grade portion of the Oil & Gas portfolio decreased from 53% to 47%
•criticized exposure increased by $4.1 billion from $1.6 billion to $5.7 billion
December 31, 2020
(in millions, except ratios)Loans and Lending-related CommitmentsDerivative ReceivablesCredit exposure% Investment-grade
% Drawn(c)
Exploration & Production ("E&P") and Oil field Services$18,228 $1,048 $19,276 32 %37 %
Other Oil & Gas(a)
19,288 595 19,883 62 21 
Total Oil & Gas(b)
37,516 1,643 39,159 47 29 
December 31, 2019
(in millions, except ratios)Loans and Lending-related CommitmentsDerivative
Receivables		Credit exposure% Investment-
grade
% Drawn(c)
Exploration & Production ("E&P") and Oil field Services$22,543 $646 $23,189 38 %38 %
Other Oil & Gas(a)
18,246 206 18,452 73 23 
Total Oil & Gas(b)
40,789 852 41,641 53 31 
(a)Other Oil & Gas includes Integrated Oil & Gas companies, Midstream/Oil Pipeline companies and refineries.
(b)Secured lending was $13.2 billion and $15.7 billion at December 31, 2020 and 2019, respectively, approximately half of which is reserve-based lending to the Exploration & Production sub-sector; unsecured exposure is largely investment-grade.
(c)Represents drawn exposure as a percent of credit exposure.
(b)JPMorgan Chase & Co./2020 Form 10-KReal Estate exposure is predominantly secured; unsecured exposure is predominantly investment-grade.127
(c)Represents drawn exposure as a percentage of credit exposure.
Management’s discussion and analysis

Loans
In the normal course of its wholesale business,businesses, the Firm provides loans to a variety of clients, ranging from large corporate and institutional clients to high-net-worth individuals. ForRefer to Note 12 for a further discussion on loans, including information onabout delinquencies, loan modifications and other credit quality indicators and sales of loans, refer to Note 12.indicators.
The following table presents the change in the nonaccrual loan portfolio for the years ended December 31, 20182020 and 2017.2019. The increase was driven by downgrades across multiple industries on client credit deterioration, with the largest concentration in Real Estate, predominantly within retail and lodging.
Wholesale nonaccrual loan activity
Year ended December 31, (in millions)20202019
Beginning balance$1,271 $1,587 
Additions(a)
6,753 2,552 
Reductions:
Paydowns and other2,290 1,585 
Gross charge-offs922 425 
Returned to performing status569 652 
Sales137 206 
Total reductions3,918 2,868 
Net changes2,835 (316)
Ending balance$4,106 $1,271 
(a)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans. Prior-period amounts have been revised to conform with the current presentation.
Wholesale nonaccrual loan activity
  
Year ended December 31, (in millions) 20182017
Beginning balance $1,734
$2,063
Additions 1,188
1,482
Reductions:   
Paydowns and other 692
1,137
Gross charge-offs 299
200
Returned to performing status 234
189
Sales 327
285
Total reductions 1,552
1,811
Net changes (364)(329)
Ending balance $1,370
$1,734

The following table presents net charge-offs/recoveries, which are defined as gross charge-offs less recoveries, for the years ended December 31, 20182020 and 2017.2019. The amounts in the table below do not include gains or losses from sales of nonaccrual loans.
Wholesale net charge-offs/(recoveries)Wholesale net charge-offs/(recoveries)Wholesale net charge-offs/(recoveries)
Year ended December 31,
(in millions, except ratios)
20182017Year ended December 31,
(in millions, except ratios)		20202019
Loans – reported Loans – reported
Average loans retained$416,828
$392,263
Average loans retained$509,907 $472,628 
Gross charge-offs313
212
Gross charge-offs954 472 
Gross recoveries(158)(93)
Net charge-offs155
119
Net charge-off rate0.04%0.03%
Gross recoveries collectedGross recoveries collected(155)(57)
Net charge-offs/(recoveries)Net charge-offs/(recoveries)799 415 
Net charge-off/(recovery) rateNet charge-off/(recovery) rate0.16 %0.09 %

116128JPMorgan Chase & Co./20182020 Form 10-K


Lending-related commitments
The Firm uses lending-related financial instruments, such as commitments (including revolving credit facilities) and guarantees, to address the financing needs of its clients. The contractual amounts of these financial instruments represent the maximum possible credit risk should the clients draw down on these commitments or when the Firm fulfillfulfills its obligations under these guarantees, and the clients subsequently fail to perform according to the terms of these contracts. Most of these commitments and guarantees arehave historically been refinanced, extended, cancelled, or expireexpired without being drawn upon or a default occurring. InAs a result, the Firm’s view,Firm does not believe that the total contractual amount of these wholesale lending-related commitments is not representative of the Firm’s expected future credit exposure or funding requirements. ForRefer to Note 28 for further information on wholesale lending-related commitments, refercommitments.
Receivables from Customers
Receivables from customers reflect held-for-investment margin loans to Note 27.brokerage clients in CIB, CCB and AWM that are collateralized by assets maintained in the clients’ brokerage accounts (e.g., cash on deposit, liquid and readily marketable debt or equity securities). Because of this collateralization, no allowance for credit losses is generally held against these receivables. To manage its credit risk the Firm establishes margin requirements and monitors the required margin levels on an ongoing basis, and requires clients to deposit additional cash or other collateral, or to reduce positions, when appropriate. These receivables are reported within accrued interest and accounts receivable on the Firm’s Consolidated balance sheets.
Clearing services
The Firm provides clearing services for clients entering into certain securities and derivative contracts. Through the provision of these services the Firm is exposed to the risk of non-performance by its clients and may be required to share in losses incurred by CCPs. Where possible, the Firm seeks to mitigate its credit risk to its clients through the collection of adequate margin at inception and throughout the life of the transactions and can also cease the provision of clearing services if clients do not adhere to their obligations under the clearing agreement. ForRefer to Note 28 for a further discussion of clearing services, refer to Note 27.

services.
Derivative contracts
Derivatives enable clients and counterparties to manage risks including credit risk and risks arising from fluctuations in interest rates, foreign exchange, equities, and commodities. The Firm makes markets in derivatives in order to meet these needs and uses derivatives to manage certain risks associated with net open risk positions from its market-making activities, including the counterparty credit risk arising from derivative receivables. The Firm also uses derivative instruments to manage its own credit risk and other market risk exposure. The nature of the counterparty and the settlement mechanism of the derivative affect the credit risk to which the Firm is exposed. For OTC derivatives the Firm is exposed to
the credit risk of the derivative counterparty. For exchange-traded derivatives (“ETD”), such as futures and options, and “cleared”cleared over-the-counter (“OTC-cleared”) derivatives, the Firm is generallycan also be exposed to the credit risk of the relevant CCP. Where possible, the Firm seeks to mitigate its credit risk exposures arising from derivative contracts through the use of legally enforceable master netting arrangements and collateral agreements. ForThe percentage of the Firm’s over-the-counter derivative transactions subject to collateral agreements — excluding foreign exchange spot trades, which are not typically covered by collateral agreements due to their short maturity and centrally cleared trades that are settled daily — was approximately 88% and 90% at December 31, 2020 and 2019, respectively. Refer to Note 5 for additional information on the Firm’s use of collateral agreements. Refer to Note 5 for a further discussion of derivative contracts, counterparties and settlement types, refer to Note 5.types.
The following table summarizes the net derivative receivables for the periods presented.


Derivative receivables  
December 31, (in millions)20182017
Total, net of cash collateral$54,213
$56,523
Liquid securities and other cash collateral held against derivative receivables(a)
(15,322)(16,108)
Total, net of all collateral$38,891
$40,415
(a)Includes collateral related to derivative instruments where appropriate legal opinions have not been either sought or obtained with respect to master netting agreements.
The fair value of derivative receivables reported on the Consolidated balance sheets were $54.2$79.6 billion and $56.5$49.8 billion at December 31, 20182020 and 2017, respectively.
2019, respectively, with increases in CIB resulting from market movements. Derivative receivables represent the fair value of the derivative contracts after giving effect to legally enforceable master netting agreements and the related cash collateral held by the Firm. However,In addition, the Firm held liquid securities and other cash collateral that the Firm believes is legally enforceable and may be used as security when the fair value of the client’s exposure is in the Firm’s favor. Liquid securities represents high quality liquid assets as defined in the LCR rule. In management’s view, the appropriate measure of current credit risk should also take into consideration additionalother collateral, which generally represents securities that do not qualify as high quality liquid securities (primarily U.S. governmentassets under the LCR rule, but that the Firm believes is legally enforceable. The collateral amounts for each counterparty are limited to the net derivative receivables for the counterparty. The following tables summarize the net derivative receivables and agency securities and other groupthe internal ratings profile for the periods presented.
Derivative receivables
December 31, (in millions)20202019
Total, net of cash collateral$79,630 $49,766 
Liquid securities and other cash collateral held against derivative receivables(a)
(14,806)(13,052)
Total, net of liquid securities and other cash collateral$64,824 $36,714 
Other collateral
held against derivative receivables(a)
(6,022)(1,837)
Total, net of collateral$58,802 $34,877 
(a)In the fourth quarter of seven nations (“G7”) government securities) and other cash2020, the Firm refined its approach for disclosing additional collateral held by the Firm aggregating $15.3 billion and $16.1 billion at December 31, 2018 and 2017, respectively, that may be used as security when the fair value of the client’s exposure is in the Firm’s favor. Prior-period amounts have been revised to conform with the current presentation.


JPMorgan Chase & Co./2020 Form 10-K129
Management’s discussion and analysis

Ratings profile of derivative receivables
2020(a)
2019(a)
December 31,
(in millions, except ratios)		Exposure net of collateral% of exposure net
of collateral		Exposure net of collateral% of exposure net
of collateral
Investment-grade$37,013 63 %$27,851 80 %
Noninvestment-grade21,789 37 7,026 20 
Total$58,802 100 %$34,877 100 %
(a)In addition to the fourth quarter of 2020, the Firm refined its approach for disclosing additional collateral describedheld by the Firm that may be used as security when the fair value of the client’s exposure is in the preceding paragraph,Firm’s favor. Prior-period amounts have been revised to conform with the current presentation.
The Firm also holds additional collateral (primarily cash, G7 government securities, other liquid government-agencygovernment agency and guaranteed securities, and corporate debt and equity securities) delivered by clients at the initiation of transactions, as well as collateral related to contracts that have a non-daily call frequency and collateral that the Firm has agreed to return but has not yet settled as of the reporting date. Although this collateral does not reduce the balances and is not included in the table above, it is available as security against potential exposure that could arise should the fair value of the client’s derivative contracts move in the Firm’s favor. The derivative receivables fair value, net of all collateral, also does not include other credit enhancements, such as letters of credit. ForRefer to Note 5 for additional information on the Firm’s use of collateral agreements, refer to Note 5.agreements.
While useful as a current view of credit exposure, the net fair value of the derivative receivables does not capture the potential future variability of that credit exposure. To capture the potential future variability of credit exposure, the Firm calculates, on a client-by-client basis, three measures of potential derivatives-related credit loss: Peak, Derivative Risk Equivalent (“DRE”), and Average exposure (“AVG”). These measures all incorporate netting and collateral benefits, where applicable.
Peak represents a conservative measure of potential derivative exposure, including the benefit of collateral, to a counterparty calculated in a manner that is broadly equivalent to a 97.5% confidence level over the life of the transaction. Peak is the primary measure used by the Firm for setting of credit limits for derivative contracts, senior management reporting and derivatives exposure management.
DRE exposure is a measure that expresses the risk of derivative exposure, including the benefit of collateral, on a basis intended to be

JPMorgan Chase & Co./2018 Form 10-K117
Management’s discussion and analysis

equivalent to the risk of loan exposures. DRE is a less extreme measure of potential credit loss than Peak and is used as an input for aggregating derivative credit risk exposures with loans and other credit risk.
Finally, AVG is a measure of the expected fair value of the Firm’s derivative receivables at future time periods,exposure, including the benefit of collateral.collateral, at future time periods. AVG over the total life of the derivative contract is used as the primary metric for pricing purposes and is used to calculate credit risk capital and the CVA, as further described below.
The fair value of the Firm’s derivative receivables incorporates CVA to reflect the credit quality of counterparties. CVA is based on the Firm’s AVG to a counterparty and the counterparty’s credit spread in the credit derivatives market. The Firm believes that active risk management is essential to controlling the dynamic credit risk in the derivatives portfolio. In addition, the Firm’s risk management process takes into consideration the potential impact of wrong-way risk, which is broadly defined as the potential for increased correlation between the Firm’srisk that exposure to a counterparty (AVG) andis positively correlated with the impact of a default by the same counterparty, which could cause exposure to increase at the same time as the counterparty’s credit quality.capacity to meet its obligations is decreasing. Many factors may influence the nature and magnitude of these correlations over time. To the extent that these correlations are identified, the Firm may adjust the CVA associated with thata particular counterparty’s AVG. The Firm risk manages exposure to changes in CVA by entering into
credit derivative contracts, as well as interest rate, foreign exchange, equity and commodity derivative contracts.
The accompanyingbelow graph shows exposure profiles to the Firm’s current derivatives portfolio over the next 10 years as calculated by the Peak, DRE and AVG metrics. The three measures generally show that exposure will decline after the first year, if no new trades are added to the portfolio.
Exposure profile of derivatives measures
December 31, 20182020
(in billions)
chart-891a3061ddb4599a9f2.jpgjpm-20201231_g6.jpg

The following table summarizes the ratings profile of the Firm’s derivative receivables, including credit derivatives, net of all collateral, at the dates indicated. The ratings scale is based on the Firm’s internal ratings, which generally correspond to the ratings as assigned by S&P and Moody’s.
Ratings profile of derivative receivables     
Rating equivalent2018 2017
December 31,
(in millions, except ratios)
Exposure net of all collateral
% of exposure net
of all collateral
 Exposure net of all collateral
% of exposure net
of all collateral
AAA/Aaa to AA-/Aa3$11,831
31% $11,529
29%
A+/A1 to A-/A37,428
19
 6,919
17
BBB+/Baa1 to BBB-/Baa312,536
32
 13,925
34
BB+/Ba1 to B-/B36,373
16
 7,397
18
CCC+/Caa1 and below723
2
 645
2
Total$38,891
100% $40,415
100%

As previously noted, the Firm uses collateral agreements to mitigate counterparty credit risk. The percentage of the Firm’s over-the-counter derivative transactions subject to collateral agreements — excluding foreign exchange spot trades, which are not typically covered by collateral agreements due to their short maturity and centrally cleared trades that are settled daily — was approximately 90% at both December 31, 2018, and December 31, 2017.



118130JPMorgan Chase & Co./20182020 Form 10-K


Credit derivatives
The Firm uses credit derivatives for two primary purposes: first, in its capacity as a market-maker, and second, as an end-user, to manage the Firm’s own credit risk associated with various exposures. For a detailed description of credit derivatives, refer to Credit derivatives in Note 5.
Credit portfolio management activities
Included in the Firm’s end-user activities are credit derivatives used to mitigate the credit risk associated with traditional lending activities (loans and unfundedlending-related commitments) and derivatives counterparty exposure in the Firm’s wholesale businesses (collectively, “credit portfolio management” activities)management activities”). Information on credit portfolio management activities is provided in the table below. For further information on derivatives used in credit portfolio management activities, refer to Credit derivatives in Note 5.
The Firm also uses credit derivatives as an end-user to manage other exposures, including credit risk arising from certain securities held in the Firm’s market-making businesses. These credit derivatives are not included in credit portfolio management activities; for further information on these credit derivatives as well as credit derivatives used inactivities.

























Credit derivatives used in credit portfolio management activities
Notional amount of protection
purchased and sold(b)
December 31, (in millions)20202019
Credit derivatives used to manage:
Loans and lending-related commitments$3,877 $2,047 
Derivative receivables (a)
18,362 16,483 
Credit derivatives used in credit portfolio management activities$22,239 $18,530 
(a)Prior-period amount has been revised to conform with the current presentation.
(b)Amounts are presented net, considering the Firm’s capacity as a market-maker in credit derivatives, refernet protection purchased or sold with respect to Credit derivatives in Note 5.each underlying reference entity or index.
Credit derivatives used in credit portfolio management activities
 
Notional amount of protection
purchased and sold (a)
December 31, (in millions)20182017
Credit derivatives used to manage:   
Loans and lending-related commitments$1,272
 $1,867
Derivative receivables11,410
 15,742
Credit derivatives used in credit portfolio management activities$12,682
 $17,609
(a)Amounts are presented net, considering the Firm’s net protection purchased or sold with respect to each underlying reference entity or index.
The credit derivatives used in credit portfolio management activities do not qualify for hedge accounting under U.S. GAAP; these derivatives are reported at fair value, with gains and losses recognized in principal transactions revenue. In contrast, the loans and lending-related commitments being risk-managed are accounted for on an accrual basis. This asymmetry in accounting treatment, between loans and lending-related commitments and the credit derivatives used in credit portfolio management activities, causes earnings volatility that is not representative, in the Firm’s view, of the true changes in value of the Firm’s overall credit exposure.
The effectiveness of credit default swaps (“CDS”) as a hedge against the Firm’s exposures may vary depending on a number of factors, including the named reference entity (i.e., the Firm may experience losses on specific exposures that are different than the named reference entities in the purchased CDS); the contractual terms of the CDS (which may have a defined credit event that does not align with an actual loss realized by the Firm); and the maturity of the Firm’s CDS protection (which in some cases may be shorter than the Firm’s exposures). However, the Firm generally seeks to purchase credit protection with a maturity date that is the same or similar to the maturity date of the exposure for which the protection was purchased, and remaining differences in maturity are actively monitored and managed by the Firm. Refer to Credit derivatives in Note 5 for a detailed description of credit derivatives.

JPMorgan Chase & Co./2018 Form 10-K119
Management’s discussion and analysis

JPMorgan Chase & Co./2020 Form 10-K131
Management’s discussion and analysis

ALLOWANCE FOR CREDIT LOSSES
Effective January 1, 2020, the Firm adopted the CECL accounting guidance. The adoption of this guidance established a single allowance framework for all financial assets measured at amortized cost and certain off-balance sheet credit exposures. This framework requires that management’s estimate reflects credit losses over the instrument’s remaining expected life and considers expected future changes in macroeconomic conditions. Refer to Note 1 for further information.
The Firm’s allowance for credit losses comprises:
•the allowance for loan losses, which covers the Firm’s retained consumer and wholesale loan portfolios as well as the Firm’s wholesale(scored and certain consumer lending-related commitments.
For further informationrisk-rated) and is presented separately on the components of Consolidated balance sheets,
•the allowance for lending-related commitments, which is presented on the Consolidated balance sheets in accounts payable and other liabilities, and
•the allowance for credit losses on investment securities, which covers the Firm’s HTM and AFS securities and is recognized within Investment Securities on the Consolidated balance sheets.
The allowance for credit losses increased compared with December 31, 2019, primarily reflecting the deterioration and uncertainty in the macroeconomic environment, in particular in the first half of 2020, as a result of the impact of the COVID-19 pandemic, consisting of:
•a net $7.4 billion addition in consumer, predominantly in the credit card portfolio, and
•a net $4.7 billion addition in wholesale, across the LOBs, impacting multiple industries.
The adoption of CECL on January 1, 2020, resulted in a $4.3 billion addition to the allowance for credit losses.
Discussion of changes in the allowance during 2020
The increase in the allowance for loan losses and lending-related commitments was primarily driven by an increase in the provision for credit losses, reflecting the deterioration in and uncertainty around the future macroeconomic environment as a result of the impact of the COVID-19 pandemic.
As of December 31, 2020, the Firm’s central case reflected U.S. unemployment rates of approximately 7% through the second quarter of 2021 and remaining above 5% until the second half of 2022. This compared with relatively low levels of unemployment of approximately 4% throughout 2020 and 2021 in the Firm’s January 1, 2020 central case.
Further, while the Firm’s January 1, 2020 central case U.S. GDP forecast reflected a 1.7% expansion in 2020, actual U.S. GDP contracted approximately 2.5% in 2020. As of December 31, 2020, the Firm’s central case assumptions reflect a return to pre-pandemic GDP levels in the fourth quarter of 2021.
Due to elevated uncertainty in the near term outlook, driven by the potential for increased infection rates and related managementlock downs resulting from the pandemic, as well as the
prospect that government and other consumer relief measures set to expire may not be extended, the Firm has placed significant weighting on its adverse scenarios. These scenarios incorporate more punitive macroeconomic factors than the central case assumptions, resulting in weighted average U.S. unemployment rates remaining elevated throughout 2021 and 2022, ending the fourth quarter of 2022 at approximately 6%, and in U.S. GDP ending 2022 approximately 0.9% higher than fourth quarter 2019 actual pre-pandemic levels.
The Firm’s central case assumptions reflected U.S. unemployment rates and U.S. real GDP as follows:
Assumptions at January 1, 2020
2Q20
4Q20(b)
2Q21
U.S. unemployment rate(a)
3.7 %3.8 %4.0 %
Cumulative change in U.S. real GDP from 12/31/20190.9 %1.7 %2.4 %
Assumptions at December 31, 2020
2Q214Q212Q22
U.S. unemployment rate(a)
6.8 %5.7 %5.1 %
Cumulative change in U.S. real GDP from 12/31/2019(1.9)%0.6 %2.0 %
(a)Reflects quarterly average of forecasted U.S. unemployment rate.
(b)4Q20 actual U.S. unemployment rate (quarterly average) was 6.8%. 4Q20 actual cumulative change in U.S. real GDP from 4Q19 was (2.5%).
Subsequent changes to this forecast and related estimates
will be reflected in the provision for credit losses in future
periods. Refer to Note 13 and Note 10 for a description of the policies, methodologies and judgments referused to determine the Firm’s allowances for credit losses on loans, lending-related commitments, and investment securities.
Refer to Critical Accounting Estimates Used by the Firm on pages 141-143 and Note 13.
At least quarterly,152-155 for further information on the allowance for credit losses is reviewed by the CRO, the CFO and the Controller of the Firm. As of December 31, 2018, JPMorgan Chase deemed the allowancerelated management judgments.
Refer to Consumer Credit Portfolio on pages 114-120, Wholesale Credit Portfolio on pages 121-131 and Note 12 for credit losses to be appropriate and sufficient to absorb probable credit losses inherent in the portfolio.
The allowance for credit losses decreased compared with December 31, 2017 driven by:
a reduction in the consumer allowance due to a $250 million reduction in the CCB allowance for loan losses in the residential real estate PCI portfolio, reflecting continued improvement in home prices and lower delinquencies, as well as a $187 million reduction in the allowance for write-offs of PCI loans partially due to loan sales. These reductions were largely offset by a $300 million addition to the allowance in the credit card portfolio, due to loan growth and higher loss rates, as anticipated.
For additional information on the consumer and wholesale credit portfolios, refer to Consumer Credit Portfolio on pages 106–111, Wholesale Credit Portfolio on pages 112–119 and Note 12.portfolios.

120JPMorgan Chase & Co./2018 Form 10-K


Summary of changes in the allowance for credit losses     
 2018 2017
Year ended December 31,
Consumer, excluding
credit card
Credit cardWholesaleTotal 
Consumer, excluding
credit card
Credit cardWholesaleTotal
(in millions, except ratios)
Allowance for loan losses         
Beginning balance at January 1,$4,579
$4,884
$4,141
$13,604
 $5,198
$4,034
$4,544
$13,776
Gross charge-offs1,025
5,011
313
6,349
 1,779
4,521
212
6,512
Gross recoveries(842)(493)(158)(1,493) (634)(398)(93)(1,125)
Net charge-offs(a)
183
4,518
155
4,856
 1,145
4,123
119
5,387
Write-offs of PCI loans(b)
187
—
—
187
 86
—
—
86
Provision for loan losses(63)4,818
130
4,885
 613
4,973
(286)5,300
Other—
—
(1)(1) (1)—
2
1
Ending balance at December 31,$4,146
$5,184
$4,115
$13,445
 $4,579
$4,884
$4,141
$13,604
Impairment methodology         
Asset-specific(c)
$196
$440
$297
$933
 $246
$383
$461
$1,090
Formula-based2,162
4,744
3,818
10,724
 2,108
4,501
3,680
10,289
PCI1,788
—
—
1,788
 2,225
—
—
2,225
Total allowance for loan losses$4,146
$5,184
$4,115
$13,445
 $4,579
$4,884
$4,141
$13,604
Allowance for lending-related commitments         
Beginning balance at January 1,$33
$—
$1,035
$1,068
 $26
$—
$1,052
$1,078
Provision for lending-related commitments—
—
(14)(14) 7
—
(17)(10)
Other—
—
1
1
 —
—
—
—
Ending balance at December 31,$33
$—
$1,022
$1,055
 $33
$—
$1,035
$1,068
Impairment methodology         
Asset-specific$—
$—
$99
$99
 $—
$—
$187
$187
Formula-based33
—
923
956
 33
—
848
881
Total allowance for lending-related commitments(d)
$33
$—
$1,022
$1,055
 $33
$—
$1,035
$1,068
Total allowance for credit losses$4,179
$5,184
$5,137
$14,500
 $4,612
$4,884
$5,176
$14,672
Memo:         
Retained loans, end of period$373,637
$156,616
$439,162
$969,415
 $372,553
$149,387
$402,898
$924,838
Retained loans, average374,395
145,606
416,828
936,829
 366,798
139,918
392,263
898,979
PCI loans, end of period24,034
—
3
24,037
 30,576
—
3
30,579
Credit ratios         
Allowance for loan losses to retained loans1.11%3.31%0.94%1.39% 1.23%3.27%1.03%1.47%
Allowance for loan losses to retained nonaccrual loans(e)
120
NM358
292
 109
NM239
229
Allowance for loan losses to retained nonaccrual loans excluding credit card120
NM358
179
 109
NM239
147
Net charge-off rates(a)
0.05
3.10
0.04
0.52
 0.31
2.95
0.03
0.60
Credit ratios, excluding residential real estate PCI loans         
Allowance for loan losses to
retained loans		0.67
3.31
0.94
1.23
 0.69
3.27
1.03
1.27
Allowance for loan losses to retained
nonaccrual loans(e)
68
NM358
253
 56
NM239
191
Allowance for loan losses to retained nonaccrual
 loans excluding credit card
68
NM358
140
 56
NM239
109
Net charge-off rates(a)
0.05%3.10%0.04%0.53% 0.34%2.95%0.03%0.62%
Note:In the table above, the financial measures which exclude the impact of PCI loans are non-GAAP financial measures.
(a)For the year ended December 31, 2017, excluding net charge-offs of $467 million related to the student loan portfolio transfer, the net charge-off rate for Consumer, excluding credit card would have been 0.18%; total Firm would have been 0.55%; Consumer, excluding credit card and PCI loans would have been 0.20%; and total Firm, excluding PCI would have been 0.57%.
(b)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.
(c)Includes risk-rated loans that have been placed on nonaccrual status and loans that have been modified in a TDR. The asset-specific credit card allowance for loan losses modified in a TDR is calculated based on the loans’ original contractual interest rates and does not consider any incremental penalty rates.
(d)The allowance for lending-related commitments is reported in accounts payable and other liabilities on the Consolidated balance sheets.
(e)The Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance.


JPMorgan Chase & Co./2018 Form 10-K121
Management’s discussion and analysis

Provision for credit losses
The following table presents the components of the Firm’s provision for credit losses:
Year ended December 31,
(in millions)
Provision for loan losses 
Provision for
lending-related commitments
 Total provision for credit losses
2018
2017
2016 2018
2017
2016
 2018
2017
2016
Consumer, excluding credit card$(63)$613
$467
 $—
$7
$—
 $(63)$620
$467
Credit card4,818
4,973
4,042
 —
—
—
 4,818
4,973
4,042
Total consumer4,755
5,586
4,509
 —
7
—
 4,755
5,593
4,509
Wholesale130
(286)571
 (14)(17)281
 116
(303)852
Total$4,885
$5,300
$5,080
 $(14)$(10)$281
 $4,871
$5,290
$5,361
Provision for credit losses
The for the year ended December 31, 2018 as a result of a decline in the consumer provision, partially offset by an increase in the wholesale provision provision for credit losses for the year ended December 31, 2018 as a result of a decline in the consumer provision, partially offset by an increase in the wholesale provision for the year ended December 31, 2018 as a result of a decline in the consumer provision, partially offset by an increase in the wholesale provision decreased for the year ended December 31, 2018 as a result of a decline in the consumer provision, partially offset by an increase in the wholesale provision
•
the decrease in the consumer, excluding credit card portfolio in CCB was due to
–lower net charge-offs in the residential real estate portfolio, largely driven by recoveries from loan sales, and
–lower net charge-offs in the auto portfolio
partially offset by
–a $250 million reduction in the allowance for loan losses in the residential real estate portfolio — PCI, reflecting continued improvement in home prices and lower delinquencies; the reduction was $75 million lower than the prior year for the residential real estate portfolio — non credit-impaired
•
the prior year also included a net $218 million write-down recorded in connection with the sale of the student loan portfolio, and
•
the decrease in the credit card portfolio was due to
–a $300 million addition to the allowance for loan losses, reflecting loan growth and higher loss rates, as anticipated; the addition was $550 million lower than the prior year,
largely offset by
–higher net charge-offs due to seasoning of more recent vintages, as anticipated, and
•
in wholesale, the current period expense of $116 million reflected additions to the allowance for loan losses from select client downgrades,
largely offset by
–other net portfolio activity, including a reduction in the allowance for loan losses related to a single name in the Oil & Gas portfolio in the first quarter of 2018, compared to a net benefit of $303 million in the prior year. The prior year benefit reflected a reduction in the allowance for loan losses on credit quality improvements in the Oil & Gas, Natural Gas Pipelines, and Metals and Mining portfolios.








122JPMorgan Chase & Co./2018 Form 10-K


132JPMorgan Chase & Co./2020 Form 10-K

The adoption of the CECL accounting guidance resulted in a change in the accounting for PCI loans, which are considered PCD loans under CECL. In conjunction with the adoption of CECL, the Firm reclassified risk-rated loans and lending-related commitments from the consumer, excluding credit card portfolio segment to the wholesale portfolio segment, to align with the methodology applied when determining the allowance. Prior-period amounts have been revised to conform with the current presentation. Refer to Note 1 for further information.
Allowance for credit losses and related information
2020(d)
2019
Year ended December 31,Consumer, excluding
credit card		Credit cardWholesaleTotalConsumer, excluding
credit card		Credit cardWholesaleTotal
(in millions, except ratios)
Allowance for loan losses
Beginning balance at January 1,$2,538 $5,683 $4,902 $13,123 $3,434 $5,184 $4,827 $13,445 
Cumulative effect of a change in accounting principle297 5,517 (1,642)4,172 NANANANA
Gross charge-offs805 5,077 954 6,836 902 5,436 472 6,810 
Gross recoveries collected(631)(791)(155)(1,577)(536)(588)(57)(1,181)
Net charge-offs174 4,286 799 5,259 366 4,848 415 5,629 
Write-offs of PCI loans(a)
NANANANA151 — — 151 
Provision for loan losses974 10,886 4,431 16,291 (378)5,348 479 5,449 
Other1 — — 1 (1)(1)11 9 
Ending balance at December 31,$3,636 $17,800 $6,892 $28,328 $2,538 $5,683 $4,902 $13,123 
Allowance for lending-related commitments
Beginning balance at January 1,$12 $— $1,179 $1,191 $12 $— $1,043 $1,055 
Cumulative effect of a change in accounting principle133 — (35)98 NANANANA
Provision for lending-related commitments42 — 1,079 1,121 — — 136 136 
Other— — (1)(1)— — — — 
Ending balance at December 31,$187 $— $2,222 $2,409 $12 $— $1,179 $1,191 
Impairment methodology
Asset-specific(b)
$(7)$633 $682 $1,308 $75 $477 $295 $847 
Portfolio-based3,643 17,167 6,210 27,020 1,476 5,206 4,607 11,289 
PCINANANANA987 — — 987 
Total allowance for loan losses$3,636 $17,800 $6,892 $28,328 $2,538 $5,683 $4,902 $13,123 
Impairment methodology
Asset-specific$— $— $114 $114 $— $— $102 $102 
Portfolio-based187 — 2,108 2,295 12 — 1,077 1,089 
Total allowance for lending-related commitments$187 $— $2,222 $2,409 $12 $— $1,179 $1,191 
Total allowance for credit losses$3,823 $17,800 $9,114 $30,737 $2,550 $5,683 $6,081 $14,314 
Memo:
Retained loans, end of period$302,127 $143,432 $514,947 $960,506 $294,999 $168,924 $481,678 $945,601 
Retained loans, average302,005 146,391 509,907 958,303 312,972 156,319 472,628 941,919 
Credit ratios
Allowance for loan losses to retained loans1.20 %12.41 %1.34 %2.95 %0.86 %3.36 %1.02 %1.39 %
Allowance for loan losses to retained nonaccrual loans(c)
67 NM208 323 87 NM464 329 
Allowance for loan losses to retained nonaccrual loans excluding credit card67 NM208 120 87 NM464 187 
Net charge-off rates0.06 2.93 0.16 0.55 0.12 3.10 0.09 0.60 
(a)Prior to the adoption of CECL, write-offs of PCI loans were recorded against the allowance for loan losses when actual losses for a pool exceeded estimated losses that were recorded as purchase accounting adjustments at the time of acquisition. A write-off of a PCI loan was recognized when the underlying loan was removed from a pool.
(b)Includes modified PCD loans and loans that have been modified or are reasonably expected to be modified in a TDR. Also includes risk-rated loans that have been placed on nonaccrual status for the wholesale portfolio segment. The asset-specific credit card allowance for loan losses modified or reasonably expected to be modified in a TDR is calculated based on the loans’ original contractual interest rates and does not consider any incremental penalty rates.
(c)The Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance.
(d)Excludes HTM securities, which had an allowance for credit losses of $78 million and a provision for credit losses of $68 million as of and for the year ended December 31, 2020.
JPMorgan Chase & Co./2020 Form 10-K133
Management’s discussion and analysis

INVESTMENT PORTFOLIO RISK MANAGEMENT
Investment portfolio risk is the risk associated with the loss of principal or a reduction in expected returns on investments arising from the investment securities portfolio or from principal investments. The investment securities portfolio is predominantly held predominantly by Treasury and CIO in connection with the Firm’sFirm's balance sheet or asset-liability management objectives or from principalobjectives. Principal investments are predominantly privately-held non-traded financial instruments and are managed in variousthe LOBs and Corporate in predominantly privately-held financial instruments.Corporate. Investments are typically intended to be held over extended periods and, accordingly, the Firm has no expectation for short-term realized gains with respect to these investments.
Investment securities risk
Investment securities risk includes the exposure associated with a default in the payment of principal and interest. This risk is minimizedmitigated given that the investment securities portfolio held by Treasury and CIO substantially investis predominantly invested in high-quality securities. At December 31, 2018,2020, the Treasury and CIO investment securities portfolio, net of allowance for credit losses, was $260.1$587.9 billion, and the average credit rating of the securities comprising the portfolio was AA+ (based upon external ratings where available and where not available, based primarily upon internal ratings that correspondrisk ratings). Refer to ratings as defined by S&PCorporate segment results on pages 83–84 and Moody’s). ForNote 10 for further information on the investment securities portfolio referand internal risk ratings. Refer to Corporate segment resultsMarket Risk Management on pages 77–78 and Note 10. For135–142 for further information on the market risk inherent in the portfolio, referportfolio. Refer to MarketLiquidity Risk Management on pages 124–131. For102–108 for further information on related liquidity risk, refer to Liquidity Risk on pages 95–100.risk.
Governance and oversight
Investment securities risks are governed by the Firm’s Risk Appetite framework, and discussedreviewed at the CIO, Treasury and Corporate (CTC)CTC Risk Committee with regular updates to the DRPC.Board Risk Committee.
The Firm’s independent control functions are responsible for reviewing the appropriateness of the carrying value of investment securities in accordance with relevant policies. Approved levels for investment securities are established for each risk category, including capital and credit risks.
Principal investment risk
Principal investments are typically privateprivately held non-traded financial instruments representing ownership or other forms of junior capital. Principal investments covercapital and span multiple asset classes andclasses. These investments are made either in stand-aloneby dedicated investing businesses or as part of a broader business platform.strategy. In general, new principal investments include tax-oriented investments as well asand investments made to enhance or accelerate LOBthe Firm’s business strategies. The Firm’s investments will continue to evolve in line with its strategies, including the Firm’s commitment to support underserved communities and Corporate strategic business initiatives.minority-owned businesses. The Firm’s principal investments are managed by the various LOBs and Corporate and are reflected within their respective financial results. Effective January 1, 2018, the Firm adopted new accounting guidance related to the recognition and measurementThe aggregate carrying values of financial assets, which requires fair value adjustments upon observable price changes to certain equity investments previously held at cost in the principal investment portfolios. For additional information, referportfolios have not been significantly affected by recent market events as a result of the COVID-19 pandemic. However, the duration and severity of adverse macroeconomic conditions could subject certain principal investments to Notes 1 and 2.impairments, write-downs, or other negative impacts.
As of December 31, 20182020 and 2017,2019, the aggregate carrying values of the principal investment portfolios were $22.2$27.5 billion and $19.5$24.2 billion, respectively, which included tax-oriented investments (e.g., alternative energy and affordable housing and alternative energy investments) of $16.6$21.3 billion and $14.0$18.2 billion, respectively, and private equity, various debt and equity instruments, and real assets of $5.6$6.2 billion and $5.5$6.0 billion, respectively.
Governance and oversight
The Firm’s approach to managing principal risk is consistent with the Firm’s general risk governance structure. A Firmwide risk policy framework exists for all principal investing activities. All investments are approvedactivities and includes approval by investment committees that include executives who are independent from the investing businesses.businesses, as appropriate.
The Firm’s independent control functions are responsible for reviewing the appropriateness of the carrying value of investments in accordance with relevant policies. As part of the risk governance structure, approved levels for investments are established and monitored for each relevant business or segment in order to manage the overall size of the portfolios. The Firm also conducts stress testing on these portfolios using specific scenarios that estimate losses based on significant market moves and/or other risk events.


JPMorgan Chase & Co./2018 Form 10-K123
Management’s discussion and analysis

134JPMorgan Chase & Co./2020 Form 10-K

MARKET RISK MANAGEMENT
Market risk is the risk associated with the effect of changes in market factors, such as interest and foreign exchange rates, equity and commodity prices, credit spreads or implied volatilities, on the value of assets and liabilities held for both the short and long term.
Market Risk Management
Market Risk Management monitors market risks throughout the Firm and defines market risk policies and procedures. The Market Risk Management function reports to the Firm’s CRO.
Market Risk Management seeks to manage risk, facilitate efficient risk/return decisions, reduce volatility in operating performance and provide transparency into the Firm’s market risk profile for senior management, the Board of Directors and regulators. Market Risk Management is responsible for the following functions:
Establishment of•Maintaining a market risk policy framework
Independent measurement,•Independently measuring, monitoring and control of line of business,controlling LOB, Corporate, and firmwideFirmwide market risk
Definition, approval•Defining, approving and monitoring of limits
Performance of•Performing stress testing and qualitative risk assessments
Risk measurement
Measures used to capture market risk
There is no single measure to capture market risk and therefore the FirmMarket Risk Management uses various metrics, both statistical and nonstatistical, to assess risk including:
•Value-at-risk (VaR)
•Stress testing
•Profit and loss drawdowns
•Earnings-at-risk
•Other sensitivity-based measures
Risk monitoring and control
Market risk exposure is managed primarily through a series of limits set in the context of the market environment and business strategy. In setting limits, the FirmMarket Risk Management takes into consideration factors such as market volatility, product liquidity, accommodation of client business, and management experience. The FirmMarket Risk Management maintains different levels of limits. Firm level limits include VaR and stress limits. Similarly, line of businessLOB and Corporate limits include VaR and stress limits and may be supplemented by certain nonstatistical risk measures such as profit and loss drawdowns. Limits may also be set within the lines of businessLOBs and Corporate, as well as at the portfolio and/or legal entity level.
Market Risk Management sets limits and regularly reviews and updates them as appropriate, with any changes approved by line of business or Corporate management and Market Risk Management.appropriate. Senior management including the Firm’s CEO and CRO, areis responsible for reviewing and approving certain of these risk limits on an ongoing basis. Limits that have not been reviewed within specified time periods by Market Risk Management are escalatedreported to senior management. The lines of businessLOBs and Corporate are responsible for adhering to established limits against which exposures are monitored and reported.
Limit breaches are required to be reported in a timely manner to limit approvers, which include Market Risk Management and senior management. In the event of a breach, Market Risk Management consults with senior managementappropriate members of the Firm and of the line of business or Corporate to determine the appropriatesuitable course of action required to return the applicable positions to compliance, which may include a reduction in risk in order to remedy the breach or granting a temporary increase in limits to accommodate an expected increase in client activity and/or market volatility. Certain Firm, Corporate or line of business-level limits that have been breachedLOB-level limit breaches are escalated as appropriate.
COVID-19 Pandemic
Market Risk Management continues to senior management,actively monitor the LOBimpact of the COVID-19 pandemic on market risk exposures by leveraging existing risk measures and controls.
Models used to measure market risk are inherently imprecise and are limited in their ability to measure certain risks or to predict losses. This imprecision may be heightened when sudden or severe shifts in market conditions occur, such as those observed at the onset of the COVID-19 pandemic. For additional discussion on model uncertainty refer to Estimations and Model Risk Committee, and/orManagement on page 151.
Market Risk Management periodically reviews the Firmwide Risk Committee.Firm’s existing market risk measures to identify opportunities for enhancement, and to the extent appropriate, will calibrate those measures accordingly over time. This is increasingly important in periods of sustained, heightened market volatility.

124JPMorgan Chase & Co./20182020 Form 10-K135

Management’s discussion and analysis

The following table summarizes by line of business and Corporate, the predominant business activities thatand related market risks, as well as positions which give rise to market risks,risk and certain measures used to capture those risks.risks, for each LOB and Corporate.
Predominant business activities that give rise to market risk by line of business and Corporate
LOBs and Corporate
Predominant business activities(a)
Related market risksPositions included in Risk Management VaRPositions included in earnings-at-riskPositions included in other sensitivity-based measures
CCB
•
Services mortgage loans
•
Originates loans and takes deposits
•
Non-linear risk primarily from prepayment options embedded in mortgages and changes in the probability of newly originated mortgage commitments actually closing
•
Basis risk from differences in the relative movements of the rate indices underlying mortgage exposure and other interest rates
•
Mortgage pipeline loans, classified as derivatives
•
Warehouse loans, classified as trading assets – debt instruments
•
MSRs
•
Hedges of pipeline loans, warehouse loans and MSRs, classified as derivatives
•
Interest-only securities, classified as trading assets debt instruments, and related hedges, classified as derivatives
•
Retained loan portfolio
•
Deposits
CIB

•
Makes markets and services clients across fixed income, foreign exchange, equities and commodities
•
Originates loans and takes deposits
•
Risk of loss from adverse movements in market prices across interest rate, credit, currency, commodity and equity risk factors
•
Trading assets/liabilities – debt and marketable equity instruments, and derivatives, including hedges of the retained loan portfolio
•
Certain securities purchased, loaned or sold under resale agreements and securities borrowed
•
Fair value option elected liabilities
•
Derivative CVA and associated hedges
•
Marketable equity investments
•
Retained loan portfolio
•
Deposits
•
Privately held equity and other investments measured at fair value
•
Derivatives FVA and fair value option elected liabilities DVA
CB
•
Originates loans and takes deposits
•
Interest rate risk and prepayment risk
•
Retained loan portfolio
•
Deposits
AWM
•
Provides initial capital investments in products such as mutual funds and capital invested alongside third-party investors
•
Originates loans and takes deposits
•
Risk from changes in market factors (e.g., rates and credit spreads)
•
Debt securities held in advance of distribution to clients, classified as trading assets - debt instruments(b)
•
Retained loan portfolio
•
Deposits
•
Initial seed capital investments and related hedges, classified as derivatives
•
Capital invested alongside third-party investors, typically in privately distributed collective vehicles managed by AWM (i.e., co-investments)
Corporate
•
Manages the Firm’s liquidity, funding, capital, structural interest rate and foreign exchange risks
•
Structural interest rate risk from the Firm’s traditional banking activities
•
Structural non-USD foreign exchange risks
•
Derivative positions measured at fair value through noninterest revenue in earnings
•
Marketable equity investments
•
Deposits with banks
•
Investment securities portfolio and related interest rate hedges
•
Long-term debt and related interest rate hedges
•
Privately held equity and other investments measured at fair value
•
Foreign exchange exposure related to Firm-issued non-USD long-term debt (“LTD”) and related hedges
(a) In addition to the predominant business activities, each of the LOBsLOB and Corporate may engage in principal investing activities. To the extent principal investments are deemed market risk sensitive, they are reflected in relevant risk measures (i.e., VaR or Other sensitivity-based measures) and captured in the table above. For additional discussion on principal investments referbelow. Refer to Investment Portfolio Risk Management on page 123.134 for additional discussion on principal investments.
LOBs and CorporatePredominant business activitiesRelated market risksPositions included in Risk Management VaRPositions included in earnings-at-riskPositions included in other sensitivity-based measures
CCB
•Services mortgage loans
•Originates loans and takes deposits
•Risk from changes in the probability of newly originated mortgage commitments closing
•Interest rate risk and prepayment risk
•Mortgage commitments, classified as derivatives
•Warehouse loans that are fair value option elected, classified as loans – debt instruments
•MSRs
•Hedges of mortgage commitments, warehouse loans and MSRs, classified as derivatives
•Interest-only and mortgage-backed securities, classified as trading assets debt instruments, and related hedges, classified as derivatives
•Fair value option elected liabilities(a)
•Retained loan portfolio
•Deposits
•Fair value option elected liabilities DVA(a)

CIB
•Makes markets and services clients across fixed income, foreign exchange, equities and commodities
•Originates loans and takes deposits
•Risk of loss from adverse movements in market prices and implied volatilities across interest rate, foreign exchange, credit, commodity and equity instruments
•Basis and correlation risk from changes in the way asset values move relative to one another
•Interest rate risk and prepayment risk

•Trading assets/liabilities – debt and marketable equity instruments, and derivatives, including hedges of the retained loan portfolio
•Certain securities purchased, loaned or sold under resale agreements and securities borrowed
•Fair value option elected liabilities(a)
•Derivative CVA and associated hedges
•Marketable equity investments
•Retained loan portfolio
•Deposits
•Privately held equity and other investments measured at fair value; and certain asset-backed fair value option elected loans
•Derivatives FVA and fair value option elected liabilities DVA(a)

CB
•Originates loans and takes deposits
•Interest rate risk and prepayment risk
•Marketable equity investments(b)

•Retained loan portfolio
•Deposits
AWM
•Provides initial capital investments in products such as mutual funds and capital invested alongside third-party investors
•Originates loans and takes deposits
•Risk from adverse movements in market factors (e.g., market prices, rates and credit spreads)
•Interest rate risk and prepayment risk
•Debt securities held in advance of distribution to clients, classified as trading assets - debt instruments(b)
•Retained loan portfolio
•Deposits
•Initial seed capital investments and related hedges, classified as derivatives
•Certain deferred compensation and related hedges, classified as derivatives
•Capital invested alongside third-party investors, typically in privately distributed collective vehicles managed by AWM (i.e., co-investments)
Corporate
•Manages the Firm’s liquidity, funding, capital, structural interest rate and foreign exchange risks
•Structural interest rate risk from the Firm’s traditional banking activities
•Structural non-USD foreign exchange risks
•Derivative positions measured at fair value through noninterest revenue in earnings
•Marketable equity investments
•Deposits with banks
•Investment securities portfolio and related interest rate hedges
•Long-term debt and related interest rate hedges
•Privately held equity and other investments measured at fair value
•Foreign exchange exposure related to Firm-issued non-USD long-term debt (“LTD”) and related hedges
(a)Reflects structured notes in Risk Management VaR and the DVA on structured notes in other sensitivity-based measures.
(b)The AWM contributionand CB contributions to Firmwide average VaR waswere not material for the year ended December 31, 20182020 and 2017.2019.

136JPMorgan Chase & Co./20182020 Form 10-K125

Management’s discussion and analysis

Value-at-risk
JPMorgan Chase utilizes VaR, a statistical risk measure,, to estimate the potential loss from adverse market moves in the current market environment. The Firm has a single VaR framework used as a basis for calculatingRisk Management VaRandRegulatory VaR.VaR.
The framework is employed across the Firm using historical simulation based on data for the previous 12 months. The framework’s approach assumes that historical changes in market values are representative of the distribution of potential outcomes in the immediate future. The Firm believes the use of Risk Management VaR provides a daily measure of risk that is closely aligned to risk management decisions made by the lines of businessLOBs and Corporate and, along with other market risk measures, provides the appropriate information needed to respond to risk events.
The Firm’s Risk Management VaR is calculated assuming a one-day holding period and an expected tail-loss methodology which approximates a 95% confidence level. Risk Management VaR provides a consistent framework to measure risk profiles and levels of diversification across product types and is used for aggregating risks and monitoring limits across businesses. VaR results are reported to senior management, the Board of Directors and regulators.
Under the Firm’s Risk Management VaR methodology, assuming current changes in market values are consistent with the historical changes used in the simulation, the Firm would expect to incur VaR “back-testing“backtesting exceptions,” defined as losses greater than that predicted by VaR estimates, an average of five times every 100 trading days. The number of VaR back-testingbacktesting exceptions observed can differ from the statistically expected number of back-testingbacktesting exceptions if the current level of market volatility is materially different from the level of market volatility during the 12 months of historical data used in the VaR calculation.
Underlying the overall VaR model framework are individual VaR models that simulate historical market returns for individual risk factors and/or product types. To capture material market risks as part of the Firm’s risk management framework, comprehensive VaR model calculations are performed daily for businesses whose activities give rise to market risk. These VaR models are granular and incorporate numerous risk factors and inputs to simulate daily changes in market values over the historical period; inputs are selected based on the risk profile of each portfolio, as sensitivities and historical time series used to generate daily market values may be different across product types or risk management systems. The VaR model results across all portfolios are aggregated at the Firm level.

As VaR is based on historical data, it is an imperfect measure of market risk exposure and potential future losses.In addition, based on their reliance on available historical data, limited time horizons, and other factors, VaR measures are inherently limited in their ability to measure certain risks and to predict losses, particularly those associated with market illiquidity and sudden or severe shifts in market conditions.
For certain products, specific risk parameters are not captured in VaR due to the lack of inherent liquidity and availability of appropriate historical data. The Firm uses proxies to estimate the VaR for these and other products when daily time series are not available. It is likely that using an actual price-based time series for these products, if available, would affect the VaR results presented. The Firm therefore considers other nonstatistical measures such as stress testing, in addition to VaR, to capture and manage its market risk positions.
The daily market data used in VaR models may be different than the independent third-party data collected for VCG price testing in its monthly valuation process. For example, in cases where market prices are not observable, or where proxies are used in VaR historical time series, the data sources may differ. ForRefer to Valuation process in Note 2 for further information on the Firm’s valuation process, refer to Valuation process in Note 2. Becauseprocess. As VaR model calculations require daily data and a consistent source for valuation, it may not be practical to use the data collected in the VCG monthly valuation process for VaR model calculations.
The Firm’s VaR model calculations are periodically evaluated and enhanced in response to changes in the composition of the Firm’s portfolios, changes in market conditions, improvements in the Firm’s modeling techniques and measurements, and other factors. Such changes may affect historical comparisons of VaR results. For information regarding model reviews and approvals, referRefer to Estimations and Model Risk Management on page 140.151 for information regarding model reviews and approvals.
The Firm calculates separately a daily aggregated VaR in accordance with regulatory rules (“Regulatory VaR”), which is used to derive the Firm’s regulatory VaR-based capital requirements under Basel III. This Regulatory VaR model framework currently assumes a ten business-day holding period and an expected tail loss methodology which approximates a 99% confidence level. Regulatory VaR is applied to “covered” positions as defined by Basel III, which may be different than the positions included in the Firm’s Risk Management VaR. For example, credit derivative hedges of accrual loans are included in the Firm’s Risk Management VaR, while Regulatory VaR excludes these credit derivative hedges. In addition, in contrast to the Firm’s Risk Management VaR, Regulatory VaR currently excludes the diversification benefit for certain VaR models.

126JPMorgan Chase & Co./20182020 Form 10-K137

Management’s discussion and analysis
ForRefer to JPMorgan Chase’s Basel III Pillar 3 Regulatory Capital Disclosures reports, which are available on the Firm’s website, for additional information on Regulatory VaR and the other components of market risk regulatory capital for the Firm (e.g., VaR-based measure, stressed VaR-based measure and the respective backtesting), refer to JPMorgan Chase’s Basel
III Pillar 3 Regulatory Capital Disclosures reports, which are available on the Firm’s website at: (http://investor.shareholder.com/jpmorganchase/basel.cfm).
The table below shows the results of the Firm’s Risk Management VaR measure using a 95% confidence level.
Total VaR    
As of or for the year ended December 31,2018 2017
(in millions) Avg.MinMax  Avg.MinMax
CIB trading VaR by risk type             
Fixed income$33
 $25
 $46
  $28
 $20
 $40
 
Foreign exchange6
 3
 15
  10
 4
 20
 
Equities17
 13
 26
  12
 8
 19
 
Commodities and other8
 4
 13
  7
 4
 10
 
Diversification benefit to CIB trading VaR(26)
(a) 
NM
(b) 
NM
(b) 
 (30)
(a) 
NM
(b) 
NM
(b) 
CIB trading VaR38
 26
(b) 
58
(b) 
 27
 14
(b) 
38
(b) 
Credit portfolio VaR3
 3
 4
  7
 3
 12
 
Diversification benefit to CIB VaR(2)
(a) 
NM
(b) 
NM
(b) 
 (6)
(a) 
NM
(b) 
NM
(b) 
CIB VaR39
 26
(b) 
59
(b) 
 28
 17
(b) 
39
(b) 
              
CCB VaR1
 —
 3
  2
 1
 4
 
Corporate VaR12
 9
 14
  4
 1
 16
 
Diversification benefit to other VaR(1)
(a) 
NM
(b) 
NM
(b) 
 (1)
(a) 
NM
(b) 
NM
(b) 
Other VaR12
 9
(b) 
14
(b) 
 5
 2
(b) 
16
(b) 
Diversification benefit to CIB and other VaR(10)
(a) 
NM
(b) 
NM
(b) 
 (4)
(a) 
NM
(b) 
NM
(b) 
Total VaR$41
 $28
(b) 
$62
(b) 
 $29
 $17
(b) 
$42
(b) 
(a)Average portfolio VaR is less than the sum of the VaR of the components described above, which is due to portfolio diversification. The diversification effect reflects that the risks are not perfectly correlated.
(b)Diversification benefit represents the difference between the total VaR and each reported level and the sum of its individual components. Diversification benefit reflects the non-additive nature of VaR due to imperfect correlation across lines of business, Corporate, and risk types. The maximum and minimum VaR  for each portfolio may have occurred on different trading days than the components and consequently diversification benefit is not meaningful.

Average Total VaR increased $12 million for the year-ended December 31, 2018 as compared with the prior year.
The increase was primarily due to changes in the risk profile for Fixed Income and Equities risk types, the inclusion of certain CIB marketable equity investments and a Corporate private equity position that became publicly traded in the fourth quarter of 2017, as well as increased volatility in the one-year historical look-back period.
In addition, average Credit Portfolio VaR has declined by $4 million, reflecting the sale of select positions in the prior year.
VaR can vary significantly over time as positions change, market volatility fluctuates, and diversification benefits change.
Total VaR
As of or for the year ended December 31,20202019
(in millions) Avg.MinMax Avg.MinMax
CIB trading VaR by risk type
Fixed income$98 $35 $156 $40 $31 $50 
Foreign exchange10 4 18 7 4 15 
Equities24 13 41 20 13 31 
Commodities and other28 7 47 8 6 12 
Diversification benefit to CIB trading VaR(67)(a) NM(b) NM(b)(33)(a)NM(b)NM(b)
CIB trading VaR93 32 (b)160 (b)42 29 (b)61 (b)
Credit portfolio VaR16 3 28 5 3 7 
Diversification benefit to CIB VaR(17)(a) NM(b) NM(b)(5)(a)NM(b)NM(b)
CIB VaR92 31 (b)162 (b)42 29 (b)63 (b)
CCB VaR5 1 12 5 1 11 
Corporate and other LOB VaR19 9 82 (c)10 9 13 
Diversification benefit to other VaR(4)(a) NM(b) NM(b)(4)(a)NM(b)NM(b)
Other VaR20 10 (b)82 (b)11 8 (b)17 (b)
Diversification benefit to CIB and other VaR(17)(a) NM(b) NM(b)(10)(a)NM(b)NM(b)
Total VaR$95 $32 (b)$164 (b)$43 $30 (b)$65 (b)
(a)Diversification benefit represents the difference between the portfolio VaR and the sum of its individual components. This reflects the non-additive nature of VaR due to imperfect correlation across LOBs, Corporate, and risk types.
(b)The maximum and minimum VaR for each portfolio may have occurred on different trading days than the components and consequently diversification benefit is not meaningful.
(c)Maximum Corporate and other LOB VaR was higher than the prior year, due to increases in the fourth quarter of 2020 driven by a private equity position that became publicly traded at the end of the third quarter of 2020.
Generally, average VaR and maximum VaR across risk types and LOBs were higher due to increased volatility that occurred at the onset of the COVID-19 pandemic, which remains in the one-year historical look-back period. As a result average total VaR increased by $52 million for the year-ended December 31, 2020 when compared with the prior year driven by the fixed income and commodities risk types.

Effective January 1, 2020, the Firm refined the scope of VaR back-testingto exclude positions related to the risk management of interest rate exposure from changes in the Firm’s own credit spread on fair value option elected liabilities, and included these positions in other sensitivity-based measures. Additionally, effective July 1, 2020, the Firm refined the scope of VaR to exclude certain asset-backed fair value option elected loans, and included them in other sensitivity-based measures to more effectively measure the risk from these loans. In the absence of these refinements, the average Total VaR and each of the components would have been higher by the amounts reported in the following table:
(in millions)Amount by which reported average VaR would have been higher for the year ended
December 31, 2020
CIB fixed income VaR$9 
CIB trading VaR7 
CIB VaR9 
Total VaR8 
138JPMorgan Chase & Co./2020 Form 10-K

VaR backtesting
The Firm evaluates the effectiveness of itsperforms daily VaR methodology by back-testing,model backtesting, which compares the daily Risk Management VaR results with the daily gains and losses actually recognized on market-risk related revenue.
that are utilized for VaR backtesting purposes. The Firm’s definition of market risk-related gains and losses is consistentin the chart below do not reflect the Firm’s revenue results as they exclude select components of total net revenue, such as those associated with the definition used by the banking regulators under Basel III. Under this definition, market risk-related gainsexecution of new transactions (i.e., intraday client-driven trading and losses are defined as: gains and losses on the positions included in the Firm’s Risk Management VaR, excludingintraday risk management activities), fees, commissions, certain valuation adjustments and net interest income, andincome. These excluded components of total net revenue may more than offset backtesting gains and losses arising from intraday trading.

JPMorgan Chase & Co./2018 Form 10-K127
Management’s discussionon a particular day. The definition of backtesting gains and analysis

losses above is consistent with the requirements for backtesting under Basel III capital rules.
The following chart compares actualFirmwide daily market risk-relatedbacktesting gains and losses with the Firm’s Risk Management VaR for the year ended December 31, 2018. As the chart presents market risk-related gains and losses related to those positions included in the Firm’s Risk Management VaR, the2020. The results in the tablechart below differ from the results of back-testingbacktesting disclosed in the Market Risk section of the Firm’s BaselBasel III Pillar 3 Regulatory Capital Disclosures reports, which are based on Regulatory VaR applied to the Firm’s covered positions. The chart shows that for
For the year ended December 31, 20182020, the Firm observed ten VaR back-testing exceptions and posted backtesting gains on 128162 of the 259 days.260 days, and observed 10 VaR backtesting exceptions, which were predominantly driven by volatility at the onset of the COVID-19 pandemic that was materially higher than the levels realized in the historical data used for the VaR calculation. Firmwide backtesting loss days can differ from the loss days for which Fixed Income Markets and Equity Markets posted losses, as disclosed in CIB Markets revenue, as the population of positions which compose each metric are different and due to the exclusion of select components of total net revenue in backtesting gains and losses as described above. For more information on CIB Markets revenue, refer to pages 74-75.
Daily Market Risk-Related Gains and Losses
vs. Risk Management VaR (1-day, 95% Confidence level)Backtesting Results
Year ended December 31, 20182020
Market Risk-RelatedBacktesting Gains and Losses
Risk Management VaR(1-day, 95% Confidence level)
chart-7f19a5faf05b5095bd8.jpg
jpm-20201231_g7.jpg
First Quarter
2018

2020
Second Quarter
2018

2020
Third Quarter
2018

2020
Fourth Quarter
2018

2020


128JPMorgan Chase & Co./20182020 Form 10-K139
Management’s discussion and analysis


Other risk measures
Stress testing
Along with VaR, stress testing is an important tool used to assess risk. While VaR reflects the risk of loss due to adverse changes in markets using recent historical market behavior, stress testing reflects the risk of loss from hypothetical changes in the value of market risk sensitive positions applied simultaneously. Stress testing measures the Firm’s vulnerability to losses under a range of stressed but possible economic and market scenarios. The results are used to understand the exposures responsible for those potential losses and are measured against limits.
The Firm’s stress framework covers Corporate and all lines of business with market risk sensitive positions.positions in the LOBs and Corporate. The framework is used to calculate multiple magnitudes of potential stress for both market rallies and market sell-offs, assuming significant changes in market factors such as credit spreads, equity prices, interest rates, currency rates and commodity prices, and combines them in multiple ways to capture an array of hypothetical economic and market scenarios.
The Firm generates a number of scenarios that focus on tail events in specific asset classes and geographies, including how the event may impact multiple market factors simultaneously. Scenarios also incorporate specific idiosyncratic risks and stress basis risk between different products. The flexibility in the stress framework allows the Firm to construct new scenarios that can test the outcomes against possible future stress events. Stress testing results are reported on a regular basis to senior management of the respective LOBs, Corporate and the Firm’s senior management.Firm, as appropriate.
Stress scenarios are governed by an overall stress framework and are subject to the standards outlined in the Firm’s policies related to model risk management. Significant changes to the framework are reviewed by the relevant LOB Risk Committees on an annual basis or as changing market conditions warrant and may be redefined to reflect current or expected market conditions.appropriate.
The Firm’s stress testing framework is utilized in calculating the Firm’s CCAR and other stress test results, which are reported to the Board of Directors. In addition, stress testing results are incorporated into the Firm’s Risk Appetite framework, and are reported quarterlyperiodically to the DRPC.Board Risk Committee.
Profit and loss drawdowns
Profit and loss drawdowns are used to highlight trading losses above certain levels of risk tolerance. Profit and loss drawdowns are defined as the decline in netA profit and loss since thedrawdown is a decline in revenue from its year-to-date peak revenue level.
Earnings-at-risk
The VaR and sensitivity measures illustrate the economic sensitivity of the Firm’s Consolidated balance sheets to changes in market variables.
The effect of interest rate exposure on the Firm’s reported net income is also important as interest rate risk represents one of the Firm’s significant market risks. Interest rate risk arises not only from trading activities but also from the Firm’s traditional banking activities, which include extension of loans and credit facilities, taking deposits and issuing debt. The Firm evaluates its structural interest rate risk exposure through earnings-at-risk, which measuresdebt as well as from the extentinvestment securities portfolio. Refer to which changes in interest rates will affect the Firm’s net interest income and interest rate-sensitive fees. Fortable on page 136 for a summary by line of business
LOB and Corporate, identifying positions included in earnings-at-risk refer to the table on page 125..
The CTC Risk Committee establishes the Firm’s structural interest rate risk policy and related limits, which are subject to approval by the DRPC.Board Risk Committee. Treasury and CIO, working in partnership with the lines of business,LOBs, calculates the Firm’s structural interest rate risk profile and reviews it with senior management, including the CTC Risk Committee.In addition, oversight of structural interest rate risk is managed through a dedicated risk function reporting to the CTC CRO. This risk function is responsible for providing independent oversight and governance around assumptions and establishing and monitoring limits for structural interest rate risk. The Firm manages structural interest rate risk generally through its investment securities portfolio and interest rate derivatives.

JPMorgan Chase & Co./2018 Form 10-K129
Management’s discussion and analysis

Structural interest rate risk can occur due to a variety of factors, including:
•Differences in the timing among the maturity or repricing of assets, liabilities and off-balance sheet instruments
•Differences in the amounts of assets, liabilities and off-balance sheet instruments that are maturing or repricing at the same time
•Differences in the amounts by which short-term and long-term market interest rates change (for example, changes in the slope of the yield curve)
•The impact of changes in the maturity of various assets, liabilities or off-balance sheet instruments as interest rates change
The Firm manages interest rate exposure related to its assets and liabilities on a consolidated, firmwideFirmwide basis. Business units transfer their interest rate risk to Treasury and CIO through funds transfer pricing, which takes into account the elements of interest rate exposure that can be risk-managed in financial markets. These elements include asset and liability balances and contractual rates of interest, contractual principal payment schedules, expected prepayment experience, interest rate reset dates and maturities, rate indices used for repricing, and any interest rate ceilings or floors for adjustable rate products. All transfer-pricing assumptions are dynamically reviewed.
TheOne way the Firm generatesevaluates its structural interest rate risk is through earnings-at-risk. Earnings-at-risk estimates the Firm’s interest rate exposure for a given interest rate scenario. It is presented as a sensitivity to a baseline, forwhich includes net interest income and certain interest rate-sensitive fees,rate sensitive fees. The baseline uses market interest rates and thenin the case of deposits, pricing assumptions. The Firm conducts simulations of changes to this baseline for interest rate-sensitive assets and liabilities denominated in U.S. dollars and other currencies (“non-U.S. dollar” currencies). This simulationThese simulations primarily includesinclude retained loans, deposits, deposits with banks, investment securities, long termlong-term debt and any related interest rate hedges, and excludes otherfunds transfer pricing of positions in risk management VaR and other sensitivity-based measures as described on page 125.136.
140JPMorgan Chase & Co./2020 Form 10-K

Earnings-at-risk scenarios estimate the potential change in thisto a net interest income baseline, over the following 12 months utilizing multiple assumptions.These scenarios include a parallel shift involving changes to both short-term and long-term rates by an equal amount; a steeper yield curve involving holding short-term rates constant and increasing long-term rates or decreasing short-term rates and holding long-term rates constant;rates; and a flatter yield curve involving holding short-term rates constant and decreasing long-term rates or increasing short-term rates and holding long-term rates constant.These scenarios consider themany different factors, including:
•The impact on exposures as a result of instantaneous changes in interest rates from baseline rates, as well as pricing sensitivities of deposits, optionality and changes in product mix. The scenarios include forecastedrates.
•Forecasted balance sheet, changes, as well as modeled prepayment and reinvestment behavior, but do not include assumptions about actions that could be taken by the Firm or its clients and customers in response to any such instantaneous rate changes. Mortgage prepayment assumptions are based on the interest rates used in the scenarios compared with underlying contractual rates, the time since origination, and other factors which are updated periodically based on historical experience.
•The pricing sensitivity of deposits, inknown as deposit betas, represent the baseline and scenarios use
assumedamount by which deposit rates paid whichcould change upon a given change in market interest rates over the cycle. The deposit rates paid in these scenarios may differ from actual deposit rates paid, due to timingrepricing lags and other factors.
The Firm’s earnings-at-risk scenarios areperiodically evaluated and enhanced in response to changes in the composition of the Firm’s balance sheet, changes in market conditions, improvements in the Firm’s simulation and other factors. While a relevant measure of the Firm’s interest rate exposure, the earnings at risk analysis does not represent a forecast of the Firm’s net interest income (Refer to Outlook on page 49 for additional information).
The Firm’s U.S. dollar sensitivities are presented in the table below.
December 31,
(in billions)		20202019
Parallel shift:
+100 bps shift in rates$6.9 $0.3 
Steeper yield curve:
+100 bps shift in long-term rates2.4 1.2 
Flatter yield curve:
+100 bps shift in short-term rates4.5 (0.9)
December 31,
(in billions)
2018
2017
Parallel shift:




+100 bps shift in rates$0.9
 $1.7
-100 bps shift in rates(2.1) (3.6)
Steeper yield curve:   
+100 bps shift in long-term rates0.5
 0.7
-100 bps shift in short-term rates(1.2) (2.2)
Flatter yield curve:   
+100 bps shift in short-term rates0.4
 1.0
-100 bps shift in long-term rates(0.9) (1.4)
The change in the Firm’s U.S. dollar sensitivities as of December 31, 2020 compared to December 31, 2019 reflected updates to the Firm’s baseline for lower short-term and long-term rates as well as the impact of changes in the Firm’s balance sheet. In addition, during the fourth quarter of 2020 as part of the Firm’s continuous evaluation and periodic enhancement to its earnings-at-risk calculations, the Firm updated the deposit rates paid betas for consumer deposit products based upon observed pricing during the most recent economic cycle. In the absence of this update, the Firm’s U.S. dollar sensitivities as of December 31, 2020 would have been lower by $2.0 billion to the +100bps shift in short-term and parallel rate scenarios.
The Firm’s sensitivity to rates is largelyprimarily a result of assets repricing at a faster pace than deposits.
The Firm’s net U.S. dollar sensitivitiesBased upon current and implied market rates as of December 31, 2018decreased when compared to December 31, 2017 primarily as a2020, scenarios reflecting lower rates could result of updating the Firm’s baseline to reflect higherin negative interest rates. As higherThe U.S. has never experienced an interest rate environment where the Federal Reserve has a negative interest rate policy. While the impact of negative interest rates are now reflected inon the Firm’s baselines, sensitivitiesFirm's earnings-at-risk would vary by scenario, a parallel shift downward of up to changes in rates are expected to be less significant.100bps would negatively impact net interest income. In a negative interest rate environment, the modeling assumptions used for certain assets and liabilities require additional management judgment and therefore, the actual outcomes may differ from these assumptions.
The Firm’s non-U.S. dollar sensitivities are presented in the table below.
December 31,
(in billions)
2018
2017December 31,
(in billions)		20202019
Parallel shift:




Parallel shift:
+100 bps shift in rates$0.5
 $0.5
+100 bps shift in rates$0.9 $0.5 
Flatter yield curve:   Flatter yield curve:
+100 bps shift in short-term rates0.5
 0.5
+100 bps shift in short-term rates0.8 0.5 
The results of the non-U.S. dollar interest rate scenario involving a steeper yield curve with long-term rates rising by 100 basis points and short-term rates staying at current levels were not material to the Firm’s earnings-at-risk at December 31, 20182020 and 2017.2019.

130JPMorgan Chase & Co./20182020 Form 10-K141

Management’s discussion and analysis

Non-U.S. dollar foreign exchange risk
Non-U.S. dollar FX risk is the risk that changes in foreign exchange rates affect the value of the Firm’s assets or liabilities or future results. The Firm has structural non-U.S. dollar FX exposures arising from capital investments, forecasted expense and revenue, the investment securities
portfolio and non-U.S. dollar-denominated debt issuance. Treasury and CIO, working in partnership with the lines of business,LOBs, primarily manage these risks on behalf of the Firm. Treasury and CIO may hedge certain of these risks using derivatives within risk limits governed by the CTC Risk Committee.
derivatives.
Other sensitivity-based measures
The Firm quantifies the market risk of certain investmentdebt and equity and funding activities by assessing the potential impact on net revenue, other comprehensive income (“OCI”) and OCInoninterest expense due to changes in relevant market variables. For additional information on the positions captured in other sensitivity-based measures, referRefer to the table Predominant business activities that give rise to market risk on page 125.136 for additional information on the positions captured in other sensitivity-based measures.
The table below represents the potential impact to net revenue, OCI or OCInoninterest expense for market risk sensitive instruments that are not included in VaR or earnings-at-risk. Where appropriate, instruments used for hedging purposes are reported along withnet of the positions being hedged. The sensitivities disclosed in the table below may not be representative of the actual gain or loss that would have been realized at December 31, 20182020 and 2017,2019, as the movement in market parameters across maturities may vary and are not intended to imply management’s expectation of future deteriorationchanges in these sensitivities.
Year ended December 31,
Gain/(loss) (in millions)
ActivityDescriptionSensitivity measure20202019
Debt and equity(a)
Asset Management activities
Consists of seed capital and related hedges; fund co-investments(b); and certain deferred compensation and related hedges(c)
10% decline in market value$(48)$(68)
Other debt and equity
Consists of certain asset-backed fair value option elected loans, privately held equity and other investments held at fair value(b)
10% decline in market value(919)(867)(e)
Funding activities
Non-USD LTD cross-currency basis
Represents the basis risk on derivatives used to hedge the foreign exchange risk on the non-USD LTD(d)
1 basis point parallel tightening of cross currency basis(16)(17)
Non-USD LTD hedges foreign currency (“FX”) exposure
Primarily represents the foreign exchange revaluation on the fair value of the derivative hedges(d)
10% depreciation of currency13 15 
Derivatives – funding spread risk
Impact of changes in the spread related to derivatives FVA(b)
1 basis point parallel increase in spread(4)(5)
Fair value option elected liabilities –
funding spread risk
Impact of changes in the spread related to fair value option elected liabilities DVA(d)
1 basis point parallel increase in spread33 29 
Fair value option elected liabilities –interest rate sensitivity
Interest rate sensitivity on fair value option liabilities resulting from a change in the Firm’s own credit spread(d)
1 basis point parallel increase in spread(3)(2)
Interest rate sensitivity related to risk management of changes in the Firm’s own credit spread on fair value option liabilities(b)
1 basis point parallel increase in spread3 2 
Year ended December 31,
Gain/(loss) (in millions)
       
Activity Description Sensitivity measure 20182017
        
Investment activities(a)
       
Investment management activities Consists of seed capital and related hedges; and fund co-investments 10% decline in market value $(102)$(110)
Other investments Consists of privately held equity and other investments held at fair value 10% decline in market value (218)(338)
        
Funding activities       
Non-USD LTD cross-currency basis 
Represents the basis risk on derivatives used to hedge the foreign exchange risk on the non-USD LTD(b)
 1 basis point parallel tightening of cross currency basis (13)(10)
Non-USD LTD hedges foreign currency (“FX”) exposure 
Primarily represents the foreign exchange revaluation on the fair value of the derivative hedges(b)
 10% depreciation of currency 17
(13)
Derivatives – funding spread risk Impact of changes in the spread related to derivatives FVA 1 basis point parallel increase in spread (4)(6)
Fair value option elected liabilities –
funding spread risk
 
Impact of changes in the spread related to fair value option elected liabilities DVA(b)
 1 basis point parallel increase in spread 30
22
Fair value option elected liabilities –interest rate sensitivity 
Interest rate sensitivity on fair value option liabilities resulting from a change in the Firm’s own credit spread(b)
 1 basis point parallel increase in spread 1
(1)
(a)Excludes equity securities without readily determinable fair values that are measured under the measurement alternative. Refer to Note 2 for additional information.
(a)Excludes equity securities without readily determinable fair values that are measured under the measurement alternative. Refer to Note 2 for additional information.
(b)Impact recognized through OCI.

(b)Impact recognized through net revenue.
(c)In the second quarter of 2020, the Firm refined the approach for risk management of certain deferred compensation, which is recognized through noninterest expense. As a result, certain deferred compensation and related hedges are now included in other sensitivity-based measures.
(d)Impact recognized through OCI.
(e)Prior-period amount has been revised to conform with the current presentation. In the absence of the scope refinement, Other debt and equity would have been $(203) million and $(192) million for the periods ending December 31, 2020 and 2019, respectively. Refer to Total VaR on page 138 for additional information.
JPMorgan Chase & Co./2018 Form 10-K131
Management’s discussion and analysis

142JPMorgan Chase & Co./2020 Form 10-K

COUNTRY RISK MANAGEMENT
The Firm, through its lines of businessLOBs and Corporate, may be exposed to country risk resulting from financial, economic, political or other significant developments which adversely affect the value of the Firm’s exposures related to a particular country or set of countries. The Country Risk Management group actively monitors the various portfolios which may be impacted by these developments and measures the extent to which the Firm’s exposures are diversified given the Firm’s strategy and risk tolerance relative to a country.
Organization and management
Country Risk Management is an independent risk management function that assesses, manages and monitors country risk originated across the Firm. The Firmwide Risk Executive for Country Risk reports to the Firm’s CRO.
The Firm’s country risk management function includes the following activities:
Establishing•Maintaining policies, procedures and standards consistent with a comprehensive country risk framework
•Assigning sovereign ratings, assessing country risks and establishing risk tolerance relative to a country
•Measuring and monitoring country risk exposure and stress across the Firm
•Managing and approving country limits and reporting trends and limit breaches to senior management
•Developing surveillance tools, such as signaling models and ratings indicators, for early identification of potential country risk concerns
•Providing country risk scenario analysis
Sources and measurement
The Firm is exposed to country risk through its lending and deposits, investing, and market-making activities, whether cross-border or locally funded. Country exposure includes activity with both government and private-sector entities in a country.
Under the Firm’s internal country risk management approach, attribution of exposure to a specifican individual country is based on the country where the largest proportion of the assets of the counterparty, issuer, obligor or guarantor are located or where the largest proportion of its revenue is derived, which may be different than the domicile (i.e. legal residence) or country of incorporationincorporation.
Individual country exposures reflect an aggregation of the counterparty, issuer, obligor or guarantor. Country exposures are generally measured by considering the Firm’s risk to an immediate default, with zero recovery, of the counterparty, issuer, obligorcounterparties, issuers, obligors or guarantor, with zero recovery. guarantors attributed to that country. Activities which result in contingent or indirect exposure to a country are not included in the country exposure measure (for example, providing clearing services or secondary exposure to collateral on securities financing receivables).
Assumptions are sometimes required in determining the measurement and allocation of country exposure, particularly in the case of certain non-linear or index exposures.products, or where the nature of the counterparty, issuer,
obligor or guarantor is not suitable for attribution to an individual country. The use of different measurement approaches or assumptions could affect the amount of reported country exposure.
During the fourth quarter of 2018, the Firm refined its country exposure measurement approach to exclude capital invested in local entities. With this change, country exposure more directly measures the Firm’s risk to an immediate default of a counterparty, issuer, obligor or guarantor. The risk associated with capital invested in local entities will continue to be examined in tailored stress scenarios, depending on the vulnerabilities being tested. For more on the Firm’s country risk stress testing, refer to page 133.
Under the Firm’s internal country risk measurement framework:
•Lending exposures are measured at the total committed amount (funded and unfunded), net of the allowance for credit losses and eligible cash and marketable securities collateral received
•Deposits are measured as the cash balances placed with central and commercial banks
•Securities financing exposures are measured at their receivable balance, net of eligible collateral received
•Debt and equity securities are measured at the fair value of all positions, including both long and short positions
•Counterparty exposure on derivative receivables is measured at the derivative’s fair value, net of the fair value of the eligible collateral received
•Credit derivatives protection purchased and sold is reported based on the underlying reference entity and is measured at the notional amount of protection purchased or sold, net of the fair value of the recognized derivative receivable or payable. Credit derivatives protection purchased and sold in the Firm’s market-making activities is measured on a net basis, as such activities often result in selling and purchasing protection related to the same underlying reference entity; this reflects the manner in which the Firm manages these exposures
Some activities may create contingent or indirect exposure related to a country (for example, providing clearing services or secondary exposure to collateral on securities financing receivables). These exposures are managed in the normal course of business through the Firm’s credit, market, and operational risk governance, rather than through Country Risk Management.
The Firm’s internal country risk reporting differs from the reporting provided under the FFIEC bank regulatory requirements. ForRefer to Cross-border outstandings on page 318 of the 2020 Form 10-K for further information on the FFIEC’s reporting methodology, refer to Cross-border outstandings on page 306 of the 2018 Form 10-K.



methodology.

132JPMorgan Chase & Co./20182020 Form 10-K143

Management’s discussion and analysis

Stress testing
Stress testing is an important component of the Firm’s country risk management framework, which aims to estimate and limit losses arising from a country crisis by measuring the impact of adverse asset price movements to a country based on market shocks combined with counterparty specific assumptions. Country Risk Management periodically designs and runs tailored stress scenarios to test vulnerabilities to individual countries or sets of countries in response to specific or potential market events, sector performance concerns, sovereign actions and geopolitical risks. These tailored stress results are used to inform potential risk reduction across the Firm, as necessary.
COVID-19 Pandemic
Country Risk Management continues to monitor the impact of the COVID-19 pandemic, leveraging existing stress testing, exposure reporting and controls, as well as tailored analysis, to assess the extent to which individual countries may be adversely impacted.
Risk reporting
To enable effective risk management of country risk to the Firm, countryCountry exposure and stress are measured and reported weekly,regularly, and used by Country Risk Management to identify trends, and monitor high usages and breaches against limits.
For country risk management purposes, the Firm may report exposure to jurisdictions that are not fully autonomous, including Special Administrative Regions (“SAR”) and dependent territories, separately from the independent sovereign states with which they are associated.
The following table presents the Firm’s top 20 exposures by country (excluding the U.S.) as of December 31, 2018,2020, and their comparative exposures as of December 31, 2017.2019. The selection of countries represents the Firm’s largest total exposures by individual country, based on the Firm’s internal country risk management approach, and does not represent the Firm’s view of any actual or potentially adverse credit conditions. Country exposures may fluctuatefluctuate from period to period due to client activity and market flows.
As discussed on page 132, duringThe overall increase in top 20 exposures was largely driven by client activity and growth in client deposits, relative to the period ending December 31, 2019. This resulted in an increase in cash placements with the central banks of Germany and the United Kingdom.
Top 20 country exposures (excluding the U.S.)(a)
December 31, (in billions)2020
2019(f)
Lending and deposits(c)
Trading and investing(d)
Other(e)
Total exposureTotal exposure
Germany$120.8 $5.8 $0.6 $127.2 $51.6 
United Kingdom57.2 9.4 1.8 68.4 42.4 
Japan36.7 8.6 0.3 45.6 43.8 
China9.7 9.9 1.6 21.2 19.2 
France13.4 4.6 0.8 18.8 18.1 
Switzerland14.7 0.5 3.5 18.7 18.3 
Australia9.9 5.7 0.3 15.9 11.7 
Canada13.4 0.9 0.2 14.5 13.2 
Luxembourg11.1 1.3 — 12.4 12.9 
Brazil4.2 6.6 — 10.8 7.2 
India3.9 5.1 1.5 10.5 11.3 
South Korea5.4 4.3 0.4 10.1 6.4 
Italy4.7 4.7 0.3 9.7 6.8 
Singapore4.0 2.7 2.0 8.7 6.8 
Netherlands(b)
5.4 0.1 2.2 7.7 5.8 
Hong Kong SAR3.7 1.9 0.6 6.2 5.1 
Spain4.1 1.6 0.1 5.8 5.8 
Saudi Arabia4.9 0.9 — 5.8 5.2 
Mexico3.9 1.0 — 4.9 4.7 
Sweden5.4 (1.1)— 4.3 1.1 
(a)Country exposures presented in the table reflect 90% and 87% of total Firmwide non-U.S. exposure,where exposure is attributed to an individual country, at December 31, 2020 and 2019, respectively.
(b)In the fourth quarter of 20182020, Country Risk Management determined that the Firm refined itsexposure for certain commodities contracts corresponds to an EU-wide risk and should not be attributed to the individual country of registration, previously the Netherlands. As such, the exposure measurement approach to exclude capital invested in local entities. While this change did not have a material impact to country exposure, prior period amounts haveis no longer included and the prior-period amount has been revised within the following table to conform with the current period presentation.
(c)Lending and deposits includes loans and accrued interest receivable, lending-related commitments (net of eligible collateral and the allowance for credit losses), deposits with banks (including central banks), acceptances, other monetary assets, and issued letters of credit net of participations. Excludes intra-day and operating exposures, such as those from settlement and clearing activities.
(d)Includes market-making inventory, Investment securities, and counterparty exposure on derivative and securities financings net of eligible collateral and hedging. Includes exposure from single reference entity (“single-name”), index and other multiple reference entity transactions for which one or more of the underlying reference entities is in a country listed in the above table.
(e)Predominantly includes physical commodity inventory.
(f)The country rankings presented in the table as of December 31, 2019, are based on the country rankings of the corresponding exposures at December 31, 2020, not actual rankings of such exposures at December 31, 2019.



Top 20 country exposures (excluding the U.S.)(a)
 
December 31, (in billions)2018 
2017(f)
 
Lending and deposits(b)
Trading and investing(c)(d)
Other(e)
Total exposure Total exposure
Germany$53.7
$8.1
$0.3
$62.1
 $57.4
United Kingdom28.0
10.1
2.6
40.7
 44.9
Japan25.4
3.3
0.4
29.1
 30.8
China9.5
7.1
2.7
19.3
 16.3
France10.8
6.5
0.6
17.9
 19.4
Canada10.8
3.4
0.1
14.3
 14.9
Australia7.2
5.4
0.4
13.0
 11.4
Switzerland9.1
0.6
3.1
12.8
 13.9
India6.1
4.0
1.7
11.8
 12.3
Luxembourg10.5
0.5
—
11.0
 9.5
South Korea4.2
3.2
0.2
7.6
 6.8
Brazil4.4
2.9
—
7.3
 4.6
Singapore3.9
1.4
1.5
6.8
 6.3
Italy2.4
3.8
0.2
6.4
 6.7
Netherlands5.0
0.4
0.4
5.8
 8.0
Mexico3.7
1.8
—
5.5
 5.2
Hong Kong2.4
1.1
1.9
5.4
 4.2
Saudi Arabia4.7
0.6
—
5.3
 4.5
Spain3.8
1.3
—
5.1
 6.8
Malaysia1.8
1.1
1.4
4.3
 3.0
(a)
Country exposures presented in the table reflect 87% and 86% of total firmwide non-U.S. exposure,where exposure is attributed to a specific country, for the periods ending December 31, 2018 and 2017, respectively.
(b)
Lending and deposits includes loans and accrued interest receivable (net ofeligiblecollateral and the allowance for loan losses), deposits with banks (including central banks), acceptances, other monetary assets, issued letters of credit net of participations, and unused commitments to extend credit. Excludes intra-day and operating exposures, such as those from settlement and clearing activities.
(c)
Includes market-making inventory, AFS securities, andcounterparty exposure on derivative and securities financings net of eligible collateral and hedging.
(d)Includes single reference entity (“single-name”), index and other multiple reference entity transactions for which one or more of the underlying reference entities is in a country listed in the above table.
(e)Predominantly includes physical commodity inventory.
(f)The country rankings presented in the table as of December 31, 2017, are based on the country rankings of the corresponding exposures at December 31, 2018, not actual rankings of such exposures at December 31, 2017.



JPMorgan Chase & Co./2018 Form 10-K133
Management’s discussion and analysis

144JPMorgan Chase & Co./2020 Form 10-K

OPERATIONAL RISK MANAGEMENT
Operational risk is the risk associated withof an adverse outcome resulting from inadequate or failed internal processes people and systems, or fromsystems; human factors; or external events andimpacting the Firm’s processes or systems; Operational Risk includes compliance, risk, conduct, risk, legal, risk, and estimations and model risk. Operational risk is inherent in the Firm’s activities and can manifest itself in various ways, including fraudulent acts, business interruptions, cybersecuritycyber attacks, inappropriate employee behavior, failure to comply with applicable laws and regulations or failure of vendors to perform in accordance with their agreements. These events could result in financial losses, litigation and regulatory fines, as well as other damagesOperational Risk Management attempts to the Firm. The goal is to keepmanage operational risk at appropriate levels in light of the Firm’s financial position, the characteristics of its businesses, and the markets and regulatory environments in which it operates.
Operational Risk Management Framework
To monitorThe Firm’s Compliance, Conduct, and control operational risk, the Firm has an Operational Risk (“CCOR”) Management Framework (“ORMF”) which is designed to enable the Firm to maintain a soundgovern, identify, measure, monitor and well-controlledtest, manage and report on the Firm’s operational environment. The ORMF has four main components: Governance, risk.
Operational Risk Identification and Assessment, Operational Risk Measurement, and Operational Risk Monitoring and Reporting.
Governance
The lines of businessLOBs and Corporate are responsible for applying the ORMF in order to manage themanagement of operational risk that arises from their activities.risk. The Control Management organization,Organization, which consists of control managers within each line of businessLOB and Corporate, is responsible for the day-to-day execution of the ORMF.
LineCCOR Framework and the evaluation of business and Corporatethe effectiveness of their control committees are responsible for reviewing data that indicates the quality and stability of processes, addressing key operational risk issues, focusing on processes with control concerns, and overseeing control remediation. These committees escalate operational risk issuesenvironments to the FCC, as appropriate. For additional information on the FCC, refer to Enterprise-wide Risk Management on pages 79–140.determine where targeted remediation efforts may be required.
The Firmwide Risk ExecutiveFirm’s Global Chief Compliance Officer (“CCO”) and FRE for Operational Risk Management (“ORM”), a direct report to the CRO, is responsible for defining the ORMFCCOR Management Framework and establishing minimum standards for its execution. Operational Risk Officers (“OROs”) report to both the line of businessLOB CROs and to the FirmwideFRE for Operational Risk, Executive for ORM, and are independent of the respective businesses or corporate functions they oversee.
The Firm’s Operational RiskCCOR Management Policy is approved by the DRPC. This policy establishes the Operational RiskCCOR Management Framework for the Firm. The CCOR Management Framework is articulated in the Risk Governance and Oversight Policy which is reviewed and approved by the Board Risk Committee periodically.
Operational Risk identification and assessment
The Firm utilizes a structured risk and control self-assessment process whichthat is executed by the lines of businessLOBs and Corporate in accordance with the minimum standards established by ORM, to identify, assess, mitigate and manage its operational risk.Corporate. As part of this process, lines of businessthe LOBs and Corporate identify key operational risks inherent in their activities, address gaps or deficiencies identified, and define actions to reduce residual risk. Action plans are developed for identified control issues and lines of business and Corporate are held accountable for tracking and resolving issues in a timely manner. Operational Risk Officers independently challenge the execution of the self-assessment and evaluate the appropriateness of the residual risk results.
In addition to the self-assessment process, the Firm tracks and monitors events that have led to or could lead to actual operational risk losses, including litigation-related events. Responsible lines of business and Corporate analyze their losses to evaluate the effectiveness of their control environment to assess where controls have failed, and to determine where targeted remediation efforts may be required. ORMThe Firm’s Operational Risk and Compliance organization (“Operational Risk and Compliance”) provides oversight of these activities and may also perform independent assessments of significant operational risk events and areas of concentrated or emerging risk.

Operational Risk Measurement
Operational Risk and Compliance performs independent risk assessments of the Firm’s operational risks, which includes assessing the effectiveness of the control environment and reporting the results to senior management.
In addition, to the level of actual operational risk losses, operational risk measurement includes operational risk-based capital and operational risk loss projections under both baseline and stressed conditions.
The primary component of the operational risk capital estimate is the Loss Distribution Approach (“LDA”) statistical model, which simulates the frequency and severity of future operational risk loss projections based on historical data. The LDA model is used to estimate an aggregate operational risk loss over a one-year time horizon, at a 99.9% confidence level. The LDA model incorporates actual internal operational risk losses in the quarter following the period in which those losses were realized, and the calculation generally continues to reflect such losses even after the issues or business activities giving rise to the losses have been remediated or reduced.
As required under the Basel III capital framework, the Firm’s operational risk-based capital methodology, which uses the Advanced Measurement Approach (“AMA”), incorporates internal and external losses as well as management’s view of tail risk captured through operational risk scenario analysis, and evaluation of key business environment and internal control metrics. The Firm does not reflect the impact of insurance in its AMA estimate of operational risk capital.

134JPMorgan Chase & Co./2018 Form 10-K


The Firm considers the impact of stressed economic conditions on operational risk losses and develops a forward looking view of material operational risk events that may occur in a stressed environment. The Firm’s operational risk stress testing framework is utilized in calculating results for the Firm’s CCAR and other stress testing processes.
ForRefer to Capital Risk Management section, on pages 91-101 for information related to operational risk RWA, CCAR or ICAAP, refer to Capital Risk Management section, pages 85-94.and CCAR.
Operational Risk Monitoring and reportingtesting
ORMThe results of risk assessments performed by Operational Risk and Compliance are leveraged as one of the key criteria in the independent monitoring and testing of the LOBs and Corporate’s compliance with laws and regulation. Through monitoring and testing, Operational Risk and Compliance independently identify areas of operational risk and tests the effectiveness of controls within the LOBs and Corporate.
Management of Operational Risk
The operational risk areas or issues identified through monitoring and testing are escalated to the LOBs and Corporate to be remediated through action plans, as needed, to mitigate operational risk. Operational Risk and
JPMorgan Chase & Co./2020 Form 10-K145
Management’s discussion and analysis
Compliance may advise the LOBs and Corporate in the development and implementation of action plans.
Operational Risk Reporting
Escalation of risks is a fundamental expectation for employees at the Firm. Risks identified by Operational Risk and Compliance are escalated to the appropriate LOB and Corporate Control Committees, as needed. Operational Risk and Compliance has established standards forto ensure that consistent operational risk monitoringreporting and reporting. Operationaloperational risk reports are produced on a firmwideFirmwide basis as well as by line of businessthe LOBs and Corporate. Reporting includes the evaluation of key risk indicators and key performance indicators against established thresholds as well as the assessment of different types of operational risk against stated risk appetite. The standards reinforce escalation protocols to senior management and to the Board of Directors.
COVID-19 Pandemic
Under the CCOR Management Framework, Operational Risk and Compliance monitors and assesses COVID-19 related legal and regulatory developments associated with the Firm’s financial products and services offered to clients and customers as part of the existing change management process. The Firm will continue to review and assess the impact of the pandemic on operational risk and implement adequate measures as needed.
Subcategories and examples of operational risks
Operational risk can manifest itself in various ways. Operational risk subcategories such as Compliance risk, Conduct risk, Legal risk, and Estimations and Model risk as well as other operational risks, can lead to losses which are captured through the Firm’s operational risk measurement processes. Forprocesses. Refer to pages 148, 149, 150 and 151, respectively for more information on Compliance, risk, Conduct, risk, Legal, risk and Estimations and Model risk, refer to pages 137, 138, 139 and 140, respectively.risk. Details on other select examples of operational risks are provided below.
Cybersecurity risk
Cybersecurity risk is the risk of the Firm’s exposure to harm or loss resulting from misuse or abuse of technology by malicious actors. Cybersecurity risk is an important continuous and continuously evolving focus for the Firm. The Firm devotes significantSignificant resources are devoted to protecting and continuing to improveenhancing the security of the Firm’s computer systems, software, networks and other technology assets. The Firm’s security efforts are designed to protect against, among other things, cybersecurity attacks by unauthorized parties attempting to obtain access to confidential information, destroy data, disrupt or degrade service, sabotage systems or cause other damage.
Ongoing business expansions may expose the Firm to potential new threats as well as expanded regulatory scrutiny including the introduction of new cybersecurity requirements. The Firm continues to make significant investments in enhancing its cyberdefensecyber defense capabilities and to strengthen its partnerships with the appropriate government and law enforcement agencies and other businesses in order to understand the full spectrum of cybersecurity risks in the operating environment, enhance defenses and improve resiliency against cybersecurity
threats. The Firm actively participates in discussions of cybersecurity risks with law enforcement, government officials, peer and industry groups, and has significantly increased efforts to educate employees and certain clients on the topic.topic of cybersecurity risks.
Third parties with which the Firm does business or that facilitate the Firm’s business activities (e.g., vendors, supply chain, exchanges, clearing houses, central depositories, and financial intermediaries) couldare also be sources of
cybersecurity risk to the Firm. Third party cybersecurity incidents such as system breakdowns or failures, misconduct by the employees of such parties, or cyberattacks could affect their ability to deliver a product or service to the Firm or result in lost or compromised information of the Firm or its clients. Clients canare also be sources of cybersecurity risk to the Firm, particularly when their activities and systems are beyond the Firm’s own security and control systems. As a result, the Firm engages in regular and ongoing discussions with certain vendors and clients regarding cybersecurity risks and opportunities to improve security. However, where cybersecurity incidents are due tooccur as a result of client failurefailures to maintain the security of their own systems and processes, clients will generally beare responsible for losses incurred.
To protect the confidentiality, integrity and availability of the Firm’s infrastructure, resources and information, the Firm maintains a cybersecurity program designed to prevent, detect, and respond to cyberattacks. The Global Chief Information Officer, Chief Technology Control Officer, and Chief Information Security Officer (“CISO”) update the Audit Committee of the Board of Directors at least annuallyis updated periodically on the Firm’s Information Security Program, recommended changes, cybersecurity policies and practices, ongoing efforts to improve security, as well as its efforts regarding significant cybersecurity events. In addition, the Firm has a detailed cybersecurity incident response plan (“IRP”) designed to enable the Firm to respond to attempted cybersecurity incidents, coordinate such responses with law enforcement and other government agencies, and notify clients and customers.customers, as applicable. Among other key focus areas, the IRP is designed to mitigate the risk of insider trading connected to a cybersecurity incident, and includes various escalation points in this regard including Compliancepoints. Due to the impact of COVID-19, the Firm increased the use of remote access and also video conferencing solutions provided by third parties to facilitate remote work. As a result the Legal Department.Firm took additional precautionary measures to mitigate cybersecurity risks.
The Cybersecurity and Technology Control functions are responsible for governance and oversight of the Firm’s Information Security Program. In partnership with the Firm’s lines of business,LOBs and Corporate, the Cybersecurity and Technology Control organization identifies information security risk issues and championsoversees programs for the technological protection of the Firm’s information resources including applications, infrastructure as well as confidential and personal information related to the Firm’s customers. The Cybersecurity and Technology Control organization comprises Governance and Control, Assessments, Assurance and Training, Cybersecurity Operations,consists of business aligned control officers, Identity and Access Management, and resiliency functionsinformation security managers that are supported within the organization by the following products that execute the Information Security Program.Program for the Firm:
•Cyber Defense & Fraud
146JPMorgan Chase & Co./2020 Form 10-K

•Data Management, Protection & Privacy
•Identity & Access Management
•Governance & Controls
•Production Management & Resiliency
•Software & Platform Enablement
The Global Cybersecurity and Technology Control governance structure is designed to identify, escalate, and mitigate information security risks. This structure uses key governance forums to disseminate information and monitor technology efforts. These forums are established at multiple levels throughout the Firm and include representatives from each line of businessLOB and Corporate.

JPMorgan Chase & Co./2018 Form 10-K135
Management’s discussion and analysis

Reports containing overviews of key technology risks and efforts to enhance related controls are produced for these forums, and are reviewed by management at multiple levels including technology management, Firmwide management and the Operating Committee.levels. The forums are used to escalate information security risks or other matters as appropriate to the FCC.appropriate.
The IRM function provides oversight of the activities whichdesigned to identify, assess, managemeasure, and mitigate cybersecurity risk. As integral participants in cybersecurity governance forums, the IRM organization actively monitors and oversees the Cybersecurity and Technology Control functions.
The Firm’s Security Awareness Program includes training that reinforces the Firm's Information Technology Risk and Security Management policies, standards and practices, as well as the expectation that employees comply with these policies. The Security Awareness Program engages personnel through training on how to identify potential cybersecurity risks and protect the Firm’s resources and information. This training is mandatory for all employees globally on an annuala periodic basis, and it is supplemented by firmwideFirmwide testing initiatives, including quarterlyperiodic phishing tests. Finally, the Firm’s Global Privacy Program requires all employees to take annualperiodic awareness training on data privacy. This privacy-focused training includes information about confidentiality and security, as well as responding to unauthorized access to or use of information.
Business and technology resiliency risk
Business disruptions can occur due to forces beyond the Firm’s control such as the spread of infectious diseases or pandemics, severe weather, power or telecommunications loss, accidents, failure of a third party to provide expected services, cyberattack, flooding, transit strikes, terrorist threats or infectious disease.terrorism, health emergencies. The safety of the Firm’s employees and customers is of the highest priority. The Firm’s globalFirmwide resiliency program is intended to enable the Firm to recover its critical business functions and supporting assets (i.e., staff, technology and facilities) in the event of a business interruption. The program includes corporate governance, awareness training, and testing of recovery strategies, as well as strategic and tactical initiatives to identify, assess, and manage business interruption and public safety risks.
The strength and proficiency of the Firm’s globalFirmwide resiliency program has played an integral role in maintaining the Firm’s business operations during and after various events.

Payment fraud risk
Payment fraud risk is the risk of external and internal parties unlawfully obtaining personal monetary benefit through misdirected or otherwise improper payment. Overthe past year, theThe risk of payment fraud remainedremains at a heightened level across the industry.industry, particularly during the current COVID-19 pandemic due to the use of contingent forms of payment authentication methods, scams involving the pandemic being perpetrated including an increase in the level of fraud attempts against consumers. The complexities of these incidents and the strategies used by perpetrators continue to evolve. A Payments Control Program including the LOBs and Corporate develop methodsThe Firm employs various controls for managing thepayment fraud risk implementing controls andas well as providing employee and client education and awareness training.trainings. The Firm’s monitoring of customer behavior to detect new fraud strategies is periodically evaluated and enhanced in an effort to detect and mitigate new strategies implemented bythese fraud perpetrators. The Firm’s consumer and wholesale businesses collaborate closely to deploy risk mitigation controls across their businesses.risks.
Third-party outsourcing risk
To identify and manage the operational risk inherent in its outsourcing activities, the Firm has aThe Firm‘s Third-Party Oversight (“TPO”) and Inter-affiliates Oversight (“IAO”) framework to assist the lines of businessLOBs and Corporate in selecting, documenting, onboarding, monitoring and managing their supplier relationships.relationships including services provided by affiliates. The objectiveobjectives of the TPO framework isare to hold third partiessuppliers to the samea high level of operational performance as is expected of the Firm’s internal operations.and to mitigate key risks including data loss and business disruption. The Corporate Third-Party Oversight group is responsible for Firmwide TPO training, monitoring, reporting and standards.
Insurance
One of the ways in which operational risk may be mitigated is through insurance maintained by the Firm. The Firm purchases insurance from commercial insurers and utilizesmaintains a wholly-owned captive insurer, Park Assurance Company, as needed to comply with local laws and regulations (e.g., workers compensation), as well as to serve other needs (e.g., property loss and public liability).Company. Insurance may also be required by third parties with whom the Firm does business. The insurance purchased is reviewed and approved by senior management.


136JPMorgan Chase & Co./2018 Form 10-K


JPMorgan Chase & Co./2020 Form 10-K147
Management’s discussion and analysis
COMPLIANCE RISK MANAGEMENT
Compliance risk, a subcategory of operational risk, is the risk of failurefailing to comply with legal or regulatory obligationslaws, rules, regulations or codes of conduct and standards of self-regulatory organizations applicable to the business activities of the Firm.organizations.
Overview
Each line of businessLOB and Corporate hold primary ownership of and accountability for managing compliance risk. The Firm’s Operational Risk and Compliance Organization (“Operational Risk and Compliance”), which is independent of the lines of business, works closely with senior management to provideLOBs and Corporate, provides independent review, monitoring and oversight of business operations with a focus on compliance with the legallaws, rules, and regulatory obligationsregulations applicable to the delivery of the Firm’s products and services to clients and customers.
These compliance risks relate to a wide variety of legallaws, rules and regulatory obligations,regulations depending on the line of businessLOB and the jurisdiction, and include thoserisks related to financial products and services, relationships and interactions with clients and customers, and employee activities. For example, compliance risks include those associated with anti-money laundering compliance, trading activities, market conduct, and complying with the laws, rules, and regulations related to the offering of products and services across jurisdictional borders, among others.borders. Compliance risk is also inherent in the Firm’s fiduciary activities, including the failure to exercise the applicable standard of care (such as the duties of loyalty or care), to act in the best interest of clients and customers or to treat clients and customers fairly.
Other Functionsfunctions provide oversight of significant regulatory obligations that are specific to their respective areas of responsibility.
Operational Risk and Compliance implements various practices designed to identify and mitigate compliance risk by establishing policies and standards testing, monitoring, trainingdesigned to govern, identify, measure, monitor and providing guidance.test, manage, and report on compliance risk.

Governance and oversight
Operational Risk and Compliance is led by the Firms’Firm’s Global CCO who reports to the Firm’s CRO.and FRE for Operational Risk.
The Firm maintains oversight and coordination of its Compliancecompliance risk through the implementation of the CCOR Risk Management practices through the Firm’s CCO, lines of business CCOs and regional CCOs to implement the Compliance program globally across the lines of business and regions. The Firm’s CCO is a member of the FCC and the FRC.Framework. The Firm’s CCO also provides regular updates to the Audit Committee and DRPC.the Board Risk Committee. In addition, certain Special Purpose Committees of the Board have previously been established to oversee the Firm’s compliance with regulatory Consent Orders.
Code of Conduct
The Firm has a Code of Conduct (the “Code”). Each employee is given annual training on the Code and is required annually to affirm his or her compliance with the Code. All new hires must complete Code training shortly after their start date with the Firm. The Code that sets forth the Firm’s expectation that employees will conduct themselves with integrity at all times and provides the principles that govern employee conduct with clients, customers, shareholders and one another, as well as with the markets and communities in which the Firm does business. The Code requires employees to promptly report any knownpotential or suspectedactual violation of the Code, any internal Firm policy, or any law or regulation applicable to the Firm’s business. It also requires employees to report any illegal conduct, or conduct that violates the underlying principles of the Code, by any of the Firm’s employees, clients, customers, suppliers, contract workers, business partners, or agents. TheAll newly hired employees are assigned Code prohibits retaliation against anyone who raisestraining and current employees are periodically assigned Code training on an issue or concern in good faith. Specifiedongoing basis. Employees are required to affirm their compliance officers are specially trained and designated as “code specialists” who act as a resource to employees on questions related towith the Code. Code periodically.
Employees can report any knownpotential or suspectedactual violations of the Code through the Code ReportingJPMC Conduct Hotline by phone or the internet. The Hotline is anonymous, except in certain non-U.S. jurisdictions where laws prohibit anonymous reporting, and is available 24/7at all times globally, with translation services. It is maintainedadministered by an outside service provider. Annually,The Code prohibits retaliation against anyone who raises an issue or concern in good faith. Periodically, the Audit Committee receives a reportreports on the Code of Conduct program, including an update on the employee completion rate for Code of Conduct training and affirmation.program.




JPMorgan Chase & Co./2018 Form 10-K137
Management’s discussion and analysis

148JPMorgan Chase & Co./2020 Form 10-K

CONDUCT RISK MANAGEMENT
Conduct risk, a subcategory of operational risk, is the risk that any action or inaction by an employee or employees could lead to unfair client or customer outcomes, impact the integrity of the markets in which the Firm operates, or compromise the Firm’s reputation.
Overview
Each line of businessLOB and Corporate is accountable for identifying and managing its conduct risk to provide appropriate engagement, ownership and sustainability of a culture consistent with the Firm’s How We Do Business Principles (the “Principles”). The Principles serve as a guide for how employees are expected to conduct themselves. With the Principles serving as a guide, the Firm’s Code sets out the Firm’s expectations for each employee and provides information and resources to help employeesemployees conduct business ethically and in compliance with the lawlaws everywhere the Firm operates. For further discussion of the Code, referRefer to Compliance Risk Management on page 137.148 for further discussion of the Code.
Governance and oversight
The Conduct Risk Program is governed by a Board-level approved Conduct Risk Governance Policy. The Conduct Risk Governance Policythe CCOR Management policy, which establishes the framework for ownership, assessment, managinggovernance, identification, measurement, monitoring and escalatingtesting, management and reporting conduct riskrisk in the Firm.
The CRSCFirm has a senior committee that provides oversight of the Firm’s conduct initiatives to develop a more holistic view of conduct risks and to connect key programs across the Firm in order to identify opportunities and emerging areas of focus.
The CRSC may escalate systemic conduct risk issues This committee is responsible for setting overall program direction for strategic enhancements to the FRCFirm's employee conduct framework and as appropriate toreview the DRPC. The misconduct (actual or potential) of individuals involved in material risk and control issues are escalated to the HR Control Forum.consolidated Firmwide Conduct Risk Appetite Assessment.
Certain committees of the Board oversee conduct risk issues within the scope of their responsibilities.
Conduct risk management encompasses various aspects of people management practices throughout the employee life cycle, including recruiting, onboarding, training and development, performance management, promotion and compensation processes. Each LOB, Treasury and CIO, and designated corporate functionfunctions completes an assessment of conduct risk quarterly,periodically, reviews metrics and issues which may involve conduct risk, and provides business conduct training as appropriate.



138JPMorgan Chase & Co./2018 Form 10-K


JPMorgan Chase & Co./2020 Form 10-K149
Management’s discussion and analysis
LEGAL RISK MANAGEMENT
Legal risk, a subcategory of operational risk, is the risk of loss primarily caused by the actual or alleged failure to meet legal obligations that arise from the rule of law in jurisdictions in which the Firm operates, agreements with clients and customers, and products and services offered by the Firm.
Overview
The global Legal function (“Legal”) provides legal services and advice to the Firm. Legal is responsible for managing the Firm’s exposure to Legallegal risk by:
•managing actual and potential litigation and enforcement matters, including internal reviews and investigations related to such matters
•advising on products and services, including contract negotiation and documentation
•advising on offering and marketing documents and new business initiatives
•managing dispute resolution
•interpreting existing laws, rules and regulations, and advising on changes theretoto them
•advising on advocacy in connection with contemplated and proposed laws, rules and regulations, and
•providing legal advice to the LOBs, Corporate, functions and Corporate, in alignment with the lines of defense described under Enterprise-wide Risk Management.Board.
Legal selects, engages and manages outside counsel for the Firm on all matters in which outside counsel is engaged. In addition, Legal advises the Firm’s Conflicts Office which reviews the Firm’s wholesale transactions that may have the potential to create conflicts of interest for the Firm.
Governance and oversight
The Firm’s General Counsel reports to the CEO and is a member of the Operating Committee, the Firmwide Risk Committee and the Firmwide Control Committee. The General Counsel’s leadership team includes a General Counsel for each line of business, the heads of the Litigation and Corporate & Regulatory practices, as well as the Firm’s Corporate Secretary. Each region (e.g., Latin America, Asia Pacific) has a General Counsel who is responsible for managing legal risk across all lines of business and functions in the region.
The Firm’s General Counsel and other members of Legal report on significant legal matters at each meeting ofto the Firm’s Board of Directors at least quarterlyand to the Audit Committee, and periodically to the DRPC.Committee. 
Legal serves on and advises various committees (including new business initiative and reputation risk committees) and advises the Firm’s businesses to protect the Firm’sLOBs and Corporate on potential reputation beyond any particular legal requirements.risk issues.



JPMorgan Chase & Co./2018 Form 10-K139
Management’s discussion and analysis

150JPMorgan Chase & Co./2020 Form 10-K

ESTIMATIONS AND MODEL RISK MANAGEMENT
Estimations and Model risk, a subcategory of operational risk, is the potential for adverse consequences from decisions based on incorrect or misused estimation outputs.
The Firm uses models and other analytical and judgment-based estimations across various businesses and functions. The estimation methods are of varying levels of sophistication and are used for many purposes, such as the valuation of positions and measurement of risk, assessing regulatory capital requirements, conducting stress testing, and making business decisions. A dedicated independent function, Model Risk Governance and Review (“MRGR”), defines and governs the Firm’s policies relating to the management of model risk management policies and risks associated with certain analytical and judgment-based estimations, such as those used in risk management, budget forecasting and capital planning and analysis. MRGR reports to the Firm’s CRO.
The governance of analytical and judgment-based estimations within MRGR’s scope follows a consistent approach to the approach used for models, which is described in detail below.
Model risks are owned by the users of the models within the Firm based on the specific purposes of such models. Users and developers of models are responsible for developing, implementing and testing their models, as well as referring models to the Model Risk functionMRGR for review and approval. Once models have been approved, model users and developers are responsible for maintaining a robust operating environment, and must monitor and evaluate the performance of the models on an ongoing basis. Model users and developers may seek to enhance models in response to changes in the portfolios and in product and market developments, as well as to capture improvements in available modeling techniques and systems capabilities.
Models are tiered based on an internal standard according to their complexity, the exposure associated with the model and the Firm’s reliance on the model. This tiering is subject to the approval of the Model Risk function.MRGR. In its review of a model, the Model Risk functionMRGR considers whether the model is suitable for the specific purposes for which it will be used. The factors considered in reviewing a model include whether the model accurately reflects the characteristics of the product and its significant risks, the selection and reliability of model inputs, consistency with models for similar products, the appropriateness of any model-related adjustments, and sensitivity to input parameters and assumptions that cannot be observed from the market. When reviewing a model, the Model Risk functionMRGR analyzes and challenges the model methodology and the reasonableness of model assumptions, and may perform or require additional testing, including back-testing of model outcomes. Model reviews are approved by the appropriate level of management within the Model Risk functionMRGR based on the relevant model tier.
Under the Firm’s Estimations and Model Risk Management Policy, the Model Risk functionMRGR reviews and approves new models, as well as material changes to existing models, prior to implementation in the operating environment. In certain circumstances the head of the Model Risk functionexceptions may grant exceptionsbe granted to the Firm’s policy to allow a model to be used prior to review or approval. The Model Risk functionMRGR may also require the user to take appropriate actions to mitigate the model risk if it is to be used in the interim. These actions will depend on the model and may include, for example, limitation of trading activity.
ForWhile models are inherently imprecise, the degree of imprecision or uncertainty can be heightened by the market or economic environment. This is particularly true when the current and forecasted environment is significantly different from the historical macroeconomic environments upon which the models were trained, as the Firm has experienced during the COVID-19 pandemic. This uncertainty may necessitate a summarygreater degree of model-based valuationsjudgment and other valuation techniques, referanalytics to inform adjustments to model outputs than in typical periods.
Refer to Critical Accounting Estimates Used by the Firm on pages 141-143152-155 and Note 2.2 for a summary of model-based valuations and other valuation techniques.



140JPMorgan Chase & Co./2018 Form 10-K


JPMorgan Chase & Co./2020 Form 10-K151
Management’s discussion and analysis
CRITICAL ACCOUNTING ESTIMATES USED BY THE FIRM
JPMorgan Chase’s accounting policies and use of estimates are integral to understanding its reported results. The Firm’s most complex accounting estimates require management’s judgment to ascertain the appropriate carrying value of assets and liabilities. The Firm has established policies and control procedures intended to ensure that estimation methods, including any judgments made as part of such methods, are well-controlled, independently reviewed and applied consistently from period to period. The methods used and judgments made reflect, among other factors, the nature of the assets or liabilities and the related business and risk management strategies, which may vary across the Firm’s businesses and portfolios. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. The Firm believes its estimates for determining the carrying value of its assets and liabilities are appropriate. The following is a brief description of the Firm’s critical accounting estimates involving significant judgments.
Allowance for credit losses
JPMorgan Chase’sThe Firm’s allowance for credit losses coversrepresents management’s estimate of expected credit losses over the retained consumer and wholesale loan portfolios, as well asremaining expected life of the Firm’s wholesalefinancial assets measured at amortized cost and certain consumeroff-balance sheet lending-related commitments. The allowance for credit losses comprises:
•The allowance for loan losses, is intended to adjust the carrying value ofwhich covers the Firm’s retained loan assets to reflect probable credit losses inherent in the loan portfolio as of the balance sheet date. Similarly, theportfolios (scored and risk-rated),
•The allowance for lending-related commitments, is established to cover probableand
•The allowance for credit losses inherent inon investment securities, which covers the lending-related commitments portfolio as of the balance sheet date.Firm’s HTM and AFS securities.
The allowance for credit losses includes a formula-based component, an asset-specific component, and a component related to PCI loans. The determination of each of these components involves significant judgment on a number of matters. Formatters including development and weighting of macroeconomic forecasts, incorporation of historical loss experience, assessment of risk characteristics, assignment of risk ratings, valuation of collateral, and the determination of remaining expected life. Refer to Note 10 and Note 13 for further information on these components, areas of judgmentjudgments as well as the Firm’s policies and methodologies used to determine the Firm’s allowance for credit losses.
One of the most significant judgments involved in establishingestimating the Firm’s allowance for credit losses referrelates to Allowance forthe macroeconomic forecasts used to estimate credit losses on pages 120–122 and Note 13.
Allowanceover the eight-quarter forecast period within the Firm’s methodology. The eight-quarter forecast incorporates hundreds of macroeconomic variables (“MEVs”) that are relevant for exposures across the Firm, with modeled credit losses sensitivity
being driven primarily by a subset of less than twenty variables. The Firm’s allowance for credit losses is sensitive to numerous factors, which may differ dependingspecific variables that have the greatest effect on the portfolio. modeled losses of each portfolio vary by portfolio and geography.
•Key MEVs for the consumer portfolio include U.S. unemployment, house price index (“HPI”) and U.S. real gross domestic product (“GDP”).
•Key MEVs for the wholesale portfolio include U.S. real GDP, U.S. unemployment, U.S. equity prices, corporate credit spreads, oil prices, commercial real estate prices and HPI.
Changes in economic conditions or in the Firm’s assumptions and estimatesforecasts of economic conditions could significantly affect its estimate of probableexpected credit losses inherent in the portfolio at the balance sheet date. The Firm uses its best judgmentdate or lead to assess these economic conditions and loss data in estimating the allowance for credit losses and these estimates are subject to periodic refinement based on changes to underlying external or Firm-specific historical data. Refer to Note 13 for further discussion.
To illustrate the potential magnitude of certain alternate judgments, the Firm estimates thatsignificant changes in the following inputs would haveestimate from one reporting period to the following effects onnext.
The COVID-19 pandemic has resulted in a weak labor market and weak overall economic conditions that will continue to affect borrowers across the Firm’s modeled credit loss estimates as of December 31, 2018, without consideration of any offsetting or correlated effects of other inputs inconsumer and wholesale lending portfolios. Significant judgment is required to estimate the Firm’s allowance for loan losses:
A combined 5% decline in housing pricesseverity and a 100 basis point increase in unemployment rates from current levels could imply:
◦an increase to modeled credit loss estimates of approximately $425 million for PCI loans.
◦an increase to modeled annual credit loss estimates of approximately $50 million for residential real estate loans, excluding PCI loans.
For credit card loans, a 100 basis point increase in unemployment rates from current levels could imply an increase to modeled annual credit loss estimates of approximately $875 million.
An increase in probability of default (“PD”) factors consistent with a one-notch downgrade in the Firm’s internal risk ratings for its entire wholesale loan portfolio could imply an increase in the Firm’s modeled credit loss estimates of approximately $1.6 billion.
A 100 basis point increase in estimated loss given default (“LGD”) for the Firm’s entire wholesale loan portfolio could imply an increase in the Firm’s modeled credit loss estimates of approximately $175 million.
The purpose of these sensitivity analyses is to provide an indicationduration of the isolated impactscurrent economic downturn, as well as its potential impact on borrower defaults and loss severities. In particular, macroeconomic conditions and forecasts regarding the duration and severity of hypothetical alternative assumptions on modeled loss estimates. Thethe economic downturn caused by the COVID-19 pandemic have been rapidly changing and remain highly uncertain. It is difficult to predict exactly how borrower behavior will be impacted by these changes in economic conditions. The effectiveness of government support, customer assistance and enhanced unemployment benefits should act as mitigants to credit losses, but the inputs presented above are not intended to imply management’s expectationextent of future deterioration of those risk factors. In addition, these analyses are not intended to estimate changes in the overall allowance for loan losses, which would also be influenced by the judgment management applies to the modeled loss estimates to reflect the uncertainty and imprecision of these modeled loss estimates based on then-current circumstances and conditions.mitigation impact remains uncertain.
It is difficult to estimate how potential changes in specific factorsany one factor or input might affect the overall allowance for credit losses because management considers a wide variety of factors and inputs in estimating the allowance for credit losses. Changes in thesethe factors and inputs considered may not occur at the same rate and may not be consistent across all geographies or product types, and changes in factors and inputs may be directionally inconsistent, such that improvement in one factor or input may offset deterioration in other factors. In addition, it is difficult to predict how changes in specific economic conditions or assumptions could affect borrower behavior or other factorsothers.
To consider the impact of a hypothetical alternate macroeconomic forecast, the Firm compared the modeled credit losses determined using its central and relative adverse macroeconomic scenarios, which are two of the five scenarios considered by management in estimating the allowanceallowances for credit losses. Givenloan losses and lending-related commitments. The central and relative adverse scenarios each included a full suite of MEVs, but differed in the processlevels, paths and peaks/troughs of those variables over the Firm followseight-quarter forecast period.
For example, compared to the Firm’s central scenario described on page 132 and in Note 13, the judgments madeFirm’s relative adverse scenario assumes a significantly elevated U.S. unemployment rate throughout 2021, averaging 3.0% higher over the eight-quarter forecast, with a peak difference of approximately 4.0% in evaluating the risk factors relatedsecond quarter of 2021; lower U.S. real GDP with a slower recovery,
152JPMorgan Chase & Co./2020 Form 10-K

remaining nearly 2.6% lower at the end of the eight-quarter forecast, with a peak difference of nearly 4.1% in the third quarter of 2021; and a 10.1% further deterioration in the national HPI with a trough in the first quarter of 2022.
This analysis is not intended to its loss estimates, management believes that its current estimate ofexpected future changes in the allowance for credit losses, for a number of reasons, including:
•the Firm has placed significant weight on its adverse scenarios in estimating its allowance for credit losses as of December 31, 2020, and accordingly, the existing allowance already reflects credit losses beyond those estimated under the central scenario
•the impacts of changes in many MEVs are both interrelated and nonlinear, so the results of this analysis cannot be simply extrapolated for more severe changes in macroeconomic variables
•the COVID-19 pandemic has stressed many MEVs at a speed and to degrees not seen in recent history, adding significantly higher degrees of uncertainty around modeled credit loss estimations
•significant changes in the expected severity and duration of the economic downturn caused by the COVID-19 pandemic, the effects of government support and customer assistance, and the speed of the subsequent recovery could significantly affect the Firm’s estimate of expected credit losses irrespective of the estimated sensitivities described below.
Without considering the additional weight the Firm has placed on its adverse scenarios or any other offsetting or correlated effects in other qualitative components of the Firm’s allowance for credit losses for the lending exposures noted below, the difference between the modeled estimates under the Firm’s relative adverse and central scenarios at December 31, 2020 would result in the following:
•An increase of approximately $700 million for residential real estate loans and lending-related commitments
•An increase of approximately $5.1 billion for credit card loans
•An increase of approximately $2.8 billion for wholesale loans and lending-related commitments
This analysis relates only to the modeled credit loss estimates and is appropriate.not intended to estimate changes in the overall allowance for credit losses as it does not reflect any potential changes in other adjustments to the quantitative calculation, which would also be influenced by the judgment management applies to the modeled lifetime loss estimates to reflect the uncertainty and imprecision of these modeled lifetime loss estimates based on then-current circumstances and conditions.
Recognizing that forecasts of macroeconomic conditions are inherently uncertain, particularly in light of the recent economic conditions, the Firm believes that its process to consider the available information and associated risks and
uncertainties is appropriately governed and that its estimates of expected credit losses were reasonable and appropriate for the period ended December 31, 2020.
Fair value
JPMorgan Chase carries a portion of its assets and liabilities at fair value. The majority of such assets and liabilities are measured at fair value on a recurring basis, including, derivatives and structured note products. Certain assets and liabilities are measured at fair value on a nonrecurring basis, including certain mortgage, home equity and other

JPMorgan Chase & Co./2018 Form 10-K141
Management’s discussion and analysis

loans, where the carrying value is based on the fair value of the underlying collateral.
Assets measured at fair value
The following table includes the Firm’s assets measured at fair value and the portion of such assets that are classified within level 3 of the valuation hierarchy. For further information, referRefer to Note 2.2 for further information.
December 31, 2020
(in billions, except ratios)		Total assets at fair valueTotal level 3 assets
Federal Funds sold and securities purchased under resale agreements$238.0 $— 
Securities borrowed53.0 — 
Trading assets:
    Trading debt and equity instruments$423.5 $2.6 
    Derivative receivables(a)
79.6 7.7 
Total trading assets503.1 10.3 
AFS securities388.2 — 
Loans44.5 2.3 
MSRs3.3 3.3 
Other304.1 0.5 
Total assets measured at fair value on a recurring basis
1,243.2 16.4 
Total assets measured at fair value on a nonrecurring basis3.6 2.0 
Total assets measured at fair value
$1,246.8 $18.4 
Total Firm assets$3,386.1 
Level 3 assets at fair value as a percentage of total Firm assets(a)
0.5 %
Level 3 assets at fair value as a percentage of total Firm assets at fair value(a)
1.5 %
December 31, 2018
(in billions, except ratios)		Total assets at fair valueTotal level 3 assets
Trading debt and equity instruments$359.5
 $4.2
Derivative receivables(a)
54.2
 5.8
Trading assets413.7
 10.0
AFS securities230.4
 —
Loans3.2
 0.1
MSRs6.1
 6.1
Other27.2
 1.0
Total assets measured at fair value on a recurring basis
680.6
 17.2
Total assets measured at fair value on a nonrecurring basis1.4
 1.1
Total assets measured at fair value
$682.0
 $18.3
Total Firm assets$2,622.5
  
Level 3 assets as a percentage of total Firm assets(a)
  0.7%
Level 3 assets as a percentage of total Firm assets at fair value(a)
  2.7%
(a)For purposes of the table above, the derivative receivables total reflects the impact of netting adjustments; however, the $7.7 billion of derivative receivables classified as level 3 does not reflect the netting adjustment as such netting is not relevant to a presentation based on the transparency of inputs to the valuation of an asset. The level 3 balances would be reduced if netting were applied, including the netting benefit associated with cash collateral.
(a)For purposes of the table above, the derivative receivables total reflects the impact of netting adjustments; however, the $5.8 billion of derivative receivables classified as level 3 does not reflect the netting adjustment as such netting is not relevant to a presentation based on the transparency of inputs to the valuation of an asset. The level 3 balances would be reduced if netting were applied, including the netting benefit associated with cash collateral.
Valuation
Details of the Firm’s processes for determining fair value are set out in Note 2. Estimating fair value requires the application of judgment. The type and level of judgment required is largely dependent on the amount of observable market information available to the Firm. For instruments valued using internally developed valuation models and other valuation techniques that use significant unobservable inputs and are therefore classified within level 3 of the valuation hierarchy, judgments used to estimate fair value are more significant than those required when estimating the fair value of instruments classified within levels 1 and 2.
JPMorgan Chase & Co./2020 Form 10-K153
Management’s discussion and analysis
In arriving at an estimate of fair value for an instrument within level 3, management must first determine the appropriate valuation model or other valuation technique to use. Second, the lack of observability of certain significant inputs requires management to assess all relevant empirical data in deriving valuation inputs including, for example, transaction details, yield curves, interest rates, prepayment rates,speed, default rates, volatilities, correlations, prices (such as commodity, equity or debt prices,prices), valuations of comparable instruments, foreign exchange rates and credit curves. ForRefer to Note 2 for a further discussion of the valuation of level 3 instruments, including unobservable inputs used, refer to Note 2.used.
For instruments classified in levels 2 and 3, management judgment must be applied to assess the appropriate level of valuation adjustments to reflect counterparty credit quality,
the Firm’s creditworthiness, market funding rates, liquidity considerations, unobservable parameters, and for portfolios that meet specified criteria, the size of the net open risk position. The judgments made are typically affected by the type of product and its specific contractual terms, and the level of liquidity for the product or within the market as a whole. ForIn periods of heightened market volatility and uncertainty judgments are further affected by the wider variation of reasonable valuation estimates, particularly for positions that are less liquid. Refer to Note 2 for a further discussion of valuation adjustments applied by the Firm, refer to Note 2.Firm.
Imprecision in estimating unobservable market inputs or other factors can affect the amount of gain or loss recorded for a particular position. Furthermore, while the Firm believes its valuation methods are appropriate and consistent with those of other market participants, the methods and assumptions used reflect management judgment and may vary across the Firm’s businesses and portfolios.
The Firm uses various methodologies and assumptions in the determination of fair value. The use of methodologies or assumptions different than those used by the Firm could result in a different estimate of fair value at the reporting date. ForRefer to Note 2 for a detailed discussion of the Firm’s valuation process and hierarchy, and its determination of fair value for individual financial instruments, refer to Note 2.instruments.
Goodwill impairment
Under U.S. GAAP, goodwill must be allocated to reporting units and tested for impairment at least annually. The Firm’s process and methodology used to conduct goodwill impairment testing is described in Note 15.
Management applies significant judgment when testing goodwill for impairment. The goodwill associated with each business combination is allocated to the related reporting units for goodwill impairment testing.
For the year ended December 31, 2018,2020, the Firm reviewed current economic conditions, including the potential impacts of the COVID-19 pandemic on business performance, estimated market cost of equity, as well as actual business results and projections of business
performance for all its businesses. Based upon such reviews, thereporting units. The Firm has concluded that the goodwill allocated to its reporting units was not impaired as of December 31, 2018.2020. The fair values of these reporting units exceeded their carrying values by approximately 20% or higherat least 15% and did not indicate a significant risk of goodwill impairment based on current projections and valuations.
The projections for all of the Firm’s reporting units are consistent with management’s current short-term business outlook assumptions and in the longershort term, incorporate a set of macroeconomic assumptions and the Firm’s best estimates of long-term growth and returnsreturn on equity of its businesses.in the longer term. Where possible, the Firm uses third-party and peer data to benchmark its assumptions and estimates.
Declines in business performance, increases in credit losses, increases in capital requirements, as well as deterioration in economic or market conditions, adverse regulatory or legislative changes or increases in the estimated market cost of equity, could cause the estimated fair values of the Firm’s reporting units or their associated goodwillRefer to decline in the future, which could result in a material impairment charge to earnings in a future period related to some portion of the associated goodwill.
ForNote 15 for additional information on goodwill, refer to Note 15.
including the goodwill impairment assessment as of December 31, 2020.

142JPMorgan Chase & Co./2018 Form 10-K


Credit card rewards liability
JPMorgan Chase offers credit cards with various rewards programs which allow cardholders to earn rewards points based on their account activity and the terms and conditions of the rewards program. Generally, there are no limits on the points that an eligible cardholder can earn, nor do theythe points expire, and thesethe points can be redeemed for a variety of rewards, including cash (predominantly in the form of account credits), gift cards and travel. The Firm maintains a rewards liability which represents the estimated cost of rewards points earned and expected to be redeemed by cardholders. The rewards liability is sensitive to various assumptions, including cost per point and redemption rates for each of the various rewards programs, which are evaluated periodically. The liability is accrued as the cardholder earns the benefit and is reduced when the cardholder redeems points. This liability was $5.8$7.7 billion and $4.9$6.4 billion at December 31, 20182020 and 2017,2019, respectively, and is recorded in accounts payable and other liabilities on the Consolidated balance sheets.
The rewards liability is sensitive to redemption rate (“RR”) and cost per point (“CPP”) assumptions. The RR assumption is used to estimate the number of points earned by customers that will be redeemed over the life of the account. The CPP assumption is used to estimate the cost of future point redemptions. These assumptions are evaluated periodically considering historical actuals and cardholder redemption behavior and updates to them will impact the rewards liability. As of December 31, 2020, a combined increase of 25 basis points in RR and 1 basis point in CPP would increase the rewards liability by approximately $215 million.
Income taxes
JPMorgan Chase is subject to the income tax laws of the various jurisdictions in which it operates, including U.S. federal, state and local, and non-U.S. jurisdictions. These laws are often complex and may be subject to different interpretations. To determine the financial statement impact of accounting for income taxes, including the provision for income tax expense and unrecognized tax benefits, JPMorgan Chase must make assumptions and judgments about how to interpret and apply these complex tax laws to numerous transactions and business events, as well as make judgments regarding the timing of when
154JPMorgan Chase & Co./2020 Form 10-K

certain items may affect taxable income in the U.S. and non-U.S. tax jurisdictions.
JPMorgan Chase’s interpretations of tax laws around the world are subject to review and examination by the various taxing authorities in the jurisdictions where the Firm operates, and disputes may occur regarding its view on a tax position. These disputes over interpretations with the various taxing authorities may be settled by audit, administrative appeals or adjudication in the court systems of the tax jurisdictions in which the Firm operates. JPMorgan Chase regularly reviews whether it may be assessed additional income taxes as a result of the resolution of these matters, and the Firm records additional reserves as appropriate. In addition, the Firm may revise its estimate of income taxes due to changes in income tax laws, legal interpretations, and business strategies. It is possible that revisions in the Firm’s estimate of income taxes may materially affect the Firm’s results of operations in any reporting period.
The Firm’s provision for income taxes is composed of current and deferred taxes. Deferred taxes arise from differences between assets and liabilities measured for financial reporting versus income tax return purposes. Deferred tax assets are recognized if, in management’s judgment, their realizability is determined to be more likely than not. The Firm has also recognized deferred tax assets in connection with certain tax attributes, including NOLs.net operating loss (“NOL”) carryforwards and foreign tax credit (“FTC”) carryforwards. The Firm performs regular reviews to ascertain whether its deferred tax assets are realizable. These reviews include
management’s estimates and assumptions regarding future taxable income, which also incorporates various tax planning strategies, including strategies that may be available to utilize NOLs before they expire. In connection with these reviews, if it is determined that a deferred tax asset is not realizable, a valuation allowance is established. The valuation allowance may be reversed in a subsequent reporting period if the Firm determines that, based on revised estimates of future taxable income or changes in tax planning strategies, it is more likely than not that all or part of the deferred tax asset will become realizable. As of December 31, 2018,2020, management has determined it is more likely than not that the Firm will realize its deferred tax assets, net of the existing valuation allowance.
Prior to December 31, 2017, U.S. federal income taxes had not been provided on the undistributed earnings of certain non-U.S. subsidiaries, to the extent that such earnings had been reinvested abroad for an indefinite period of time. The Firm is no longer maintaining the indefinite reinvestment assertion on the undistributed earnings of those non-U.S. subsidiaries in light of the enactment of the TCJA. The U.S. federal and state and local income taxes associated with the undistributed and previously untaxed earnings of those non-U.S. subsidiaries was included in the deemed repatriation charge recorded as of December 31, 2017. The Firm will recognize any taxes it may incur on global intangible low tax income as income tax expense in the period in which the tax is incurred.
The Firm adjusts its unrecognized tax benefits as necessary when additional information becomes available. Uncertain tax positions that meet the more-likely-than-not recognition threshold are measured to determine the amount of benefit to recognize. An uncertain tax position is measured at the largest amount of benefit that management believes is more likely than not to be realized upon settlement. It is possible that the reassessment of JPMorgan Chase’s unrecognized tax benefits may have a material impact on its effective income tax rate in the period in which the reassessment occurs.
The income tax expenseRefer to Note 25 for the current year includes a change in estimate recorded under SEC Staff Accounting Bulletin No. 118 (SAB 118) resulting from the enactment of the TCJA. The accounting under SAB 118 is complete.
For additional information on income taxes, refer to Note 24.taxes.
Litigation reserves
ForRefer to Note 30 for a description of the significant estimates and judgments associated with establishing litigation reserves, refer to
Note 29.reserves.

JPMorgan Chase & Co./20182020 Form 10-K143155
Management’s discussion and analysis

ACCOUNTING AND REPORTING DEVELOPMENTS
Financial Accounting Standards Board (“FASB”) Standards Adopted since January 1, 2020
ACCOUNTING AND REPORTING DEVELOPMENTSStandard
Summary of guidanceEffects on financial statements
Financial Accounting Standards Board (“FASB”) Standards Adopted during 2018
StandardSummary of guidanceEffects on financial statements
Revenue recognition – revenue from contracts with customers
Issued May 2014

 • Requires that revenue from contracts with customers be recognized upon transfer of control of a good or service in the amount of consideration expected to be received.
 • Changes the accounting for certain contract costs, including whether they may be offset against revenue in the Consolidated statements of income, and requires additional disclosures about revenue and contract costs.

 • Adopted January 1, 2018.
 • For further information, refer to Note 1.
Recognition and
measurement of financial assets and financial liabilities
Issued January 2016
 • Requires that certain equity instruments be measured at fair value, with changes in fair value recognized in earnings.
 • Provides a measurement alternative for equity securities without readily determinable fair values to be measured at cost less impairment (if any), plus or minus observable price changes from an identical or similar investment of the same issuer. Any such price changes are reflected in earnings beginning in the period of adoption.

 • Adopted January 1, 2018.
 • For further information, refer to Note 1.
Classification of certain cash receipts and cash payments in the statement of cash flows
Issued August 2016

 • Provides targeted amendments to the classification of certain cash flows, including the treatment of settlement payments for zero coupon debt instruments and distributions received from equity method investments.
 • Adopted January 1, 2018.
 • The adoption of the guidance had no material impact as the Firm was either in compliance with the amendments or the amounts to which it was applied were immaterial.
Treatment of restricted cash on the statement of cash flows
Issued November 2016
 • Requires restricted cash to be combined with unrestricted cash when reconciling the beginning and ending cash balances on the Consolidated statements of cash flows.
 • Requires additional disclosures to supplement the Consolidated statements of cash flows.

 • Adopted January 1, 2018
 • For further information, refer to Note 1.


144JPMorgan Chase & Co./2018 Form 10-K


FASB Standards Adopted during 2018 (continued)
StandardSummary of guidanceEffects on financial statements
Definition of a business
Issued January 2017
 • Narrows the definition of a business and clarifies that, to be considered a business, substantially all of the fair value of the gross assets acquired (or disposed of) may not be concentrated in a single identifiable asset or a group of similar assets.
 • In addition, a business must now include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs.
 • Adopted January 1, 2018.
 • The adoption of the guidance had no impact because it is applied prospectively. Subsequent to adoption, fewer transactions will be treated as acquisitions or dispositions of a business.
Presentation of net periodic pension cost and net periodic postretirement benefit cost
Issued March 2017

 • Requires the service cost component of net periodic pension and postretirement benefit cost to be reported separately in the Consolidated statements of income from the other cost components.
 • Adopted January 1, 2018.
 • For further information, refer to Note 1.
Premium amortization on purchased callable debt securities
Issued March 2017

 • Requires amortization of premiums to the earliest call date on certain debt securities.

 • Adopted January 1, 2018.
 • For further information, refer to Note 1.
Hedge accounting
Issued August 2017
 • Aligns the accounting with the economics of the risk management activities.
 • Expands the ability for certain hedges of interest rate risk to qualify for hedge accounting.
 • Allows recognition of ineffectiveness in cash flow hedges and net investment hedges in OCI.
 • Permits an election at adoption to transfer certain investment securities classified as held-to-maturity to available-for-sale.
 • Simplifies hedge documentation requirements.
 • Adopted January 1, 2018.
 • For further information, refer to Note 1.
Reclassification of certain tax effects from AOCI
Issued February 2018
 • Permits reclassification of the income tax effects of the TCJA on items within AOCI to retained earnings so that the tax effects of items within AOCI reflect the appropriate tax rate.
 • Adopted January 1, 2018.
 • For further information, refer to Note 1.


JPMorgan Chase & Co./2018 Form 10-K145
Management’s discussion and analysis

FASB Standards Issued but not adopted as of December 31, 2018
StandardSummary of guidanceEffects on financial statements
Leases
Issued February 2016
 • Requires lessees to recognize all leases longer than twelve months on the Consolidated balance sheets as a lease liability with a corresponding right-of-use asset.
 • Requires lessees and lessors to classify most leases using principles similar to existing lease accounting, but eliminates the “bright line” classification tests.
 • Expands qualitative and quantitative leasing disclosures.

 • Adopted January 1, 2019.
 • The Firm elected the practical expedient to adopt and implement the new lease guidance as of January 1, 2019 through a cumulative-effect adjustment without revising prior comparative periods. Upon adoption, the Firm recognized lease right-of-use (“ROU”) assets and lease liabilities on the Consolidated balance sheet of $8.1 billion and $8.2 billion, respectively. The impact to the Firm’s CET1 capital ratio was a reduction of approximately 6 bps. The adoption of the new lease guidance did not have a material impact on the Firm’s Consolidated statement of income.
  • The Firm elected the available practical expedients to not reassess whether existing contracts contain a lease or whether classification or unamortized initial lease costs would be different under the new lease guidance.




Financial instruments – credit lossesInstruments - Credit Losses (“CECL”)
Issued June 2016
• Replaces existing incurred loss impairment guidance and establishesEstablishes a single allowance framework for all financial assets carriedmeasured at amortized cost which will reflectand certain off-balance sheet credit exposures. This framework requires that management’s estimate ofreflects credit losses over the fullinstrument’s remaining expected life of the financial assets and will considerconsiders expected future changes in macroeconomic conditions.
•Eliminates existing guidance for PCI loans, and requires recognition of the nonaccretable difference as an increase to the allowance for expected credit losses on financial assets purchased with more than insignificant credit deterioration since origination, which will be offset by anwith a corresponding increase in the recorded investmentamortized cost of the related loans.
•Requires inclusion of expected recoveries, limited to the cumulative amount of prior writeoffs, when estimating the allowance for credit losses for in scope financial assets (including collateral-dependent assets).
•Amends existing impairment guidance for AFS securities to incorporate an allowance, which will allow for reversals of credit impairments in the event that the credit of an issuer improves.
•Requires a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption.
• Required effective date:Adopted January 1, 2020.(a)
• The Firm has established a Firmwide, cross-discipline governance structure, which provides implementation oversight. The Firm continuesRefer to test and refine its current expected credit loss models that satisfy the requirements of the new standard. This review and testing, as well as efforts to meet expanded disclosure requirements, will extend through the remainder of 2019.
•
The Firm expects that the allowance related to the Firm’s loans and commitments will increase as it will cover credit losses over the full remaining expected life of the portfolios. The Firm currently intends to estimate losses over a two-year forecast period using the weighted-average of a range of macroeconomic scenarios (established on a Firmwide basis), and then revert to longer term historical loss experience to estimate losses over more extended periods.
•
The Firm currently expects the increase in the allowance to be in the range of $4-6 billion, primarily driven by Card. This estimate is subject toNote 1 for further refinement based on continuing reviews and approvals of models, methodologies and judgments. The ultimate impact will depend upon the nature and characteristics of the Firm’s portfolio at the adoption date, the macroeconomic conditions and forecasts at that date, and other management judgments.
•
The Firm plans to adopt the new guidance on January 1, 2020.information.
Goodwill
Issued January 2017
•Requires recognition of an impairment loss to be recognized when the estimated fair value of a reporting unit falls below its carrying value.
•Eliminates the second condition in the current guidancerequirement that requires an impairment loss to be recognized only if the estimated implied fair value of the goodwill is below its carrying value.
• Required effective date:Adopted January 1, 2020.
(a)•No impact upon adoption as the guidance was applied prospectively.
• Based onRefer to Note 15 for further information.
Reference Rate
Reform

Issued March
2020 and updated January 2021
•Provides optional expedients and exceptions to current impairment test results,accounting guidance when financial instruments, hedge accounting relationships, and other transactions are amended due to reference rate reform.
•Provides an election to account for certain contract amendments related to reference rate reform as modifications rather than extinguishments without the requirement to assess the significance of the amendments.
•Allows for changes in critical terms of a hedge accounting relationship without automatic termination of that relationship. Provides various practical expedients and elections designed to allow hedge accounting to continue uninterrupted during the transition period.
•Provides a one-time election to transfer securities out of the held-to-maturity classification if certain criteria are met.
•The January 2021 update provides an election to account for derivatives modified to change the rate used for discounting, margining, or contract price alignment (collectively “discounting transition”) as modifications.
•Issued and effective March 12, 2020. The January 7, 2021 update was effective when issued.
•The Firm doeselected to apply certain of the practical expedients related to contract modifications and hedge accounting relationships, and discounting transition beginning in the third quarter of 2020. The discounting transition election was applied retrospectively. The main purpose of the practical expedients is to ease the administrative burden of accounting for contracts impacted by reference rate reform, and these elections did not expecthave a material effectimpact on the Consolidated Financial Statements. However, the impact of the new accounting guidance will depend on the performance of the reporting units and the market conditions at the time of adoption.
 • After adoption, the guidance may result in more frequent goodwill impairment losses due to the removal of the second condition.
 • The Firm plans to adopt the new guidance on January 1, 2020.
(a)Early adoption is permitted.

146JPMorgan Chase & Co./2018 Form 10-K


156JPMorgan Chase & Co./2020 Form 10-K

FORWARD-LOOKING STATEMENTS
From time to time, the Firm has made and will make forward-looking statements. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “anticipate,” “target,” “expect,” “estimate,” “intend,” “plan,” “goal,” “believe,” or other words of similar meaning. Forward-looking statements provide JPMorgan Chase’s current expectations or forecasts of future events, circumstances, results or aspirations. JPMorgan Chase’s disclosures in this 20182020 Form 10-K contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Firm also may make forward-looking statements in its other documents filed or furnished with the SEC. In addition, the Firm’s senior management may make forward-looking statements orally to investors, analysts, representatives of the media and others.
All forward-looking statements are, by their nature, subject to risks and uncertainties, many of which are beyond the Firm’s control. JPMorgan Chase’s actual future results may differ materially from those set forth in its forward-looking statements. While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ from those in the forward-looking statements:
•Economic, financial, reputational and other impacts of the COVID-19 pandemic;
•Local, regional and global business, economic and political conditions and geopolitical events;
•Changes in laws and regulatory requirements, including capital and liquidity requirements affecting the Firm’s businesses, and the ability of the Firm to address those requirements;
•Heightened regulatory and governmental oversight and scrutiny of JPMorgan Chase’s business practices, including dealings with retail customers;
•Changes in trade, monetary and fiscal policies and laws;
•Changes in income tax laws and regulations;
•Securities and capital markets behavior, including changes in market liquidity and volatility;
•Changes in investor sentiment or consumer spending or savings behavior;
•Ability of the Firm to manage effectively its capital and liquidity, including approval of its capital plans by banking regulators;liquidity;
•Changes in credit ratings assigned to the Firm or its subsidiaries;
•Damage to the Firm’s reputation;
•Ability of the Firm to appropriately address social, environmental and environmentalsustainability concerns that may arise, including from its business activities;
•Ability of the Firm to deal effectively with an economic slowdown or other economic or market disruption;disruption, including, but not limited to, in the interest rate environment;
•Technology changes instituted by the Firm, its counterparties or competitors;
•The effectiveness of the Firm’s control agenda;
•Ability of the Firm to develop or discontinue products and services, and the extent to which products or services previously sold by the Firm (including but not limited to mortgages and asset-backed securities) require the Firm to incur liabilities or absorb losses not contemplated at their initiation or origination;
•Acceptance of the Firm’s new and existing products and services by the marketplace and the ability of the Firm to innovate and to increase market share;
•Ability of the Firm to attract and retain qualified and diverse employees;
•Ability of the Firm to control expenses;
•Competitive pressures;
•Changes in the credit quality of the Firm’s clients, customers and counterparties;
•Adequacy of the Firm’s risk management framework, disclosure controls and procedures and internal control over financial reporting;
•Adverse judicial or regulatory proceedings;
•Changes in applicable accounting policies, including the introduction of new accounting standards;
•Ability of the Firm to determine accurate values of certain assets and liabilities;
•Occurrence of natural or man-made disasters or calamities, including health emergencies, the spread of infectious diseases, pandemics or conflictsoutbreaks of hostilities, or the effects of climate change, and the Firm’s ability to deal effectively with disruptions caused by the foregoing;
•Ability of the Firm to maintain the security of its financial, accounting, technology, data processing and other operational systems and facilities;
•Ability of the Firm to withstand disruptions that may be caused by any failure of its operational systems or those of third parties;
•Ability of the Firm to effectively defend itself against cyberattackscyber attacks and other attempts by unauthorized parties to access information of the Firm or its customers or to disrupt the Firm’s systems; and
•The other risks and uncertainties detailed in Part I, Item 1A: Risk Factors in the Firm’s 2018JPMorgan Chase’s 2020 Form 10-K.
Any forward-looking statements made by or on behalf of the Firm speak only as of the date they are made, and JPMorgan Chase does not undertake to update any forward-looking statements. The reader should, however, consult any further disclosures of a forward-looking nature the Firm may make in any subsequent Annual Reports on Form 10-K,10-Ks, Quarterly Reports on Form 10-Q,10-Qs, or Current Reports on Form 8-K.


JPMorgan Chase & Co./20182020 Form 10-K147157
Management’s report on internal control over financial reporting


Management of JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”) is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Firm’s principal executive and principal financial officers, or persons performing similar functions, and effected by JPMorgan Chase’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.America (“U.S. GAAP”).
JPMorgan Chase’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records, that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Firm’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,U.S. GAAP, and that receipts and expenditures of the Firm are being made only in accordance with authorizations of JPMorgan Chase’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Firm’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management has completed an assessment of the effectiveness of the Firm’s internal control over financial reporting as of December 31, 2018.2020. In making the assessment, management used the “Internal Control — Integrated Framework” (“COSO 2013”) promulgated by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Based upon the assessment performed, management concluded that as of December 31, 2018,2020, JPMorgan Chase’s internal control over financial reporting was effective based upon the COSO 2013 framework. Additionally, based upon management’s assessment, the Firm determined that there were no material weaknesses in its internal control over financial reporting as of December 31, 2018.2020.
The effectiveness of the Firm’s internal control over financial reporting as of December 31, 2018,2020, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

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James Dimon
Chairman and Chief Executive Officer

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Marianne LakeJennifer Piepszak
Executive Vice President and Chief Financial Officer


February 26, 201923, 2021

148158JPMorgan Chase & Co./20182020 Form 10-K
Report of Independent Registered Public Accounting Firm

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To the Board of Directors and Shareholders of JPMorgan Chase & Co.:
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of JPMorgan Chase & Co. and its subsidiaries (the “Firm”) as of December 31, 20182020 and 2017,2019, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2018,2020, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Firm’s internal control over financial reporting as of December 31, 2018,2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Firm as of December 31, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20182020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Firm maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018,2020, based on criteria established in Internal Control – Integrated Framework (2013)(2013) issued by the COSO.
Change in Accounting Principle
As discussed in Note 1 and Note 13 to the consolidated financial statements, the Firm changed the manner in which it accounts for credit losses on certain financial instruments in 2020.
Basis for Opinions
The Firm’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s report on internal control over financial reporting. Our responsibility is to express opinions on the Firm’s consolidated financial statements and on the Firm’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Firm in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP 300 Madison Avenue New York, NY 10017
JPMorgan Chase & Co./2020 Form 10-K159
Report of Independent Registered Public Accounting Firm
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Allowance for Loan Losses – Portfolio-based component of Wholesale Loan and Credit Card Loan Portfolios
As described in Note 13 to the consolidated financial statements, the allowance for loan losses for the portfolio-based component of the wholesale and credit card loan portfolios was $23.4 billion on total portfolio-based retained loans of $653.4 billion at December 31, 2020. The Firm’s allowance for loan losses represents management’s estimate of expected credit losses over the remaining expected life of the Firm's loan portfolios and considers expected future changes in macroeconomic conditions. The portfolio-based component of the Firm’s allowance for loan losses for the wholesale and credit card retained loan portfolios begins with a quantitative calculation of expected credit losses over the expected life of the loan by applying credit loss factors to the estimated exposure at default. The credit loss factors applied are determined based on the weighted average of five internally developed macroeconomic scenarios that take into consideration the Firm's economic outlook as derived through forecast macroeconomic variables, the most significant of which are U.S. unemployment and U.S. real gross domestic product. This quantitative calculation is further adjusted to take into consideration model imprecision, emerging risk assessments, trends and other subjective factors that are not yet otherwise reflected in the credit loss estimate.
The principal considerations for our determination that performing procedures relating to the allowance for loan losses for the portfolio-based component of the wholesale and credit card loan portfolios is a critical audit matter are (i) the significant judgment and estimation by management in the forecast of macroeconomic variables, specifically U.S. unemployment and U.S. real gross domestic product, as the Firm’s forecasts of economic conditions significantly affect its estimate of expected credit losses at the balance sheet date, (ii) the significant judgment and estimation by management in determining the quantitative calculation utilized in their credit loss estimates and the adjustments to take into consideration model imprecision, emerging risk assessments, trends and other subjective factors that are not yet otherwise reflected in the credit loss estimate, which both in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and in evaluating audit evidence obtained relating to the credit
loss estimates and the appropriateness of the adjustments to the credit loss estimates, and (iii) the audit effort involved professionals with specialized skill and knowledge to assist in evaluating the audit evidence.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the Firm’s allowance for loan losses, including controls over model validation and generation of macroeconomic scenarios. These procedures also included, among others, testing management’s process for estimating the allowance for loan losses, which involved (i) evaluating the appropriateness of the models and methodologies used in quantitative calculations; (ii) evaluating the reasonableness of forecasts of U.S. unemployment and U.S. real gross domestic product; (iii) testing the completeness and accuracy of data used in the estimate; and (iv) evaluating the reasonableness of management’s adjustments to the quantitative output for the impacts of model imprecision, emerging risk assessments, trends and other subjective factors that are not yet otherwise reflected in the credit loss estimate. These procedures also included the use of professionals with specialized skill and knowledge to assist in evaluating the appropriateness of certain models, methodologies and macroeconomic variables.
Fair Value of Certain Level 3 Financial Instruments
As described in Notes 2 and 3 to the consolidated financial statements, the Firm carries $1.2 trillion of its assets and $437.6 billion of its liabilities at fair value on a recurring basis. Included in these balances are $10.3 billion of trading assets and $41.5 billion of liabilities measured at fair value on a recurring basis, collectively financial instruments, which are classified as level 3 as they contain one or more inputs to valuation which are unobservable and significant to their fair value measurement. The Firm utilized internally developed valuation models and unobservable inputs to estimate fair value of the level 3 financial instruments. The unobservable inputs used by management to estimate the fair value of certain of these financial instruments include forward equity prices, volatility relating to interest rates and equity prices and correlation relating to interest rates, equity prices, credit and foreign exchange rates.
The principal considerations for our determination that performing procedures relating to the fair value of certain level 3 financial instruments is a critical audit matter are (i) the significant judgment and estimation by management in determining the inputs to estimate fair value, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures related to the fair value of these financial instruments, and (ii) the audit effort involved professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained from these procedures.
160JPMorgan Chase & Co./2020 Form 10-K
Report of Independent Registered Public Accounting Firm
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the Firm’s processes for determining fair value which include controls over models, inputs, and data. These procedures also included, among others, the involvement of professionals with specialized skill and knowledge to assist in developing an independent estimate of fair value for a sample of these financial instruments. Developing the independent estimate involved testing the completeness and accuracy of data provided by management, developing independent inputs and, as appropriate, evaluating and utilizing management’s aforementioned unobservable inputs; and comparing management’s estimate to the independently developed estimate of fair value.

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February 26, 201923, 2021

We have served as the Firm’s auditor since 1965.


PricewaterhouseCoopers LLP Ÿ  300 Madison Avenue Ÿ  New York, NY 10017

JPMorgan Chase & Co./20182020 Form 10-K149161
Consolidated statements of income



Year ended December 31, (in millions, except per share data)2018
 2017
 2016
Revenue     
Investment banking fees$7,550
 $7,412
 $6,572
Principal transactions12,059
 11,347
 11,566
Lending- and deposit-related fees6,052
 5,933
 5,774
Asset management, administration and commissions17,118
 16,287
 15,364
Investment securities gains/(losses)(395) (66) 141
Mortgage fees and related income1,254
 1,616
 2,491
Card income4,989
 4,433
 4,779
Other income5,343
 3,646
 3,799
Noninterest revenue53,970
 50,608
 50,486
Interest income77,442
 64,372
 55,901
Interest expense22,383
 14,275
 9,818
Net interest income55,059
 50,097
 46,083
Total net revenue109,029
 100,705
 96,569
      
Provision for credit losses4,871
 5,290
 5,361
      
Noninterest expense     
Compensation expense33,117
 31,208
 30,203
Occupancy expense3,952
 3,723
 3,638
Technology, communications and equipment expense8,802
 7,715
 6,853
Professional and outside services8,502
 7,890
 7,526
Marketing3,290
 2,900
 2,897
Other expense5,731
 6,079
 5,555
Total noninterest expense63,394
 59,515
 56,672
Income before income tax expense40,764
 35,900
 34,536
Income tax expense8,290
 11,459
 9,803
Net income$32,474
 $24,441
 $24,733
Net income applicable to common stockholders$30,709
 $22,567
 $22,834
Net income per common share data     
Basic earnings per share$9.04
 $6.35
 $6.24
Diluted earnings per share9.00
 6.31
 6.19
      
Weighted-average basic shares3,396.4
 3,551.6
 3,658.8
Weighted-average diluted shares3,414.0
 3,576.8
 3,690.0

Effective January 1, 2018,
Year ended December 31, (in millions, except per share data)202020192018
Revenue
Investment banking fees$9,486 $7,501 $7,550 
Principal transactions18,021 14,018 12,059 
Lending- and deposit-related fees(a)
6,511 6,626 6,377 
Asset management, administration and commissions(a)
18,177 16,908 16,793 
Investment securities gains/(losses)802 258 (395)
Mortgage fees and related income3,091 2,036 1,254 
Card income(b)
4,435 5,076 4,743 
Other income4,457 5,731 5,343 
Noninterest revenue64,980 58,154 53,724 
Interest income64,523 84,040 76,100 
Interest expense9,960 26,795 21,041 
Net interest income54,563 57,245 55,059 
Total net revenue119,543 115,399 108,783 
Provision for credit losses17,480 5,585 4,871 
Noninterest expense
Compensation expense34,988 34,155 33,117 
Occupancy expense4,449 4,322 3,952��
Technology, communications and equipment expense10,338 9,821 8,802 
Professional and outside services8,464 8,533 8,502 
Marketing(b)
2,476 3,351 3,044 
Other expense5,941 5,087 5,731 
Total noninterest expense66,656 65,269 63,148 
Income before income tax expense35,407 44,545 40,764 
Income tax expense6,276 8,114 8,290 
Net income$29,131 $36,431 $32,474 
Net income applicable to common stockholders$27,410 $34,642 $30,709 
Net income per common share data
Basic earnings per share$8.89 $10.75 $9.04 
Diluted earnings per share8.88 10.72 9.00 
Weighted-average basic shares3,082.4 3,221.5 3,396.4 
Weighted-average diluted shares3,087.4 3,230.4 3,414.0 
(a)In the first quarter of 2020, the Firm adopted several new accounting standards. Certainreclassified certain fees from asset management, administration and commissions to lending- and deposit-related fees. Prior-period amounts have been revised to conform with the current presentation.
(b)In the second quarter of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.

The Notes to Consolidated Financial Statements are an integral part of these statements.

150JPMorgan Chase & Co./2018 Form 10-K
Consolidated statements of comprehensive income


Year ended December 31, (in millions) 2018
 2017
 2016
Net income $32,474
 $24,441
 $24,733
Other comprehensive income/(loss), after–tax      
Unrealized gains/(losses) on investment securities (1,858) 640
 (1,105)
Translation adjustments, net of hedges 20
 (306) (2)
Fair value hedges (107) NA
 NA
Cash flow hedges (201) 176
 (56)
Defined benefit pension and OPEB plans (373) 738
 (28)
DVA on fair value option elected liabilities 1,043
 (192) (330)
Total other comprehensive income/(loss), after–tax (1,476) 1,056
 (1,521)
Comprehensive income $30,998
 $25,497
 $23,212
Effective January 1, 2018,2020, the Firm adopted several new accounting standards. For additional information, referreclassified certain spend-based credit card reward costs from marketing expense to Note 1.be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.

The Notes to Consolidated Financial Statements are an integral part of these statements.

JPMorgan Chase & Co./2018 Form 10-K151
Consolidated balance sheets


December 31, (in millions, except share data)2018 2017
Assets   
Cash and due from banks$22,324
 $25,898
Deposits with banks256,469
 405,406
Federal funds sold and securities purchased under resale agreements (included 13,235 and $14,732 at fair value)
321,588
 198,422
Securities borrowed (included $5,105 and $3,049 at fair value)
111,995
 105,112
Trading assets (included assets pledged of $89,073 and $109,887)
413,714
 381,844
Investment securities (included $230,394 and $202,225 at fair value and assets pledged of $11,432 and $17,969)
261,828
 249,958
Loans (included $3,151 and $2,508 at fair value)
984,554
 930,697
Allowance for loan losses(13,445) (13,604)
Loans, net of allowance for loan losses971,109
 917,093
Accrued interest and accounts receivable73,200
 67,729
Premises and equipment14,934
 14,159
Goodwill, MSRs and other intangible assets54,349
 54,392
Other assets (included $9,630 and $16,128 at fair value and assets pledged of $3,457 and $7,980)
121,022
 113,587
Total assets(a)
$2,622,532
 $2,533,600
Liabilities   
Deposits (included $23,217 and $21,321 at fair value)
$1,470,666
 $1,443,982
Federal funds purchased and securities loaned or sold under repurchase agreements (included $935 and $697 at fair value)
182,320
 158,916
Short-term borrowings (included $7,130 and $9,191 at fair value)
69,276
 51,802
Trading liabilities144,773
 123,663
Accounts payable and other liabilities (included $3,269 and $9,208 at fair value)
196,710
 189,383
Beneficial interests issued by consolidated VIEs (included $28 and $45 at fair value)
20,241
 26,081
Long-term debt (included $54,886 and $47,519 at fair value)
282,031
 284,080
Total liabilities(a)
2,366,017
 2,277,907
Commitments and contingencies (refer to Notes 27, 28 and 29)


 


Stockholders’ equity   
Preferred stock ($1 par value; authorized 200,000,000 shares: issued 2,606,750 shares)
26,068
 26,068
Common stock ($1 par value; authorized 9,000,000,000 shares; issued 4,104,933,895 shares)
4,105
 4,105
Additional paid-in capital89,162
 90,579
Retained earnings199,202
 177,676
Accumulated other comprehensive loss(1,507) (119)
Shares held in restricted stock units (“RSU”) trust, at cost (472,953 shares)
(21) (21)
Treasury stock, at cost (829,167,674 and 679,635,064 shares)
(60,494) (42,595)
Total stockholders’ equity256,515
 255,693
Total liabilities and stockholders’ equity$2,622,532
 $2,533,600
Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.
(a)The following table presents information on assets and liabilities related to VIEs that are consolidated by the Firm at December 31, 2018 and 2017. The assets of the consolidated VIEs are used to settle the liabilities of those entities. The holders of the beneficial interests do not have recourse to the general credit of JPMorgan Chase. The assets and liabilities in the table below include third-party assets and liabilities of consolidated VIEs and exclude intercompany balances that eliminate in consolidation. For a further discussion, refer to Note 14.
December 31, (in millions)2018 2017
Assets   
Trading assets$1,966
 $1,449
Loans59,456
 68,995
All other assets1,013
 2,674
Total assets$62,435
 $73,118
Liabilities   
Beneficial interests issued by consolidated VIEs$20,241
 $26,081
All other liabilities312
 349
Total liabilities$20,553
 $26,430


The Notes to Consolidated Financial Statements are an integral part of these statements.

152JPMorgan Chase & Co./2018 Form 10-K
Consolidated statements of changes in stockholders’ equity

Year ended December 31, (in millions, except per share data) 2018
2017 2016
Preferred stock      
Balance at January 1 $26,068
 $26,068
 $26,068
Issuance 1,696
 1,258
 —
Redemption (1,696) (1,258) —
Balance at December 31 26,068
 26,068
 26,068
Common stock      
Balance at January 1 and December 31 4,105
 4,105
 4,105
Additional paid-in capital      
Balance at January 1 90,579
 91,627
 92,500
Shares issued and commitments to issue common stock for employee share-based compensation awards, and related tax effects (738) (734) (334)
Other (679) (314) (539)
Balance at December 31 89,162
 90,579
 91,627
Retained earnings      
Balance at January 1 177,676
 162,440
 146,420
Cumulative effect of change in accounting principles (183) —
 (154)
Net income 32,474
 24,441
 24,733
Dividends declared:      
Preferred stock (1,551) (1,663) (1,647)
Common stock ($2.72, $2.12 and $1.88 per share for 2018, 2017 and 2016, respectively)
 (9,214) (7,542) (6,912)
Balance at December 31 199,202
 177,676
 162,440
Accumulated other comprehensive income      
Balance at January 1 (119) (1,175) 192
Cumulative effect of change in accounting principles 88
 —
 154
Other comprehensive income/(loss), after-tax (1,476) 1,056
 (1,521)
Balance at December 31 (1,507) (119) (1,175)
Shares held in RSU Trust, at cost      
Balance at January 1 and December 31 (21) (21) (21)
Treasury stock, at cost      
Balance at January 1 (42,595) (28,854) (21,691)
Repurchase (19,983) (15,410) (9,082)
Reissuance 2,084
 1,669
 1,919
Balance at December 31 (60,494) (42,595) (28,854)
Total stockholders’ equity $256,515
 $255,693
 $254,190
Effective January 1, 2018, the Firm adopted several new accounting standards. For additional information, refer to Note 1.

The Notes to Consolidated Financial Statements are an integral part of these statements.


162JPMorgan Chase & Co./20182020 Form 10-K153
Consolidated statements of cash flows

comprehensive income

Year ended December 31, (in millions)202020192018
Net income$29,131 $36,431 $32,474 
Other comprehensive income/(loss), after–tax
Unrealized gains/(losses) on investment securities4,123 2,855 (1,858)
Translation adjustments, net of hedges234 20 20 
Fair value hedges19 30 (107)
Cash flow hedges2,320 172 (201)
Defined benefit pension and OPEB plans212 964 (373)
DVA on fair value option elected liabilities(491)(965)1,043 
Total other comprehensive income/(loss), after–tax6,417 3,076 (1,476)
Comprehensive income$35,548 $39,507 $30,998 
Year ended December 31, (in millions)2018 2017 2016
Operating activities     
Net income$32,474
 $24,441
 $24,733
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:     
Provision for credit losses4,871
 5,290
 5,361
Depreciation and amortization7,791
 6,179
 5,478
Deferred tax expense1,721
 2,312
 4,651
Other2,717
 2,136
 1,799
Originations and purchases of loans held-for-sale(102,141) (94,628) (61,107)
Proceeds from sales, securitizations and paydowns of loans held-for-sale93,453
 93,270
 60,196
Net change in:     
Trading assets(38,371) 5,673
 (20,007)
Securities borrowed(6,861) (8,653) 2,313
Accrued interest and accounts receivable(5,849) (15,868) (5,815)
Other assets(8,833) 3,982
 (4,176)
Trading liabilities18,290
 (26,256) 5,198
Accounts payable and other liabilities14,630
 (16,508) 5,087
Other operating adjustments295
 7,803
 (1,827)
Net cash provided by/(used in) operating activities14,187
 (10,827) 21,884
Investing activities     
Net change in:     
Federal funds sold and securities purchased under resale agreements(123,201) 31,448
 (17,468)
Held-to-maturity securities:     
Proceeds from paydowns and maturities2,945
 4,563
 6,218
Purchases(9,368) (2,349) (143)
Available-for-sale securities:     
Proceeds from paydowns and maturities37,401
 56,117
 65,950
Proceeds from sales46,067
 90,201
 48,592
Purchases(95,091) (105,309) (123,959)
Proceeds from sales and securitizations of loans held-for-investment29,826
 15,791
 15,429
Other changes in loans, net(81,586) (61,650) (80,996)
All other investing activities, net(4,986) (563) (2,825)
Net cash provided by/(used in) investing activities(197,993) 28,249
 (89,202)
Financing activities     
Net change in:     
Deposits26,728
 57,022
 97,336
Federal funds purchased and securities loaned or sold under repurchase agreements23,415
 (6,739) 13,007
Short-term borrowings18,476
 16,540
 (2,461)
Beneficial interests issued by consolidated VIEs1,712
 (1,377) (5,707)
Proceeds from long-term borrowings71,662
 56,271
 83,070
Payments of long-term borrowings(76,313) (83,079) (68,949)
Proceeds from issuance of preferred stock1,696
 1,258
 —
Redemption of preferred stock(1,696) (1,258) —
Treasury stock repurchased(19,983) (15,410) (9,082)
Dividends paid(10,109) (8,993) (8,476)
All other financing activities, net(1,430) 407
 (467)
Net cash provided by financing activities34,158
 14,642
 98,271
Effect of exchange rate changes on cash and due from banks and deposits with banks(2,863) 8,086
 (1,482)
Net increase/(decrease) in cash and due from banks and deposits with banks(152,511) 40,150
 29,471
Cash and due from banks and deposits with banks at the beginning of the period431,304
 391,154
 361,683
Cash and due from banks and deposits with banks at the end of the period$278,793
 $431,304
 $391,154
Cash interest paid$21,152
 $14,153
 $9,508
Cash income taxes paid, net3,542
 4,325
 2,405
Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.
The Notes to Consolidated Financial Statements are an integral part of these statements.

JPMorgan Chase & Co./2020 Form 10-K163
Consolidated balance sheets

December 31, (in millions, except share data)20202019
Assets
Cash and due from banks$24,874 $21,704 
Deposits with banks502,735 241,927 
Federal funds sold and securities purchased under resale agreements (included $238,015 and $14,561 at fair value)
296,284 249,157 
Securities borrowed (included $52,983 and $6,237 at fair value)
160,635 139,758 
Trading assets (included assets pledged of $130,645 and $111,522)(a)
503,126 369,687 
Available-for-sale securities (amortized cost of $381,729 and $345,306; included assets pledged of $32,227 and $10,325)
388,178 350,699 
Held-to-maturity securities (net of allowance for credit losses of $78)201,821 47,540 
Investment securities, net of allowance for credit losses589,999 398,239 
Loans (included $44,474 and $44,955 at fair value)(a)
1,012,853 997,620 
Allowance for loan losses(28,328)(13,123)
Loans, net of allowance for loan losses984,525 984,497 
Accrued interest and accounts receivable90,503 72,861 
Premises and equipment27,109 25,813 
Goodwill, MSRs and other intangible assets53,428 53,341 
Other assets (included $13,827 and $12,676 at fair value and assets pledged of $3,739 and $3,349)(a)
152,853 130,395 
Total assets(b)
$3,386,071 $2,687,379 
Liabilities
Deposits (included $14,484 and $28,589 at fair value)
$2,144,257 $1,562,431 
Federal funds purchased and securities loaned or sold under repurchase agreements (included $155,735 and $549 at fair value)
215,209 183,675 
Short-term borrowings (included $16,893 and $5,920 at fair value)
45,208 40,920 
Trading liabilities170,181 119,277 
Accounts payable and other liabilities (included $3,476 and $3,728 at fair value)
232,599 210,407 
Beneficial interests issued by consolidated VIEs (included $41 and $36 at fair value)
17,578 17,841 
Long-term debt (included $76,817 and $75,745 at fair value)
281,685 291,498 
Total liabilities(b)
3,106,717 2,426,049 
Commitments and contingencies (refer to Notes 28, 29 and 30)00
Stockholders’ equity
Preferred stock ($1 par value; authorized 200,000,000 shares: issued 3,006,250 and 2,699,250 shares)
30,063 26,993 
Common stock ($1 par value; authorized 9,000,000,000 shares; issued 4,104,933,895 shares)
4,105 4,105 
Additional paid-in capital88,394 88,522 
Retained earnings236,990 223,211 
Accumulated other comprehensive income7,986 1,569 
Shares held in restricted stock units (“RSU”) trust, at cost (0 and 472,953 shares)
0 (21)
Treasury stock, at cost (1,055,499,435 and 1,020,912,567 shares)
(88,184)(83,049)
Total stockholders’ equity279,354 261,330 
Total liabilities and stockholders’ equity$3,386,071 $2,687,379 
Effective January 1, 2020, the Firm adopted the CECL accounting guidance. Refer to Note 1 for further information.
(a)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans and other assets. Prior-period amounts have been revised to conform with the current presentation.
(b)The following table presents information on assets and liabilities related to VIEs that are consolidated by the Firm at December 31, 2020 and 2019. The assets of the consolidated VIEs are used to settle the liabilities of those entities. The holders of the beneficial interests do not have recourse to the general credit of JPMorgan Chase. The assets and liabilities in the table below include third-party assets and liabilities of consolidated VIEs and exclude intercompany balances that eliminate in consolidation. Refer to Note 14 for a further discussion.
December 31, (in millions)20202019
Assets
Trading assets$1,934 $2,633 
Loans37,619 42,931 
All other assets681 881 
Total assets$40,234 $46,445 
Liabilities
Beneficial interests issued by consolidated VIEs$17,578 $17,841 
All other liabilities233 447 
Total liabilities$17,811 $18,288 

The Notes to Consolidated Financial Statements are an integral part of these statements.
154164JPMorgan Chase & Co./20182020 Form 10-K
Consolidated statements of changes in stockholders’ equity
Year ended December 31, (in millions, except per share data)202020192018
Preferred stock
Balance at January 1$26,993 $26,068 $26,068 
Issuance4,500 5,000 1,696 
Redemption(1,430)(4,075)(1,696)
Balance at December 3130,063 26,993 26,068 
Common stock
Balance at January 1 and December 314,105 4,105 4,105 
Additional paid-in capital
Balance at January 188,522 89,162 90,579 
Shares issued and commitments to issue common stock for employee share-based compensation awards, and related tax effects(72)(591)(738)
Other(56)(49)(679)
Balance at December 3188,394 88,522 89,162 
Retained earnings
Balance at January 1223,211 199,202 177,676 
Cumulative effect of change in accounting principles(2,650)62 (183)
Net income29,131 36,431 32,474 
Dividends declared:
Preferred stock(1,583)(1,587)(1,551)
Common stock ($3.60, $3.40 and $2.72 per share for 2020, 2019 and 2018, respectively)
(11,119)(10,897)(9,214)
Balance at December 31236,990 223,211 199,202 
Accumulated other comprehensive income
Balance at January 11,569 (1,507)(119)
Cumulative effect of change in accounting principles— — 88 
Other comprehensive income/(loss), after-tax6,417 3,076 (1,476)
Balance at December 317,986 1,569 (1,507)
Shares held in RSU Trust, at cost
Balance at the beginning of the period(21)(21)(21)
Liquidation of RSU Trust21 0 0 
Balance at December 310 (21)(21)
Treasury stock, at cost
Balance at January 1(83,049)(60,494)(42,595)
Repurchase(6,397)(24,121)(19,983)
Reissuance1,262 1,566 2,084 
Balance at December 31(88,184)(83,049)(60,494)
Total stockholders’ equity$279,354 $261,330 $256,515 
Effective January 1, 2020, the Firm adopted the CECL accounting guidance. Refer to Note 1 for further information.

The Notes to Consolidated Financial Statements are an integral part of these statements.

JPMorgan Chase & Co./2020 Form 10-K165
Consolidated statements of cash flows

Year ended December 31, (in millions)202020192018
Operating activities
Net income$29,131 $36,431 $32,474 
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
Provision for credit losses17,480 5,585 4,871 
Depreciation and amortization8,614 8,368 7,791 
Deferred tax expense(3,981)949 1,721 
Other1,649 1,996 2,717 
Originations and purchases of loans held-for-sale(a)
(166,504)(169,289)(172,728)
Proceeds from sales, securitizations and paydowns of loans held-for-sale(a)
175,490 171,415 163,747 
Net change in:
Trading assets(a)
(148,749)6,551 (35,067)
Securities borrowed(20,734)(27,631)(6,861)
Accrued interest and accounts receivable(18,012)(78)(5,849)
Other assets(a)
(42,434)(17,570)(8,779)
Trading liabilities77,198 (14,516)18,290 
Accounts payable and other liabilities7,827 (352)14,630 
Other operating adjustments(a)
3,115 2,233 (1,343)
Net cash provided by/(used in) operating activities(79,910)4,092 15,614 
Investing activities
Net change in:
Federal funds sold and securities purchased under resale agreements(47,115)72,396 (123,201)
Held-to-maturity securities:
Proceeds from paydowns and maturities21,360 3,423 2,945 
Purchases(12,400)(13,427)(9,368)
Available-for-sale securities:
Proceeds from paydowns and maturities57,675 52,200 37,401 
Proceeds from sales149,758 70,181 46,067 
Purchases(397,145)(242,149)(95,091)
Proceeds from sales and securitizations of loans held-for-investment23,559 62,095 29,826 
Other changes in loans, net(a)
(50,263)(51,743)(83,013)
All other investing activities, net(7,341)(5,035)(4,986)
Net cash (used in) investing activities(261,912)(52,059)(199,420)
Financing activities
Net change in:
Deposits602,765 101,002 26,728 
Federal funds purchased and securities loaned or sold under repurchase agreements31,528 1,347 23,415 
Short-term borrowings4,438 (28,561)18,476 
Beneficial interests issued by consolidated VIEs1,347 4,289 1,712 
Proceeds from long-term borrowings78,686 61,085 71,662 
Payments of long-term borrowings(105,055)(69,610)(76,313)
Proceeds from issuance of preferred stock4,500 5,000 1,696 
Redemption of preferred stock(1,430)(4,075)(1,696)
Treasury stock repurchased(6,517)(24,001)(19,983)
Dividends paid(12,690)(12,343)(10,109)
All other financing activities, net(927)(1,146)(1,430)
Net cash provided by financing activities596,645 32,987 34,158 
Effect of exchange rate changes on cash and due from banks and deposits with banks9,155 (182)(2,863)
Net increase/(decrease) in cash and due from banks and deposits with banks263,978 (15,162)(152,511)
Cash and due from banks and deposits with banks at the beginning of the period263,631 278,793 431,304 
Cash and due from banks and deposits with banks at the end of the period$527,609 $263,631 $278,793 
Cash interest paid$13,077 $29,918 $21,152 
Cash income taxes paid, net7,661 5,624 3,542 
(a) In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans and other assets. Prior-period amounts have been revised to conform with the current presentation.
The Notes to Consolidated Financial Statements are an integral part of these statements.
166JPMorgan Chase & Co./2020 Form 10-K
Notes to consolidated financial statements

Note 1 – Basis of presentation
JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”), a financial holding company incorporated under Delaware law in 1968, is a leading global financial services firm and one of the largest banking institutions in the U.S., with operations worldwide. The Firm is a leader in investment banking, financial services for consumers and small business,businesses, commercial banking, financial transaction processing and asset management. ForRefer to Note 32 for a further discussion of the Firm’s business segments, refer to Note 31.segments.
The accounting and financial reporting policies of JPMorgan Chase and its subsidiaries conform to U.S. GAAP. Additionally, where applicable, the policies conform to the accounting and reporting guidelines prescribed by regulatory authorities.
Certain amounts reported in prior periods have been reclassified to conform with the current presentation.
Consolidation
The Consolidated Financial Statements include the accounts of JPMorgan Chase and other entities in which the Firm has a controlling financial interest. All material intercompany balances and transactions have been eliminated.
Assets held for clients in an agency or fiduciary capacity by the Firm are not assets of JPMorgan Chase and are not included on the Consolidated balance sheets.
The Firm determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity.
Voting interest entities
Voting interest entities are entities that have sufficient equity and provide the equity investors voting rights that enable them to make significant decisions relating to the entity’s operations. For these types of entities, the Firm’s determination of whether it has a controlling interest is primarily based on the amount of voting equity interests held. Entities in which the Firm has a controlling financial interest, through ownership of the majority of the entities’ voting equity interests, or through other contractual rights that give the Firm control, are consolidated by the Firm.
Investments in companies in which the Firm has significant influence over operating and financing decisions (but does not own a majority of the voting equity interests) are accounted for (i) in accordance with the equity method of accounting (which requires the Firm to recognize its proportionate share of the entity’s net earnings), or (ii) at fair value if the fair value option was elected. These investments are generally included in other assets, with income or loss included in noninterest revenue.
Certain Firm-sponsored Firm-sponsored asset management funds are structured as limited partnerships or certain limited liability companies. For many of these entities, the Firm is the general partner or managing member, but the non-affiliated partners or members have the ability to remove the Firm as the general partner or managing member without cause
(i.e.without cause (i.e., kick-out rights), based on a simple majority vote, or the non-affiliated partners or members have rights to participate in important decisions. Accordingly, the Firm does not consolidate these voting interest entities. However, in the limited cases where the non-managing partners or members do not have substantive kick-out or participating rights, the Firm evaluates the funds as VIEs and consolidates the funds if the Firm is the general partner or managing member and has a potentially significant interest.
The Firm’s investment companies and asset management funds have investments in both publicly-held and privately-held entities,, including investments in buyouts, growth equity and venture opportunities. These investments are accounted for under investment company guidelines and, accordingly, irrespective of the percentage of equity ownership interests held, are carried on the Consolidated balance sheets at fair value, and are recorded in other assets, with income or loss included in noninterest revenue. If consolidated, the Firm retains the accounting under such specialized investment company guidelines.
Variable interest entities
VIEs are entities that, by design, either (1) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity.
The most common type of VIE is anan SPE. SPEs are commonly used in securitization transactions in order to isolate certain assets and distribute the cash flows from those assets to investors. The basic SPE structure involves a company selling assets to the SPE; the SPE funds the purchase of those assets by issuing securities to investors. The legal documents that govern the transaction specify how the cash earned on the assets must be allocated to the SPE’s investors and other parties that have rights to those cash flows. SPEs are generally structured to insulate investors from claims on the SPE’s assets by creditors of other entities, including the creditors of the seller of the assets.
The primary beneficiary of a VIE (i.e., the party that has a controlling financial interest) is required to consolidate the assets and liabilities of the VIE. The primary beneficiary is the party that has both (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; and (2) through its interests in the VIE, the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.
To assess whether the Firm has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, the Firm considers all the facts and
JPMorgan Chase & Co./2020 Form 10-K167
Notes to consolidated financial statements
circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment

JPMorgan Chase & Co./2018 Form 10-K155
Notes to consolidated financial statements

includes, first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE (such as asset managers, collateral managers, servicers, or owners of call options or liquidation rights over the VIE’s assets) or have the right to unilaterally remove those decision-makers are deemed to have the power to direct the activities of a VIE.
To assess whether the Firm has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, the Firm considers all of its economic interests, including debt and equity investments, servicing fees, and derivatives or other arrangements deemed to be variable interests in the VIE. This assessment requires that the Firm apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE’s capital structure; and the reasons why the interests are held by the Firm.
The Firm performs on-going reassessments of: (1) whether entities previously evaluated under the majority voting-interest framework have become VIEs, based on certain events, and are therefore subject to the VIE consolidation framework; and (2) whether changes in the facts and circumstances regarding the Firm’s involvement with a VIE cause the Firm’s consolidation conclusion to change.
Refer to Note 14 for further discussion of the Firm’s VIEs.
Revenue recognition
Interest income
The Firm recordsrecognizes interest income on loans, debt securities, and other debt instruments, generally on a level-yield basis, based on the underlying contractual rate. ForRefer to Note 7 for further discussion of interest income, refer to Note 7.income.
Revenue from contracts with customers
JPMorgan Chase recordsrecognizes noninterest revenue from certain contracts with customers under ASC 606, Revenue from Contracts with customers,, in investment banking fees, deposit-related fees, asset management administration and commissions, and components of card income. Under this guidance, revenue is recognizedincome, when the Firm’s related performance obligations are satisfied. ForRefer to Note 6 for further discussion of the Firm’s revenue from contracts with customers, refer to Note 6.customers.
Principal transactions revenue
JPMorgan Chase carries a portion of its assets and liabilities at fair value. Changes in fair value are reported primarily in principal transactions revenue. ForRefer to Notes 2 and 3 for further discussion of fair value measurement, refermeasurement. Refer to Notes 2 and 3. ForNote 6 for further discussion of principal transactions revenue, refer to Note 6.revenue.
Use of estimates in the preparation of consolidated financial statements
The preparation of the Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expense, and disclosures of contingent assets and liabilities. Actual results could be different from these estimates.
Foreign currency translation
JPMorgan Chase revalues assets, liabilities, revenue and expense denominated in non-U.S. currencies into U.S. dollars using applicable exchange rates.
Gains and losses relating to translating functional currency financial statements for U.S. reporting are included in OCI within stockholders’ equity. the Consolidated statements of comprehensive income. Gains and losses relating to nonfunctional currency transactions, including non-U.S. operations where the functional currency is the U.S. dollar, are reported in the Consolidated statements of income.
Offsetting assets and liabilities
U.S. GAAP permits entities to present derivative receivables and derivative payables with the same counterparty and the related cash collateral receivables and payables on a net basis on the Consolidated balance sheets when a legally enforceable master netting agreement exists. U.S. GAAP also permits securities sold and purchased under repurchase agreements and securities borrowed or loaned under securities loan agreements to be presented net when specified conditions are met, including the existence of a legally enforceable master netting agreement. The Firm has elected to net such balances when the specified conditions are met.
The Firm uses master netting agreementsto mitigate counterparty credit risk in certain transactions, including derivative contracts, resale, repurchase, securities borrowed and securities loaned agreements. A master netting agreement is a single agreement with a counterparty that permits multiple transactions governed by that agreement to be terminated or accelerated and settled through a single payment in a single currency in the event of a default (e.g., bankruptcy, failure to make a required payment or securities transfer or deliver collateral or margin when due). Upon the exercise of derivatives termination rights by the non-defaulting party (i) all transactions are terminated, (ii) all transactions are valued and the positive values of “in the money” transactions are netted against the negative values of “out of the money” transactions and (iii) the only remaining payment obligation is of one of the parties to pay the netted termination amount. Upon exercise of default rights under repurchase agreements and securities loan agreements in general (i) all transactions are terminated and accelerated, (ii) all values of securities or cash held or to be delivered are calculated, and all such sums are netted against each other and (iii) the only remaining payment obligation is of one of the parties to pay the netted termination amount.

156168JPMorgan Chase & Co./20182020 Form 10-K


Typical master netting agreements for these types of transactions also often contain a collateral/margin agreement that provides for a security interest in, or title transfer of, securities or cash collateral/margin to the party that has the right to demand margin (the “demanding party”). The collateral/margin agreement typically requires a party to transfer collateral/margin to the demanding party with a value equal to the amount of the margin deficit on a net basis across all transactions governed by the master netting agreement, less any threshold. The collateral/margin agreement grants to the demanding party, upon default by the counterparty, the right to set-off any amounts payable by the counterparty against any posted collateral or the cash equivalent of any posted collateral/margin. It also grants to the demanding party the right to liquidate collateral/margin and to apply the proceeds to an amount payable by the counterparty.
ForRefer to Note 5 for further discussion of the Firm’s derivative instruments, referinstruments. Refer to Note 5. For 11 for further discussion of the Firm’s securities financing agreements, refer to Note 11.agreements.
Statements of cash flows
For JPMorgan Chase’s Consolidated statements of cash flows, cash is defined as those amounts included in cash and due from banks and deposits with banks.
Accounting standardsstandard adopted January 1, 20182020
Revenue recognitionFinancial Instruments – revenue from contracts with customersCredit Losses (“CECL”)
The adoption of this guidance established a single allowance framework for all financial assets measured at amortized cost and certain off-balance sheet credit exposures. This framework requires gross presentation of certain costs that were previously offset against revenue. Adoptionmanagement’s estimate reflects credit losses over the instrument’s remaining expected life and considers expected future changes in macroeconomic conditions. Refer to Note 13 for further information. Prior to the adoption of the CECL accounting guidance, did not result in any material changesthe Firm’s allowance for credit losses represented management’s estimate of probable credit losses inherent in the timing ofFirm’s retained loan portfolios and certain lending-related commitments.
The following table presents the Firm’s revenue recognition. This guidance was adopted retrospectively and, accordingly, prior period amounts were revised, which resulted in an increase in both noninterest revenue and noninterest expense. The Firm did not apply any practical expedients. For additional information, referimpacts to the table on page 158 of this Note,allowance for credit losses and Note 6.
Recognition and measurement of financial assets and financial liabilities
Theretained earnings upon adoption of this guidance requires that certain equity instruments be measuredon January 1, 2020:
(in billions)December 31, 2019CECL adoption impactJanuary 1, 2020
Allowance for credit losses
Consumer, excluding credit card(a)
$2.6 $0.4 $3.0 
Credit card5.7 5.5 11.2 
Wholesale(a)
6.0 (1.6)4.4 
Firmwide$14.3 $4.3 $18.6 
Retained earnings
Firmwide allowance increase$4.3 
Balance sheet reclassification(b)
(0.8)
Total pre-tax impact3.5 
Tax effect(0.8)
Decrease to retained earnings$2.7 
(a)In conjunction with the adoption of CECL, the Firm reclassified risk-rated business banking and auto dealer loans and lending-related commitments held in CCB from the consumer, excluding credit card portfolio segment to the wholesale portfolio segment, to align with the methodology applied when determining the allowance. Prior-period amounts have been revised to conform with the current presentation. Accordingly, $0.6 billion of the allowance for credit losses at December 31, 2019 and $(0.2) billion of the CECL adoption impact were reclassified.
(b)Represents the recognition of the nonaccretable difference on purchased credit deteriorated loans and the Firm's election to recognize the reserve for uncollectible accrued interest on credit card loans in the allowance, both of which resulted in a corresponding increase to loans.
Securities Financing Agreements
As permitted by the guidance, the Firm elected the fair value with changes inoption for certain securities financing agreements. The difference between their carrying amount and fair value recognized in earnings.was immaterial and was recorded as part of the Firm’s cumulative-effect adjustment. Refer to Note 11 for further information.
Investment securities
Upon adoption, HTM securities are presented net of an
allowance for credit losses. The guidance also providesamended the
previous other-than-temporary impairment (“OTTI”) model
for AFS securities to incorporate an alternativeallowance. Refer to measure equity securities without readily determinable fair values at cost less impairment (if any), plus or minus observable price changes from an identical or similar investment
Note 10 for further information.
Credit quality disclosures
As a result of the same issuer (the “measurement alternative”). The Firm elected the measurement alternative for its qualifying equity securities and the adoption of the guidance resulted in fair value gains of $505 million which were recognized in other income in the first quarter of 2018. For additional information, refer to Notes 2 and 10.
Premium amortization on purchased callable debt securities
The adoption of this guidance, requires that premiums bethe Firm
expanded credit quality disclosures for financial assets
measured at amortized cost particularly within the retained
loan portfolios. Refer to the earliest call date on certain debt securities. Note 12 for further information.
PCD loans
The adoption of this guidance resulted in a cumulative-effect adjustment to retained earnings and
change in the accounting for PCI
loans, which are considered purchased credit deteriorated
AOCI. For additional information, refer to the table below, and Notes 10 and 23.
Hedge accounting
The(“PCD”) loans under CECL. Upon adoption, of this guidance better aligns hedge accounting with the economics of the Firm’s risk management activities. As permitted by the guidance, the Firmalso elected to transfer certain investment securities from HTM to AFS. The adoption of this guidance
recognized the nonaccretable difference on PCD loans in
the allowance, which resulted in a cumulative-effect adjustment corresponding increase
to retained earnings and AOCI as a result of the investment securities transfer and the revised guidance for excluded components. For additional information, referloans. PCD loans are subject to the table below,Firm’s nonaccrual and Notes 5, 10
charge-off policies and 23.
Treatment of restricted cash on the statement of cash flows
The adoption of this guidance requires restricted cash to be combined with unrestricted cash when reconciling the beginning and ending cash balances on the Consolidated statements of cash flows. To align the Consolidated balance sheets with the Consolidated statements of cash flows, the Firm reclassified restricted cash into cash and due from banks or deposits with banks. In addition, for the Firm’s Consolidated statements of cash flows, cash is defined as those amounts included in cash and due from banksand deposits with banks. This guidance was applied retrospectively and, accordingly, prior period amounts have been revised. For additional information, refer to the table below, and Note 25.
Presentation of net periodic pension cost and net periodic postretirement benefit cost
The adoption of this guidance requires the service cost component of net periodic pension cost and net periodic postretirement benefit cost to beare now reported separately in the Consolidated statements of income from the other cost components. This change was adopted retrospectively and, accordingly, prior period amounts were revised, which resulted in an increase in compensation expense and a reduction in other expense. For additional information, refer to the table below, and Note 8.consumer,
Reclassification of certain tax effects from AOCI
The adoption of this guidance permitted the Firm to reclassify from AOCI to retained earnings stranded tax effects due to the revaluation of deferred tax assets and liabilities as a result of changes in applicable tax rates under the TCJA. The adoption of this guidance resulted in a cumulative-effect adjustment to retained earnings and AOCI. For additional information, refer to the table below, and Note 23.excluding credit card portfolio’s residential real estate loan

JPMorgan Chase & Co./20182020 Form 10-K157169
Notes to consolidated financial statements

class. Refer to Note 12 for further information.
Changes in credit portfolio segments and classes
The following tables presentIn conjunction with the prior period impactadoption of CECL, the Firm reclassified risk-rated loans and lending-related commitments from the consumer excluding credit card portfolio segment to the Consolidated statements of incomewholesale portfolio segment, to align with the methodology applied when determining the allowance. The Firm also revised its loan classes. Prior- period amounts have been revised to conform with the current presentation. Refer to Note 12 for further information.
Accrued interest receivables
As permitted by the guidance, the Firm elected to continue
classifying accrued interest on loans, including accrued but
unbilled interest on credit card loans, and investment
securities in accrued interest and accounts receivables on
the Consolidated balance sheets fromsheets. For credit card loans,
accrued interest once billed is then recognized in the retrospectiveloan
balances, with the related allowance recorded in the
allowance for credit losses. Changes in the allowance for
credit losses on accrued interest on credit card loans are
recognized in the provision for credit losses and charge-offs
are recognized by reversing interest income. For other
loans and securities, the Firm generally does not recognize
an allowance for credit losses on accrued interest
receivables, consistent with its policy to write them off no
later than 90 days past due by reversing interest income.
Capital transition provisions
As permitted under the U.S. capital rules issued by the federal banking agencies in 2019, the Firm initially elected to phase-in the January 1, 2020 (“day 1”) CECL adoption impact to retained earnings of $2.7 billion to CET1 capital, at 25% per year in each of 2020 to 2023. As part of their response to the impact of the COVID-19 pandemic, on March 31, 2020, the federal banking agencies issued an interim final rule (issued as final on August 26, 2020) that provided the option to delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period (“CECL capital transition provisions”). Refer to Note 27 for further information.
Accounting standards adopted January 1, 2018
Effective January 1, 2018, the Firm adopted several accounting standards resulting in a net decrease of $183 million to retained earnings and a net increase of $88 million to AOCI. The adoption of the new accounting standardsrecognition and measurement guidance resulted in $505 million of fair value gains in the first quarter of 2018:
2018, recorded in total net revenue, on certain equity investments that were previously held at cost.
Selected Consolidated statements of income data
Year ended
December 31, 2017 (in millions)
Reported
Revisions(a)
Revised
Revenue   
Investment banking fees$7,248
$164
$7,412
Asset management, administration and commissions15,377
910
16,287
Other income3,639
7
3,646
Total net revenue99,624
1,081
100,705
    
Noninterest expense   
Compensation expense31,009
199
31,208
Technology, communication and equipment expense7,706
9
7,715
Professional and outside services6,840
1,050
7,890
Other expense6,256
(177)6,079
Total noninterest expense$58,434
$1,081
$59,515
Year ended
December 31, 2016 (in millions)
Reported
Revisions(a)
Revised
Revenue   
Investment banking fees$6,448
$124
$6,572
Asset management, administration and commissions14,591
773
15,364
Other income3,795
4
3,799
Total net revenue95,668
901
96,569
    
Noninterest expense   
Compensation expense29,979
224
30,203
Technology, communication and equipment expense6,846
7
6,853
Professional and outside services6,655
871
7,526
Other expense5,756
(201)5,555
Total noninterest expense$55,771
$901
$56,672
(a)Revisions relate to revenue recognition and pension cost guidance.
Selected Consolidated balance sheets data
December 31, 2017
(in millions)

Reported
Revisions(a)
Revised
Assets   
Cash and due from banks$25,827
$71
$25,898
Deposits with banks404,294
1,112
405,406
Other assets114,770
(1,183)113,587
Total assets$2,533,600
$—
$2,533,600
(a)Revisions relate to the reclassification of restricted cash.
The following table presents the adjustment to retained earnings and AOCI as a result of the adoption of new accounting standards in the first quarter of 2018:
Increase/(decrease) (in millions)
Retained earnings

AOCI
Premium amortization on purchased callable debt securities$(505)$261
Hedge accounting34
115
Reclassification of certain tax effects from AOCI288
(288)
Total$(183)$88

Significant accounting policies
The following table identifies JPMorgan Chase’s other significant accounting policies and the Note and page where a detailed description of each policy can be found.
Fair value measurementNote 2Page 159page 171
Fair value optionNote 3Page 179page 192
Derivative instrumentsNote 5Page 184page 198
Noninterest revenue and noninterest expenseNote 6Page 198page 212
Interest income and interestInterest expenseNote 7Page 201page 215
Pension and other postretirement employee benefit plansNote 8Page 202page 216
Employee share-based incentivesNote 9Page 209page 221
Investment securitiesNote 10Page 211page 223
Securities financing activitiesNote 11Page 216page 229
LoansNote 12Page 219page 232
Allowance for credit lossesNote 13Page 239page 248
Variable interest entitiesNote 14Page 244page 253
Goodwill and Mortgage servicing rightsNote 15page 252261
Premises and equipmentNote 16page 256265
Long-term debtLeasesNote 1918page 257266
Long-term debtNote 20page 269
Earnings per shareNote 23page 274
Income taxesNote 2425page 264277
Off–balance sheet lending-related financial instruments, guarantees and other commitmentsNote 2728page 271283
LitigationNote 2930page 278290


158170JPMorgan Chase & Co./20182020 Form 10-K



Note 2 – Fair value measurement
JPMorgan Chase carries a portion of its assets and liabilities at fair value. These assets and liabilities are predominantly carried at fair value on a recurring basis (i.e., assets and liabilities that are measured and reported at fair value on the Firm’s Consolidated balance sheets). Certain assets, (e.g., held-for-sale loans), liabilities and unfunded lending-related commitments are measured at fair value on a nonrecurring basis; that is, they are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment).
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is based on quoted market prices or inputs, where available. If prices or quotes are not available, fair value is based on valuation models and other valuation techniques that consider relevant transaction characteristics (such as maturity) and use, as inputs, observable or unobservable market parameters, including yield curves, interest rates, volatilities, prices (such as commodity, equity or debt prices,prices), correlations, foreign exchange rates and credit curves. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value, as described below.
The level of precision in estimating unobservable market inputs or other factors can affect the amount of gain or loss recorded for a particular position. Furthermore, while the Firm believes its valuation methods are appropriate and consistent with those of other market participants, the methods and assumptions used reflect management judgment and may vary across the Firm’s businesses and portfolios.
The Firm uses various methodologies and assumptions in the determination of fair value. The use of different methodologies or assumptions by other market participants compared with those used by the Firm could result in the Firm deriving a different estimate of fair value at the reporting date.
Valuation process
Risk-taking functions are responsible for providing fair value estimates for assets and liabilities carried on the Consolidated balance sheets at fair value.The Firm’sVCG,, which is part of the Firm’s Finance function and independent of the risk-taking functions, is responsible for verifying these estimates and determining any fair value adjustments that may be required to ensure thatthe Firm’spositions are recorded at fair value. The VGFis composed of senior finance and risk executives and is responsible for overseeing the management of risks arising from valuation activities conducted acrossthe Firm.The Firmwide VGF is chaired by the Firmwide head of the VCG (under the direction ofthe Firm’s Controller), and includes sub-forums covering the CIB, CCB, CB, AWM and certain corporate functions including Treasury and CIO.



JPMorgan Chase & Co./2018 Form 10-K159
Notes to consolidated financial statements

Price verification process
The VCG verifies fair value estimates provided by the risk-taking functions by leveraging independently derived prices, valuation inputs and other market data, where available. Where independent prices or inputs are not available, the VCG performs additional review to ensure the reasonableness of the estimates. The additional review may include evaluating the limited market activity including client unwinds, benchmarking valuation inputs to those used for similar instruments, decomposing the valuation of structured instruments into individual components, comparing expected to actual cash flows, reviewing profit and loss trends, and reviewing trends in collateral valuation. There are also additional levels of management review for more significant or complex positions.
The VCG determines any valuation adjustments that may be required to the estimates provided by the risk-taking functions. No adjustments to quoted prices are applied for instruments classified within level 1 of the fair value hierarchy (refer to the discussion below for further information on the fair value hierarchy). For other positions, judgment is required to assess the need for valuation adjustments to appropriately reflect liquidity considerations, unobservable parameters, and, for certain portfolios that meet specified criteria, the size of the net open risk position. The determination of such adjustments follows a consistent framework across the Firm:
•
•
Liquidity valuation adjustments are considered where an observable external price or valuation parameter exists but is of lower reliability, potentially due to lower market activity. Liquidity valuation adjustments are applied and determined based on current market conditions. Factors that may be considered in determining the liquidity adjustment include analysis of: (1) the estimated bid-offer spread for the instrument being traded; (2) alternative pricing points for similar instruments in active markets; and (3) the range of reasonable values that the price or parameter could take.
•
The Firmmanages certain portfolios of financial instruments on the basis of net open risk exposure and, as permitted by U.S. GAAP, has elected to estimate the fair value of such portfolios on the basis of a transfer of the entire net open risk position in an orderly transaction. Where this is the case, valuation adjustments may be necessary to reflect the cost of exiting a larger-than-normal market-size net open risk position. Where applied, such adjustments are based on factors that a relevant market participant would consider in the transfer of the net open risk position, including the size of the adverse market move that is likely to occur during the period required to reduce the net open risk position to a normal market-size.
Unobservable parameter valuation adjustments are considered where an observable external price or valuation parameter exists but is of lower reliability, potentially due to lower market activity. Liquidity valuation adjustments are made based on current market conditions. Factors that may be considered in determining the liquidity adjustment include analysis of: (1) the estimated bid-offer spread for the instrument being traded; (2) alternative pricing points for similar instruments in active markets; and (3) the range of reasonable values that the price or parameter could take.
•The Firm manages certain portfolios of financial instruments on the basis of net open risk exposure and, as permitted by U.S. GAAP, has elected to estimate the fair value of such portfolios on the basis of a transfer of the entire net open risk position in an orderly transaction. Where this is the case, valuation adjustments may be necessary to reflect the cost of exiting a larger-than-normal market-size net open risk position. Where applied, such adjustments are based on factors that a relevant market participant would consider in the transfer of the net open risk position, including the size of the adverse market move that is likely to occur during the period required to reduce the net open risk position to a normal market-size.
•Uncertainty adjustments related to unobservable parameters may be made when positions are valued using prices or input parameters to valuation models
JPMorgan Chase & Co./2020 Form 10-K171
Notes to consolidated financial statements
that are unobservable due to a lack of market activity or because they cannot be implied from observable market data. Such prices or parameters must be estimated and are, therefore, subject to management judgment. Unobservable
parameter valuation adjustmentsAdjustments are appliedmade to reflect the uncertainty inherent in the resulting valuation estimate.
•Where appropriate, the Firm also applies adjustments to its estimates of fair value in order to appropriately reflect counterparty credit quality (CVA), the Firm’s own creditworthiness (DVA) and the impact of funding (FVA), using a consistent framework across the Firm. Refer to Credit and funding adjustments on page 188 of this Note for more information on such adjustments.
•
Where appropriate,the Firmalso applies adjustments to its estimates of fair value in order to appropriately reflect counterparty credit quality(CVA), the Firm’sown creditworthiness(DVA)and the impact of funding (FVA), using a consistent framework acrossthe Firm. For more information on such adjustments refer to Credit and funding adjustments on page 175 of this Note.
Valuation model review and approval
If prices or quotes are not available for an instrument or a similar instrument, fair value is generally determined using valuation models that consider relevant transaction dataterms such as maturity and use as inputs market-based or independently sourced parameters. Where this is the case the price verification process described above is applied to the inputs toin those models.
Underthe Firm’sEstimations and Model Risk Management Policy, the Model Risk functionMRGR reviews and approves new models, as well as material changes to existing models, prior to implementation in the operating environment. In certain circumstances the head of the Model Risk functionexceptions may grant exceptionsbe granted tothe Firm’spolicy to allow a model to be used prior to review or approval. The Model Risk functionMRGR may also require the user to take appropriate actions to mitigate the model risk if it is to be used in the interim. These actions will depend on the model and may include, for example, limitation of trading activity.
Valuation hierarchy
A three-level valuation hierarchy has been established under U.S. GAAP for disclosure of fair value measurements. The valuation hierarchy is based on the transparencyobservability of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows.
•Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
•
Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
•
•Level 3 – one or more inputs to the valuation methodology are unobservable and significant to the fair value measurement.
A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

160172JPMorgan Chase & Co./20182020 Form 10-K


The following table describes the valuation methodologies generally used by the Firm to measure its significant products/instruments at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.
Product/instrumentProduct/instrument Valuation methodologyClassifications in the valuation hierarchy
Securities financing agreementsValuations are based on discounted cash flows, which consider:Predominantly level 2
• Derivative features: for further information refer to the discussion of derivatives below.below for further information.
• Market rates for the respective maturity
• Collateral characteristics
Loans and lending-related commitments — wholesale
Loans carried at fair value

(e.g., trading loans and non-trading loans) and associated

lending-related commitments

Where observable market data is available, valuations are based on:Level 2 or 3
• Observed market prices (circumstances are infrequent)
• Relevant broker quotes
• Observed market prices for similar instruments
Where observable market data is unavailable or limited, valuations are based on discounted cash flows, which consider the following:
• Credit spreads derived from the cost of CDS; or benchmark credit curves developed by the Firm, by industry and credit rating
• Prepayment speed
• Collateral characteristics
Loans — consumer
Trading loans
Loans carried at fair value — conforming residential mortgage loans expected to be sold (CCB, CIB)Fair value is based on observable prices for mortgage-backed securities with similar collateral and incorporates adjustments to these prices to account for differences between the securities and the value of the underlying loans, which include credit characteristics, portfolio composition, and liquidity.Predominantly level 2
Investment and trading securitiesQuoted market prices are used where available.Level 1
In the absence of quoted market prices, securities are valued based on:Level 2 or 3
• Observable market prices for similar securities
•
  Relevant broker quotes
•
  Discounted cash flows
In addition, the following inputs to discounted cash flows are used for the following products:
Mortgage- and asset-backed securities specific inputs:
•
  Collateral characteristics
• Deal-specific payment and loss allocations
• Current market assumptions related to yield, prepayment speed, conditional default rates and loss severity
Collateralized loan obligations (“CLOs”) specific inputs:
•
  Collateral characteristics
•
  Deal-specific payment and loss allocations
•
Expected prepayment speed, conditional default rates, loss severity
•
  Credit spreads
• Credit rating data
Physical commoditiesValued using observable market prices or data.Level 1 andor 2


JPMorgan Chase & Co./20182020 Form 10-K161173
Notes to consolidated financial statements

Product/instrumentValuation methodologyClassifications in the valuation hierarchy
Product/instrumentValuation methodologyClassifications in the valuation hierarchy
Derivatives
DerivativesExchange-traded derivatives that are actively traded and valued using the exchange price.Level 1
Derivatives that are valued using models such as the Black-Scholes option pricing model, simulation models, or a combination of models that may use observable or unobservable valuation inputs as well as considering the contractual terms.

The key valuation inputs used will depend on the type of derivative and the nature of the underlying instruments and may include equity prices, commodity prices, interest rate yield curves, foreign exchange rates, volatilities, correlations, CDS spreads and recovery rates.  Additionally, the credit quality of the counterparty and of the Firm as well as market funding levels may also be considered.
Level 2 or 3
In addition, specific inputs used for derivatives that are valued based on models with significant unobservable inputs are as follows:
Structured credit derivatives specific inputs include:
•
  CDS spreads and recovery rates
•
  Credit correlation between the underlying debt instruments
Equity option specific inputs include:
•  Forward equity price
•
  Equity volatilitiesvolatility
•
  Equity correlation
•
  Equity-FX correlation
•
  Equity-IR correlation
Interest rate and FX exotic options specific inputs include:
•  Interest rate volatility
•
  Interest rate spread volatility
•
  Interest rate correlation
•
  Foreign exchange correlation
•
  Interest rate-FX correlation
Commodity derivatives specific inputs include:
•
  Commodity volatility
•
  Forward commodity price
•  Commodity correlation
Additionally, adjustments are made to reflect counterparty credit quality (CVA) and the impact of funding (FVA). Refer to page 175188 of this Note.
Mortgage servicing rightsRefer to Mortgage servicing rights in Note 15.Level 3
Private equity direct investmentsFair value is estimated using all available information; the range of potential inputs include:Level 2 or 3
• Transaction prices
• Trading multiples of comparable public companies
• Operating performance of the underlying portfolio company
• Adjustments as required, since comparable public companies are not identical to the company being valued, and for company-specific issues and lack of liquidity.
• Additional available inputs relevant to the investment.
Fund investments (e.g., mutual/collective investment funds, private equity funds, hedge funds, and real estate funds)Net asset value
• NAV is supported by the ability to redeem and purchase at the NAV level.Level 1
• Adjustments to the NAV as required, for restrictions on redemption (e.g., lock-up periods or withdrawal limitations) or where observable activity is limited.
Level 2 or 3(a)
Beneficial interests issued by consolidated VIEsValued using observable market information, where available.Level 2 or 3
In the absence of observable market information, valuations are based on the fair value of the underlying assets held by the VIE.
(a)Excludes certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient.



162
JPMorgan Chase & Co./2018 Form 10-K
(a)Excludes certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient.



174JPMorgan Chase & Co./2020 Form 10-K

Product/instrumentValuation methodologyClassification in the valuation hierarchy
Structured notes (included in deposits, short-term borrowings and long-term debt)
• Valuations are based on discounted cash flow analyses that consider the embedded derivative and the terms and payment structure of the note.

• The embedded derivative features are considered using models such as the Black-Scholes option pricing model, simulation models, or a combination of models that may use observable or unobservable valuation inputs, depending on the embedded derivative. The specific inputs used vary according to the nature of the embedded derivative features, as described in the discussion above regarding derivatives valuation. Adjustments are then made to this base valuation to reflect the Firm’s own credit risk (DVA). Refer to page 175188 of this Note.
Level 2 or 3



JPMorgan Chase & Co./20182020 Form 10-K163175
Notes to consolidated financial statements

The following table presents the assets and liabilities reported at fair value as of December 31, 20182020 and 2017, 2019, by major product category and fair value hierarchy.
Assets and liabilities measured at fair value on a recurring basis     
 Fair value hierarchy   
December 31, 2018 (in millions)Level 1Level 2 Level 3 Derivative netting adjustmentsTotal fair value
Federal funds sold and securities purchased under resale agreements$—
$13,235
 $—
 $—
$13,235
Securities borrowed—
5,105
 —
 —
5,105
Trading assets:       
Debt instruments:       
Mortgage-backed securities:       
U.S. government agencies(a)
—
76,249
 549
 —
76,798
Residential – nonagency—
1,798
 64
 —
1,862
Commercial – nonagency—
1,501
 11
 —
1,512
Total mortgage-backed securities—
79,548
 624
 —
80,172
U.S. Treasury and government agencies(a)
51,477
7,702
 —
 —
59,179
Obligations of U.S. states and municipalities—
7,121
 689
 —
7,810
Certificates of deposit, bankers’ acceptances and commercial paper—
1,214
 —
 —
1,214
Non-U.S. government debt securities27,878
27,056
 155
 —
55,089
Corporate debt securities—
18,655
 334
 —
18,989
Loans(b)
—
40,047
 1,706
 —
41,753
Asset-backed securities—
2,756
 127
 —
2,883
Total debt instruments79,355
184,099
 3,635
 —
267,089
Equity securities71,119
482
 232
 —
71,833
Physical commodities(c)
5,182
1,855
 —
 —
7,037
Other—
13,192
 301
 —
13,493
Total debt and equity instruments(d)
155,656
199,628
 4,168
 —
359,452
Derivative receivables:       
Interest rate682
266,380
 1,642
 (245,490)23,214
Credit—
19,235
 860
 (19,483)612
Foreign exchange771
166,238
 676
 (154,235)13,450
Equity—
46,777
 2,508
 (39,339)9,946
Commodity—
20,339
 131
 (13,479)6,991
Total derivative receivables(e)
1,453
518,969
 5,817
 (472,026)54,213
Total trading assets(f)
157,109
718,597
 9,985
 (472,026)413,665
Available-for-sale securities:       
Mortgage-backed securities:       
U.S. government agencies(a)
—
68,646
 —
 —
68,646
Residential – nonagency—
8,519
 1
 —
8,520
Commercial – nonagency—
6,654
 —
 —
6,654
Total mortgage-backed securities—
83,819
 1
 —
83,820
U.S. Treasury and government agencies56,059
—
 —
 —
56,059
Obligations of U.S. states and municipalities—
37,723
 —
 —
37,723
Certificates of deposit—
75
 —
 —
75
Non-U.S. government debt securities15,313
8,789
 —
 —
24,102
Corporate debt securities—
1,918
 —
 —
1,918
Asset-backed securities:       
Collateralized loan obligations—
19,437
 —
 —
19,437
Other—
7,260
 —
 —
7,260
Total available-for-sale securities71,372
159,021
 1
 —
230,394
Loans—
3,029
 122
 —
3,151
Mortgage servicing rights—
—
 6,130
 —
6,130
Other assets(f)(g)
7,810
195
 927
 —
8,932
Total assets measured at fair value on a recurring basis$236,291
$899,182
 $17,165
 $(472,026)$680,612
Deposits$—
$19,048
 $4,169
 $—
$23,217
Federal funds purchased and securities loaned or sold under repurchase agreements—
935
 —
 —
935
Short-term borrowings—
5,607
 1,523
 —
7,130
Trading liabilities:      

Debt and equity instruments(d)
80,199
22,755
 50
 —
103,004
Derivative payables:      

Interest rate1,526
239,576
 1,680
 (234,998)7,784
Credit—
19,309
 967
 (18,609)1,667
Foreign exchange695
163,549
 973
 (152,432)12,785
Equity—
46,462
 4,733
 (41,034)10,161
Commodity—
21,158
 1,260
 (13,046)9,372
Total derivative payables(e)
2,221
490,054
 9,613
 (460,119)41,769
Total trading liabilities82,420
512,809
 9,663
 (460,119)144,773
Accounts payable and other liabilities3,063
196
 10
 —
3,269
Beneficial interests issued by consolidated VIEs—
27
 1
 —
28
Long-term debt—
35,468
 19,418
 —
54,886
Total liabilities measured at fair value on a recurring basis$85,483
$574,090
 $34,784
 $(460,119)$234,238

Assets and liabilities measured at fair value on a recurring basis
Fair value hierarchy
December 31, 2020 (in millions)Level 1Level 2Level 3
Derivative netting adjustments(g)
Total fair value
Federal funds sold and securities purchased under resale agreements$0 $238,015 $0 $— $238,015 
Securities borrowed0 52,983 0 — 52,983 
Trading assets:
Debt instruments:
Mortgage-backed securities:
U.S. GSEs and government agencies(a)
0 68,395 449 — 68,844 
Residential – nonagency0 2,138 28 — 2,166 
Commercial – nonagency0 1,327 3 — 1,330 
Total mortgage-backed securities0 71,860 480 — 72,340 
U.S. Treasury, GSEs and government agencies(a)
104,263 10,996 0 — 115,259 
Obligations of U.S. states and municipalities0 7,184 8 — 7,192 
Certificates of deposit, bankers’ acceptances and commercial paper0 1,230 0 — 1,230 
Non-U.S. government debt securities26,772 40,671 182 — 67,625 
Corporate debt securities0 21,017 507 — 21,524 
Loans(b)
0 6,101 893 — 6,994 
Asset-backed securities0 2,304 28 — 2,332 
Total debt instruments131,035 161,363 2,098 — 294,496 
Equity securities97,035 2,652 179 — 99,866 
Physical commodities(c)
6,382 5,189 0 — 11,571 
Other0 17,165 346 — 17,511 
Total debt and equity instruments(d)
234,452 186,369 2,623 — 423,444 
Derivative receivables:
Interest rate2,318 386,865 2,307 (355,765)35,725 
Credit0 12,879 624 (12,823)680 
Foreign exchange146 205,127 987 (190,479)15,781 
Equity0 71,279 3,519 (54,125)20,673 
Commodity0 21,272 231 (14,732)6,771 
Total derivative receivables2,464 697,422 7,668 (627,924)79,630 
Total trading assets(e)
236,916 883,791 10,291 (627,924)503,074 
Available-for-sale securities:
Mortgage-backed securities:
U.S. GSEs and government agencies(a)
21,018 92,283 0 — 113,301 
Residential – nonagency0 10,233 0 — 10,233 
Commercial – nonagency0 2,856 0 — 2,856 
Total mortgage-backed securities21,018 105,372 0 — 126,390 
U.S. Treasury and government agencies201,951 0 0 — 201,951 
Obligations of U.S. states and municipalities0 20,396 0 — 20,396 
Certificates of deposit0 0 0 — 0 
Non-U.S. government debt securities13,135 9,793 0 — 22,928 
Corporate debt securities0 216 0 — 216 
Asset-backed securities:
Collateralized loan obligations0 10,048 0 — 10,048 
Other0 6,249 0 — 6,249 
Total available-for-sale securities236,104 152,074 0 — 388,178 
Loans(b)(f)
0 42,169 2,305 — 44,474 
Mortgage servicing rights0 0 3,276 — 3,276 
Other assets(b)(e)
8,110 4,561 538 — 13,209 
Total assets measured at fair value on a recurring basis$481,130 $1,373,593 $16,410 $(627,924)$1,243,209 
Deposits$0 $11,571 $2,913 $— $14,484 
Federal funds purchased and securities loaned or sold under repurchase agreements0 155,735 0 — 155,735 
Short-term borrowings0 14,473 2,420 — 16,893 
Trading liabilities:
Debt and equity instruments(d)
82,669 16,838 51 — 99,558 
Derivative payables:
Interest rate2,496 349,082 2,049 (340,615)13,012 
Credit0 14,344 848 (13,197)1,995 
Foreign exchange132 214,373 1,421 (194,493)21,433 
Equity0 74,032 7,381 (55,515)25,898 
Commodity0 21,767 962 (14,444)8,285 
Total derivative payables2,628 673,598 12,661 (618,264)70,623 
Total trading liabilities85,297 690,436 12,712 (618,264)170,181 
Accounts payable and other liabilities2,895 513 68 — 3,476 
Beneficial interests issued by consolidated VIEs0 41 0 — 41 
Long-term debt0 53,420 23,397 — 76,817 
Total liabilities measured at fair value on a recurring basis$88,192 $926,189 $41,510 $(618,264)$437,627 
164176JPMorgan Chase & Co./20182020 Form 10-K


Fair value hierarchy
December 31, 2019 (in millions)Level 1Level 2Level 3
Derivative netting adjustments(g)
Total fair value
Federal funds sold and securities purchased under resale agreements$0 $14,561 $0 $— $14,561 
Securities borrowed0 6,237 0 — 6,237 
Trading assets:— 
Debt instruments:— 
Mortgage-backed securities:— 
U.S. GSEs and government agencies(a)
0 44,510 797 — 45,307 
Residential – nonagency0 1,977 23 — 2,000 
Commercial – nonagency0 1,486 4 — 1,490 
Total mortgage-backed securities0 47,973 824 — 48,797 
U.S. Treasury, GSEs and government agencies(a)
78,289 10,295 0 — 88,584 
Obligations of U.S. states and municipalities0 6,468 10 — 6,478 
Certificates of deposit, bankers’ acceptances and commercial paper0 252 0 — 252 
Non-U.S. government debt securities26,600 27,169 155 — 53,924 
Corporate debt securities0 17,956 558 — 18,514 
Loans(b)
0 6,340 673 — 7,013 
Asset-backed securities0 2,593 37 — 2,630 
Total debt instruments104,889 119,046 2,257 — 226,192 
Equity securities71,890 244 196 — 72,330 
Physical commodities(c)
3,638 3,579 0 — 7,217 
Other0 13,896 232 — 14,128 
Total debt and equity instruments(d)
180,417 136,765 2,685 — 319,867 
Derivative receivables:
Interest rate721 311,173 1,400 (285,873)27,421 
Credit0 14,252 624 (14,175)701 
Foreign exchange117 137,938 432 (129,482)9,005 
Equity0 43,642 2,085 (39,250)6,477 
Commodity0 17,058 184 (11,080)6,162 
Total derivative receivables838 524,063 4,725 (479,860)49,766 
Total trading assets(e)
181,255 660,828 7,410 (479,860)369,633 
Available-for-sale securities:
Mortgage-backed securities:
U.S. GSEs and government agencies(a)
0 110,117 0 — 110,117 
Residential – nonagency0 12,989 1 — 12,990 
Commercial – nonagency0 5,188 0 — 5,188 
Total mortgage-backed securities0 128,294 1 — 128,295 
U.S. Treasury and government agencies139,436 0 0 — 139,436 
Obligations of U.S. states and municipalities0 29,810 0 — 29,810 
Certificates of deposit0 77 0 — 77 
Non-U.S. government debt securities12,966 8,821 0 — 21,787 
Corporate debt securities0 845 0 — 845 
Asset-backed securities:— — — 
Collateralized loan obligations0 24,991 0 — 24,991 
Other0 5,458 0 — 5,458 
Total available-for-sale securities152,402 198,296 1 — 350,699 
Loans(b)(f)
0 44,439 516 — 44,955 
Mortgage servicing rights0 0 4,699 — 4,699 
Other assets(b)(e)
7,305 3,824 917 — 12,046 
Total assets measured at fair value on a recurring basis$340,962 $928,185 $13,543 $(479,860)$802,830 
Deposits$0 $25,229 $3,360 $— $28,589 
Federal funds purchased and securities loaned or sold under repurchase agreements0 549 0 — 549 
Short-term borrowings0 4,246 1,674 — 5,920 
Trading liabilities:
Debt and equity instruments(d)
59,047 16,481 41 — 75,569 
Derivative payables:
Interest rate795 276,746 1,732 (270,670)8,603 
Credit0 14,358 763 (13,469)1,652 
Foreign exchange109 143,960 1,039 (131,950)13,158 
Equity0 47,261 5,480 (40,204)12,537 
Commodity0 19,685 200 (12,127)7,758 
Total derivative payables904 502,010 9,214 (468,420)43,708 
Total trading liabilities59,951 518,491 9,255 (468,420)119,277 
Accounts payable and other liabilities3,231 452 45 — 3,728 
Beneficial interests issued by consolidated VIEs0 36 0 — 36 
Long-term debt0 52,406 23,339 — 75,745 
Total liabilities measured at fair value on a recurring basis$63,182 $601,409 $37,673 $(468,420)$233,844 
(a)At December 31, 2020 and 2019, included total U.S. GSE obligations of $117.6 billion and $104.5 billion, respectively, which were mortgage-related.
 Fair value hierarchy    
December 31, 2017 (in millions)Level 1Level 2 Level 3 Derivative netting adjustments Total fair value
Federal funds sold and securities purchased under resale agreements$—
$14,732
 $—
 $—
 $14,732
Securities borrowed—
3,049
 —
 —
 3,049
Trading assets:        
Debt instruments:        
Mortgage-backed securities:        
U.S. government agencies(a)
—
41,515
 307
 —
 41,822
Residential – nonagency—
1,835
 60
 —
 1,895
Commercial – nonagency—
1,645
 11
 —
 1,656
Total mortgage-backed securities—
44,995
 378
 —
 45,373
U.S. Treasury and government agencies(a)
30,758
6,475
 1
 —
 37,234
Obligations of U.S. states and municipalities—
9,067
 744
 —
 9,811
Certificates of deposit, bankers’ acceptances and commercial paper—
226
 —
 —
 226
Non-U.S. government debt securities28,887
28,831
 78
 —
 57,796
Corporate debt securities—
24,146
 312
 —
 24,458
Loans(b)
—
35,242
 2,719
 —
 37,961
Asset-backed securities—
3,284
 153
 —
 3,437
Total debt instruments59,645
152,266
 4,385
 —
 216,296
Equity securities87,346
197
 295
 —
 87,838
Physical commodities(c)
4,924
1,322
 —
 —
 6,246
Other—
14,197
 690
 —
 14,887
Total debt and equity instruments(d)
151,915
167,982
 5,370
 —
 325,267
Derivative receivables:        
Interest rate181
314,107
 1,704
 (291,319) 24,673
Credit—
21,995
 1,209
 (22,335) 869
Foreign exchange841
158,834
 557
 (144,081) 16,151
Equity—
37,722
 2,318
 (32,158) 7,882
Commodity—
19,875
 210
 (13,137) 6,948
Total derivative receivables(e)
1,022
552,533
 5,998
 (503,030) 56,523
Total trading assets(f)
152,937
720,515
 11,368
 (503,030) 381,790
Available-for-sale securities:        
Mortgage-backed securities:        
U.S. government agencies(a)
—
70,280
 —
 —
 70,280
Residential – nonagency—
11,366
 1
 —
 11,367
Commercial – nonagency—
5,025
 —
 —
 5,025
Total mortgage-backed securities—
86,671
 1
 —
 86,672
U.S. Treasury and government agencies22,745
—
 —
 —
 22,745
Obligations of U.S. states and municipalities—
32,338
 —
 —
 32,338
Certificates of deposit—
59
 —
 —
 59
Non-U.S. government debt securities18,140
9,154
 —
 —
 27,294
Corporate debt securities—
2,757
 —
 —
 2,757
Asset-backed securities:        
Collateralized loan obligations—
20,720
 276
 —
 20,996
Other—
8,817
 —
 —
 8,817
Equity securities(g)
547
—
 —
 —
 547
Total available-for-sale securities41,432
160,516
 277
 —
 202,225
Loans—
2,232
 276
 —
 2,508
Mortgage servicing rights—
—
 6,030
 —
 6,030
Other assets(f)(g)
13,795
343
 1,265
 —
 15,403
Total assets measured at fair value on a recurring basis$208,164
$901,387
 $19,216
 $(503,030) $625,737
Deposits$—
$17,179
 $4,142
 $—
 $21,321
Federal funds purchased and securities loaned or sold under repurchase agreements—
697
 —
 —
 697
Short-term borrowings—
7,526
 1,665
 —
 9,191
Trading liabilities:        
Debt and equity instruments(d)
64,664
21,183
 39
 —
 85,886
Derivative payables:        
Interest rate170
282,825
 1,440
 (277,306) 7,129
Credit—
22,009
 1,244
 (21,954) 1,299
Foreign exchange794
154,075
 953
 (143,349) 12,473
Equity—
39,668
 5,727
 (36,203) 9,192
Commodity—
21,017
 884
 (14,217) 7,684
Total derivative payables(e)
964
519,594
 10,248
 (493,029) 37,777
Total trading liabilities65,628
540,777
 10,287
 (493,029) 123,663
Accounts payable and other liabilities9,074
121
 13
 —
 9,208
Beneficial interests issued by consolidated VIEs—
6
 39
 —
 45
Long-term debt—
31,394
 16,125
 —
 47,519
Total liabilities measured at fair value on a recurring basis$74,702
$597,700
 $32,271
 $(493,029) $211,644
(b)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans and other assets. Prior-period amounts have been revised to conform with the current presentation.
(a)At December 31, 2018 and 2017, included total U.S. government-sponsored enterprise obligations of $92.3 billion and $78.0 billion, respectively, which were predominantly mortgage-related.
(b)At December 31, 2018 and 2017, included within trading loans were $13.2 billion and $11.4 billion, respectively, of residential first-lien mortgages, and $2.3 billion and $4.2 billion, respectively, of commercial first-lien mortgages. Residential mortgage loans include conforming mortgage loans originated with the intent to sell to U.S. government agencies of $7.6 billion and $5.7 billion, respectively, and reverse mortgages of zero and $836 million, respectively.

(c)Physical commodities inventories are generally accounted for at the lower of cost or net realizable value. “Net realizable value” is a term defined in U.S. GAAP as not exceeding fair value less costs to sell (“transaction costs”). Transaction costs for the Firm’s physical commodities inventories are either not applicable or immaterial to the value of the inventory. Therefore, net realizable value approximates fair value for the Firm’s physical commodities inventories. When fair value hedging has been applied (or when net realizable value is below cost), the carrying value of physical commodities approximates fair value, because under fair value hedge accounting, the cost basis is adjusted for changes in fair value. Refer to Note 5 for a further
JPMorgan Chase & Co./20182020 Form 10-K165177
Notes to consolidated financial statements

discussion of the Firm’s hedge accounting relationships. To provide consistent fair value disclosure information, all physical commodities inventories have been included in each period presented.
(c)Physical commodities inventories are generally accounted for at the lower of cost or net realizable value. “Net realizable value” is a term defined in U.S. GAAP as not exceeding fair value less costs to sell (“transaction costs”). Transaction costs for the Firm’s physical commodities inventories are either not applicable or immaterial to the value of the inventory. Therefore, net realizable value approximates fair value for the Firm’s physical commodities inventories. When fair value hedging has been applied (or when net realizable value is below cost), the carrying value of physical commodities approximates fair value, because under fair value hedge accounting, the cost basis is adjusted for changes in fair value. For a further discussion of the Firm’s hedge accounting relationships, refer to Note 5. To provide consistent fair value disclosure information, all physical commodities inventories have been included in each period presented.
(d)
Balances reflect the reduction of securities owned (long positions) by the amount of identical securities sold but not yet purchased (short positions).
(e)As permitted under U.S. GAAP, the Firm has elected to net derivative receivables and derivative payables and the related cash collateral received and paid when a legally enforceable master netting agreement exists. For purposes of the tables above, the Firm does not reduce derivative receivables and derivative payables balances for this netting adjustment, either within or across the levels of the fair value hierarchy, as such netting is not relevant to a presentation based on the transparency of inputs to the valuation of an asset or liability. The level 3 balances would be reduced if netting were applied, including the netting benefit associated with cash collateral.
(f)Certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient are not required to be classified in the fair value hierarchy. At December 31, 2018 and 2017, the fair values of these investments, which include certain hedge funds, private equity funds, real estate and other funds, were $747 million and $779 million, respectively. Included in these balances at December 31, 2018 and 2017, were trading assets of $49 million and $54 million, respectively, and other assets of $698 million and $725 million, respectively.
(g)
Effective January 1, 2018, the Firm adopted the recognition and measurement guidance. Equity securities that were previously reported as AFS securities were reclassified to other assets upon adoption. Balances reflect the reduction of securities owned (long positions) by the amount of identical securities sold but not yet purchased (short positions).
(e)Certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient are not required to be classified in the fair value hierarchy. At December 31, 2020 and 2019, the fair values of these investments, which include certain hedge funds, private equity funds, real estate and other funds, were $670 million and $684 million, respectively. Included in these balances at December 31, 2020 and 2019, were trading assets of $52 million and $54 million, respectively, and other assets of $618 million and $630 million, respectively.
(f)At December 31, 2020 and 2019, included within loans were $15.1 billion and $19.8 billion, respectively, of residential first-lien mortgages, and $6.3 billion and $8.2 billion, respectively, of commercial first-lien mortgages. Residential mortgage loans include conforming mortgage loans originated with the intent to sell to U.S. GSEs and government agencies of $8.4 billion and $13.6 billion, respectively.
(g)As permitted under U.S. GAAP, the Firm has elected to net derivative receivables and derivative payables and the related cash collateral received and paid when a legally enforceable master netting agreement exists. The level 3 balances would be reduced if netting were applied, including the netting benefit associated with cash collateral.






166178JPMorgan Chase & Co./20182020 Form 10-K



Level 3 valuations
The Firm has established well-structured processes for determining fair value, including for instruments where fair value is estimated using significant unobservable inputs (level 3). ForRefer to pages 171-175 of this Note for further information on the Firm’s valuation process and a detailed discussion of the determination of fair value for individual financial instruments, refer to pages 159–163 of this Note.instruments.
Estimating fair value requires the application of judgment. The type and level of judgment required is largely dependent on the amount of observable market information available to the Firm. For instruments valued using internally developed valuation models and other valuation techniques that use significant unobservable inputs and are therefore classified within level 3 of the fair value hierarchy, judgments used to estimate fair value are more significant than those required when estimating the fair value of instruments classified within levels 1 and 2.
In arriving at an estimate of fair value for an instrument within level 3, management must first determine the appropriate valuation model or other valuation technique to use. Second, due to the lack of observability of significant inputs, management must assess all relevant empirical data in deriving valuation inputs including transaction details, yield curves, interest rates, prepayment speed, default rates, volatilities, correlations, prices (such as commodity, equity or debt prices,prices), valuations of comparable instruments, foreign exchange rates and credit curves.
The following table presents the Firm’s primary level 3 financial instruments, the valuation techniques used to measure the fair value of those financial instruments, the significant unobservable inputs, the range of values for those inputs and for certain instruments, the weighted or arithmetic averages of such inputs. While the determination to classify an instrument within level 3 is based on the significance of the unobservable inputs to the overall fair value measurement, level 3 financial instruments typically include observable components (that is, components that are actively quoted and can be validated to external sources) in addition to the unobservable components. The level 1 and/or level 2 inputs are not included in the table. In addition, the Firm manages the risk of the observable components of level 3 financial instruments using securities and derivative positions that are classified within levels 1 or 2 of the fair value hierarchy.
The range of values presented in the table is representative of the highest and lowest level input used to value the significant groups of instruments within a product/instrument classification. Where provided, the weighted averages of the input values presented in the table are calculated based on the fair value of the instruments that the input is being used to value.
In the Firm’s view, the input range, weighted and the weightedarithmetic average valuevalues do not reflect the degree of input uncertainty or an assessment of the reasonableness of the Firm’s estimates and assumptions. Rather, they reflect the characteristics of the various instruments held by the Firm and the relative distribution of instruments within the range of characteristics. For example, two option contracts may have similar levels of market risk exposure and valuation uncertainty, but may have significantly different implied volatility levels because the option contracts have different underlyings, tenors, or strike prices. The input range and weighted average values will therefore vary from period-to-period and parameter-to-parameter based on the characteristics of the instruments held by the Firm at each balance sheet date.
For the Firm’s derivatives and structured notes positions classified within level 3 at December 31, 2018, interest rate correlation inputs used in estimating fair value were concentrated towards the upper end of the range; equity correlation, equity-FX and equity-IR correlation inputs were concentrated in the middle of the range; commodity correlation inputs were concentrated in the middle of the range; credit correlation inputs were concentrated towards the lower end of the range; and the interest rate-foreign exchange (“IR-FX”) correlation inputs were distributed across the range. In addition, the interest rate spread volatility inputs used in estimating fair value were distributed across the range; equity volatilities and commodity volatilities were concentrated in the middle of the range; and forward commodity prices used in estimating the fair value of commodity derivatives were concentrated towards the lower end of the range. Recovery rate inputs used in estimating the fair value of credit derivatives were distributed across the range; credit spreads and conditional default rates were concentrated towards the lower end of the range; loss severity and price inputs were concentrated towards the upper end of the range.

JPMorgan Chase & Co./20182020 Form 10-K167179
Notes to consolidated financial statements

Level 3 inputs(a)
December 31, 2020
Product/Instrument
Fair value (in millions)
Principal valuation technique
Unobservable inputs(g)
Range of input values
Average(i)
Residential mortgage-backed securities and loans(b)
$1,282 Discounted cash flowsYield0%–18%6%
Prepayment speed0%–46%10%
Conditional default rate0%–30%14%
Loss severity0%–107%7%
Commercial mortgage-backed securities and loans(c)
466 Market comparablesPrice$0–$101$84
Corporate debt securities507 Market comparablesPrice$2–$116$85
Loans(d)
1,930 Market comparablesPrice$10–$104$72
Asset-backed securities28 Market comparablesPrice$1–$97$57
Net interest rate derivatives238 Option pricingInterest rate volatility7bps–513bps101bps
Interest rate spread volatility11bps–23bps15bps
Interest rate correlation(65)%–99%35%
IR-FX correlation(35)%–50%0%
20 Discounted cash flowsPrepayment speed0%–30%8%
Net credit derivatives(260)Discounted cash flowsCredit correlation34%–65%48%
Credit spread3bps–1,302bps441bps
Recovery rate0%–67%46%
Conditional default rate2%–100%58%
Loss severity100%100%
36 Market comparablesPrice$1–$115$71
Net foreign exchange derivatives(298)Option pricingIR-FX correlation(40)%–65%18%
(136)Discounted cash flowsPrepayment speed9%9%
Net equity derivatives(3,862)Option pricing
Forward equity price(h)
61%–106%99%
Equity volatility5%–138%35%
Equity correlation18%–99%60%
Equity-FX correlation(79)%–55%(27)%
Equity-IR correlation20%–50%28%
Net commodity derivatives(731)Option pricingOil Commodity Forward$600 / MT–$609 / MT$605 / MT
Forward power price$12 / MWH–$55 / MWH$34 / MWH
Commodity volatility1%–58%29%
Commodity correlation(49)%–95%23%
MSRs3,276 Discounted cash flowsRefer to Note 15
Other assets299 Discounted cash flowsCredit spread45bps45bps
Yield4%30%7%
585 Market comparablesPrice$29–$29$29
Long-term debt, short-term borrowings, and deposits(e)
27,912 Option pricingInterest rate volatility7bps–513bps101bps
Interest rate correlation(65)%–99%35%
IR-FX correlation(35)%–50%0%
Equity correlation18%–99%60%
Equity-FX correlation(79)%–55%(27)%
Equity-IR correlation20%–50%28%
818 Discounted cash flowsCredit correlation34%–65%48%
Other level 3 assets and liabilities, net(f)
250 
(a)The categories presented in the table have been aggregated based upon the product type, which may differ from their classification on the Consolidated balance sheets. Furthermore, the inputs presented for each valuation technique in the table are, in some cases, not applicable to every instrument valued using the technique as the characteristics of the instruments can differ.
(b)Comprises U.S. GSE and government agency securities of $449 million, nonagency securities of $28 million and non-trading loans of $805 million.
(c)Comprises nonagency securities of $3 million, trading loans of $43 million and non-trading loans of $420 million.
(d)Comprises trading loans of $850 million and non-trading loans of $1.1 billion.
(e)Long-term debt, short-term borrowings and deposits include structured notes issued by the Firm that are financial instruments that typically contain embedded derivatives. The estimation of the fair value of structured notes includes the derivative features embedded within the instrument. The significant unobservable inputs are broadly consistent with those presented for derivative receivables.
(f)Includes level 3 assets and liabilities that are insignificant both individually and in aggregate.
(g)Price is a significant unobservable input for certain instruments. When quoted market prices are not readily available, reliance is generally placed on price-based internal valuation techniques. The price input is expressed assuming a par value of $100.
(h)Forward equity price is expressed as a percentage of the current equity price.
(i)Amounts represent weighted averages except for derivative related inputs where arithmetic averages are used.
Level 3 inputs(a)
 
December 31, 2018     
Product/Instrument
Fair value (in millions)
 Principal valuation technique
Unobservable inputs(g)
Range of input valuesWeighted average
Residential mortgage-backed securities and loans(b)
$858
 Discounted cash flowsYield0 %–19%6%
   Prepayment speed0 %–24%9%
    Conditional default rate0 %–9%1%
    Loss severity0 %–100%6%
Commercial mortgage-backed securities and loans(c)
419
 Market comparablesPrice$0
–$103$90
Obligations of U.S. states and municipalities689
 Market comparablesPrice$62
–$100$96
Corporate debt securities334
 Market comparablesPrice$0
–$107$57
Loans(d)
234
 Discounted cash flowsYield8%8%
 942
 Market comparablesPrice$2
–$101$78
Asset-backed securities127
 Market comparablesPrice$1
–$102$67
Net interest rate derivatives(180) Option pricingInterest rate spread volatility16bps–38bps 
    Interest rate correlation(45)%–97% 
    IR-FX correlation45 %–60% 
 142
 Discounted cash flowsPrepayment speed4 %–30% 
Net credit derivatives(163) Discounted cash flowsCredit correlation25 %–55% 
    Credit spread10bps–1,487bps 
    Recovery rate20 %–70% 
    Conditional default rate3 %–72% 
    Loss severity100% 
 56
 Market comparablesPrice$1
–$115 
Net foreign exchange derivatives(122) Option pricingIR-FX correlation(45)%–60% 
 (175) Discounted cash flowsPrepayment speed8 %–9% 
Net equity derivatives(2,225) Option pricingEquity volatility14 %–57% 
    Equity correlation20 %–98% 
    Equity-FX correlation(75)%–61% 
    Equity-IR correlation20 %–60% 
Net commodity derivatives(1,129) Option pricingForward commodity price$39
–$56 per barrel
    Commodity volatility5 %–68% 
    Commodity correlation(51)%–95% 
MSRs6,130
 Discounted cash flowsRefer to Note 15    
Other assets306
 Discounted cash flowsCredit spread55bps55bps
    Yield8%–10%8%
 922
 Market comparablesPrice$20
 $108$40
    EBITDA multiple2.9x–8.3x7.5x
Long-term debt, short-term borrowings, and deposits(e)
25,110
 Option pricingInterest rate spread volatility16bps–38bps 
   Interest rate correlation(45)%–97% 
   IR-FX correlation(45)%–60% 
   Equity correlation20 %–98% 
   Equity-FX correlation(75)%–61% 
   Equity-IR correlation20 %–60% 
Other level 3 assets and liabilities, net(f)
326
       
(a)The categories presented in the table have been aggregated based upon the product type, which may differ from their classification on the Consolidated balance sheets. Furthermore, the inputs presented for each valuation technique in the table are, in some cases, not applicable to every instrument valued using the technique as the characteristics of the instruments can differ.
(b)Includes U.S. government agency securities of $541 million, nonagency securities of $65 million and trading loans of $252 million.
(c)Includes U.S. government agency securities of $8 million, nonagency securities of $11 million, trading loans of $278 million and non-trading loans of $122 million.
(d)Comprises trading loans.
(e)Long-term debt, short-term borrowings and deposits include structured notes issued by the Firm that are financial instruments that typically contain embedded derivatives. The estimation of the fair value of structured notes includes the derivative features embedded within the instrument. The significant unobservable inputs are broadly consistent with those presented for derivative receivables.
(f)Includes level 3 assets and liabilities that are insignificant both individually and in aggregate.
(g)
Price is a significant unobservable input for certain instruments. When quoted market prices are not readily available, reliance is generally placed on price-based internal valuation techniques. The price input is expressed assuming a par value of $100.



168180JPMorgan Chase & Co./20182020 Form 10-K


Changes in and ranges of unobservable inputs
The following discussion provides a description of the impact on a fair value measurement of a change in each unobservable input in isolation, and the interrelationship between unobservable inputs, where relevant and significant. The impact of changes in inputs may not be independent, as a change in one unobservable input may give rise to a change in another unobservable input. Where relationships do exist between two unobservable inputs, those relationships are discussed below. Relationships may also exist between observable and unobservable inputs (for example, as observable interest rates rise, unobservable prepayment rates decline); such relationships have not been included in the discussion below. In addition, for each of the individual relationships described below, the inverse relationship would also generally apply.
The following discussion also provides a description of attributes of the underlying instruments and external market factors that affect the range of inputs used in the valuation of the Firm’s positions.
Yield – The yield of an asset is the interest rate used to discount future cash flows in a discounted cash flow calculation. An increase in the yield, in isolation, would result in a decrease in a fair value measurement.
Credit spread – The credit spread is the amount of additional annualized return over the market interest rate that a market participant would demand for taking exposure to the credit risk of an instrument. The credit spread for an instrument forms part of the discount rate used in a discounted cash flow calculation. Generally, an increase in the credit spread would result in a decrease in a fair value measurement.
The yield and the credit spread of a particular mortgage-backed security primarily reflect the risk inherent in the instrument. The yield is also impacted by the absolute level of the coupon paid by the instrument (which may not correspond directly to the level of inherent risk). Therefore, the range of yield and credit spreads reflects the range of risk inherent in various instruments owned by the Firm. The risk inherent in mortgage-backed securities is driven by the subordination of the security being valued and the characteristics of the underlying mortgages within the collateralized pool, including borrower FICO scores, LTV ratios for residential mortgages and the nature of the property and/or any tenants for commercial mortgages. For corporate debt securities, obligations of U.S. states and municipalities and other similar instruments, credit spreads reflect the credit quality of the obligor and the tenor of the obligation.

Prepayment speed – The prepayment speed is a measure of the voluntary unscheduled principal repayments of a prepayable obligation in a collateralized pool. Prepayment speeds generally decline as borrower delinquencies rise. An increase in prepayment speeds, in isolation, would result in a decrease in a fair value measurement of assets valued at a premium to par and an increase in a fair value measurement of assets valued at a discount to par.

Prepayment speeds may vary from collateral pool to collateral pool, and are driven by the type and location of the
underlying borrower, and the remaining tenor of the obligation as well as the level and type (e.g., fixed or floating) of interest rate being paid by the borrower. Typically collateral pools with higher borrower credit quality have a higher prepayment rate than those with lower borrower credit quality, all other factors being equal.
Conditional default rate – The conditional default rate is a measure of the reduction in the outstanding collateral balance underlying a collateralized obligation as a result of defaults. While there is typically no direct relationship between conditional default rates and prepayment speeds, collateralized obligations for which the underlying collateral has high prepayment speeds will tend to have lower conditional default rates. An increase in conditional default rates would generally be accompanied by an increase in loss severity and an increase in credit spreads. An increase in the conditional default rate, in isolation, would result in a decrease in a fair value measurement. Conditional default rates reflect the quality of the collateral underlying a securitization and the structure of the securitization itself. Based on the types of securities owned in the Firm’s market-making portfolios, conditional default rates are most typically at the lower end of the range presented.
Loss severity – The loss severity (the inverse concept is the recovery rate) is the expected amount of future realized losses resulting from the ultimate liquidation of a particular loan, expressed as the net amount of loss relative to the outstanding loan balance. An increase in loss severity is generally accompanied by an increase in conditional default rates. An increase in the loss severity, in isolation, would result in a decrease in a fair value measurement.
The loss severity applied in valuing a mortgage-backed security investment depends on factors relating to the underlying mortgages, including the LTV ratio, the nature of the lender’s lien on the property and other instrument-specific factors.

JPMorgan Chase & Co./20182020 Form 10-K169181
Notes to consolidated financial statements

Correlation – Correlation is a measure of the relationship between the movements of two variables (e.g., how the change in one variable influences the change in the other).variables. Correlation is a pricing input for a derivative product where the payoff is driven by one or more underlying risks. Correlation inputs are related to the type of derivative(e.g. (e.g., interest rate, credit, equity, foreign exchange and commodity) commodity) due to the nature of the underlying risks. When parameters are positively correlated, an increase in one parameter will result in an increase in the other parameter. When parameters are negatively correlated, an increase in one parameter will result in a decrease in the other parameter. An increase in correlation can result in an increase or a decrease in a fair value measurement. Given a short correlation position, an increase in correlation, in isolation, would generally result in a decrease in a fair value measurement.
The level of correlation used in the valuation of derivatives with multiple underlying risks depends on a number of factors including the nature of those risks. For example, the correlation between two credit risk exposures would be different than that between two interest rate risk exposures. Similarly, the tenor of the transaction may also impact the correlation input, as the relationship between the underlying risks may be different over different time periods. Furthermore, correlation levels are very much dependent on market conditions and could have a relatively wide range of levels within or across asset classes over time, particularly in volatile market conditions.
Volatility – Volatility is a measure of the variability in possible returns for an instrument, parameter or market index given how much the particular instrument, parameter or index changes in value over time. Volatility is a pricing input for options, including equity options, commodity options, and interest rate options. Generally, the higher the volatility of the underlying, the riskier the instrument. Given a long position in an option, an increase in volatility, in isolation, would generally result in an increase in a fair value measurement.
The level of volatility used in the valuation of a particular option-based derivative depends on a number of factors, including the nature of the risk underlying the option (e.g., the volatility of a particular equity security may be significantly different from that of a particular commodity index), the tenor of the derivative as well as the strike price of the option.
EBITDA multiple – EBITDA multiples referForward price - Forward price is the price at which the buyer agrees to purchase the input (often derived fromasset underlying a forward contract on the predetermined future delivery date, and is such that the value of the contract is zero at inception.
The forward price is used as an input in the valuation of certain derivatives and depends on a comparable company) that is multipliednumber of factors including interest rates, the current price of the underlying asset, and the expected income to be received and costs to be incurred by the historic and/or expected earnings before interest, taxes, depreciation and amortization (“EBITDA”)seller as a result of a company in order to estimateholding that asset until the company’s value.delivery date. An increase in the EBITDA multiple, in isolation, net of adjustments, wouldforward can result in an increase or a decrease in a fair value measurement.
Changes in level 3 recurring fair value measurements
The following tables include a rollforward of the Consolidated balance sheets amounts (including changes in fair value) for financial instruments classified by the Firm within level 3 of the fair value hierarchy for the years endedDecember 31, 2018, 20172020, 2019 and 2016. 2018. When a determination is made to classify a financial instrument within level 3, the determination is based on the significance of the unobservable inputs to the overall fair value measurement. However, level 3 financial instruments typically include, in addition to the unobservable or level 3 components, observable components (that is, components that are actively quoted and can be validated to external sources); accordingly, the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology. Also, the Firm risk-manages the observable components of level 3 financial instruments using securities and derivative positions that are classified within level 1 or 2 of the fair value hierarchy; as these level 1 and level 2 risk management instruments are not included below, the gains or losses in the following tables do not reflect the effect of the Firm’s risk management activities related to such level 3 instruments.

170182JPMorgan Chase & Co./20182020 Form 10-K


 Fair value measurements using significant unobservable inputs  
Year ended
December 31, 2018
(in millions)
Fair value at January 1, 2018Total realized/unrealized gains/(losses)    
Transfers into
level 3(h)
Transfers (out of) level 3(h)
Fair value at Dec. 31, 2018 Change in unrealized gains/(losses) related to financial instruments held at Dec. 31, 2018
Purchases(f)
Sales 
Settlements(g)
Assets:(a)
             
Trading assets:             
Debt instruments:             
Mortgage-backed securities:             
U.S. government agencies$307
$(23) $478
$(164) $(73)$94
$(70)$549
 $(21) 
Residential – nonagency60
(2) 78
(50) (7)59
(74)64
 1
 
Commercial – nonagency11
2
 18
(18) (17)36
(21)11
 (2) 
Total mortgage-backed securities378
(23) 574
(232) (97)189
(165)624
 (22) 
U.S. Treasury and government agencies1
—
 —
—
 —
—
(1)—
 —
 
Obligations of U.S. states and municipalities744
(17) 112
(70) (80)—
—
689
 (17) 
Non-U.S. government debt securities78
(22) 459
(277) (12)23
(94)155
 (9) 
Corporate debt securities312
(18) 364
(309) (48)262
(229)334
 (1) 
Loans2,719
26
 1,364
(1,793) (658)813
(765)1,706
 (1) 
Asset-backed securities153
28
 98
(41) (55)45
(101)127
 22
 
Total debt instruments4,385
(26) 2,971
(2,722) (950)1,332
(1,355)3,635
 (28) 
Equity securities295
(40) 118
(120) (1)107
(127)232
 9
 
Other690
(285) 55
(40) (118)3
(4)301
 (301) 
Total trading assets – debt and equity instruments5,370
(351)
(c) 
3,144
(2,882) (1,069)1,442
(1,486)4,168
 (320)
(c) 
Net derivative receivables:(b)
       

     
Interest rate264
150
 107
(133) (430)(15)19
(38) 187
 
Credit(35)(40) 5
(7) (57)4
23
(107) (28) 
Foreign exchange(396)103
 52
(20) 30
(108)42
(297) (63) 
Equity(3,409)198
 1,676
(2,208) 1,805
(617)330
(2,225) 561
 
Commodity(674)(73) 1
(72) (301)7
(17)(1,129) 146
 
Total net derivative receivables(4,250)338
(c) 
1,841
(2,440) 1,047
(729)397
(3,796) 803
(c) 
Available-for-sale securities:       

     
Mortgage-backed securities1
—
 —
—
 —
—
—
1
 —
 
Asset-backed securities276
1
 —
—
 (277)—
—
—
 —
 
Total available-for-sale securities277
1
(d) 
—
—
 (277)—
—
1
 —
 
Loans276
(7)
(c) 
123
—
 (196)—
(74)122
 (7)
(c) 
Mortgage servicing rights6,030
230
(e) 
1,246
(636) (740)—
—
6,130
 230
(e) 
Other assets1,265
(328)
(c) 
61
(37) (37)4
(1)927
 (340)
(c) 
              
 Fair value measurements using significant unobservable inputs  
Year ended
December 31, 2018
(in millions)		Fair value at January 1, 2018Total realized/unrealized (gains)/losses     
Transfers (out of) level 3(h)
Fair value at Dec. 31, 2018 Change in unrealized (gains)/losses related to financial instruments held at Dec. 31, 2018
PurchasesSalesIssuances
Settlements(g)
Transfers into
level 3(h)
Liabilities:(a)
             
Deposits$4,142
$(136)
(c)(i) 
$—
$—
$1,437
$(736)$2
$(540)$4,169
 $(204)
(c)(i) 
Federal funds purchased and securities loaned or sold under repurchase agreements—
—
 —
—
—
—
—
—
—
 —
 
Short-term borrowings1,665
(329)
(c)(i) 
—
—
3,455
(3,388)272
(152)1,523
 (131)
(c)(i) 
Trading liabilities – debt and equity instruments39
19
(c) 
(99)114
—
(1)14
(36)50
 16
(c) 
Accounts payable and other liabilities13
—
 (12)5
—
—
4
—
10
 —
 
Beneficial interests issued by consolidated VIEs39
—
 —
1
—
(39)—
—
1
 —
 
Long-term debt16,125
(1,169)
(c)(i) 
—
—
11,919
(7,769)1,143
(831)19,418
 (1,385)
(c)(i) 

Fair value measurements using significant unobservable inputs
Year ended
December 31, 2020
(in millions)		Fair value at January 1, 2020Total realized/unrealized gains/(losses)
Transfers into
level 3(i)
Transfers (out of) level 3(i)
Fair value at Dec. 31, 2020Change in unrealized gains/(losses) related to financial instruments held at Dec. 31, 2020
Purchases(g)
Sales
Settlements(h)
Assets:(a)
Trading assets:
Debt instruments:
Mortgage-backed securities: 
U.S. GSEs and government agencies$797 $(172)$134 $(149) $(161)$0 $0 $449 $(150)
Residential – nonagency23 2 15 (5) (4)0 (3)28 (1)
Commercial – nonagency4 0 1 0  (1)2 (3)3 0 
Total mortgage-backed securities824 (170)150 (154)(166)2 (6)480 (151)
U.S. Treasury, GSEs and government agencies0 0 0 0  0 0 0 0 0 
Obligations of U.S. states and municipalities10 0 0 (1) (1)0 0 8 0 
Non-U.S. government debt securities155 21 281 (245) (7)0 (23)182 11 
Corporate debt securities558 (23)582 (205) (236)411 (580)507 (25)
Loans(b)
673 (73)1,112 (484) (182)791 (944)893 (40)
Asset-backed securities37 (3)44 (40) (9)9 (10)28 (4)
Total debt instruments2,257 (248)2,169 (1,129)(601)1,213 (1,563)2,098 (209)
Equity securities196 (75)53 (376) (1)535 (153)179 (20)
Other232 271 245 (9) (154)6 (245)346 206 
Total trading assets – debt and equity instruments2,685 (52)(d)2,467 (1,514)(756)1,754 (1,961)2,623 (23)(d)
Net derivative receivables:(c)
 
Interest rate(332)2,682 308 (148) (2,228)(332)308 258 325 
Credit(139)(212)73 (154) 181 59 (32)(224)(110)
Foreign exchange(607)49 49 (24) 83 13 3 (434)116 
Equity(3,395)(65)1,664 (2,317) 1,162 (935)24 (3,862)(556)
Commodity(16)(546)27 (241) 356 (310)(1)(731)267 
Total net derivative receivables(4,489)1,908 (d)2,121 (2,884)(446)(1,505)302 (4,993)42 (d)
Available-for-sale securities:
Mortgage-backed securities1 0 0 0 (1)0 0 0 0 
Asset-backed securities0 0 0 0 0 0 0 0 0 
Total available-for-sale securities1 0 0 0 (1)0 0 0 0 
Loans(b)
516 (243)(d)962 (84) (733)2,571 (684)2,305 (18)(d)
Mortgage servicing rights4,699 (1,540)(e)1,192 (176) (899)0 0 3,276 (1,540)(e)
Other assets(b)
917 (63)(d)75 (104)(320)40 (7)538 (3)(d)
Fair value measurements using significant unobservable inputs
Year ended
December 31, 2020
(in millions)		Fair value at January 1, 2020Total realized/unrealized (gains)/losses
Transfers (out of) level 3(i)
Fair value at Dec. 31, 2020Change in unrealized (gains)/losses related to financial instruments held at Dec. 31, 2020
PurchasesSalesIssuances
Settlements(h)
Transfers into
level 3(i)
Liabilities:(a)
Deposits$3,360 $165 (d)(f)$0 $0 $671 $(605)$265 $(943)$2,913 $455 (d)(f)
Short-term borrowings1,674 (338)(d)(f)0 0 5,140 (4,115)105 (46)2,420 143 (d)(f)
Trading liabilities – debt and equity instruments41 (2)(d)(126)14 0 (4)136 (8)51 (1)(d)
Accounts payable and other liabilities45 33 (d)(87)37 0 0 47 (7)68 28 (d)
Beneficial interests issued by consolidated VIEs0 0  0 0 0 0 0 0 0 0 
Long-term debt23,339 40 (d)(f)0 0 9,883 (9,833)1,250 (1,282)23,397 1,920 (d)(f)
JPMorgan Chase & Co./20182020 Form 10-K171183
Notes to consolidated financial statements

 Fair value measurements using significant unobservable inputs  
Year ended
December 31, 2017
(in millions)
Fair value at January 1, 2017Total realized/unrealized gains/(losses)      
Transfers (out of) level 3(h)
Fair value at Dec. 31, 2017 Change in unrealized gains/(losses) related to financial instruments held at Dec. 31, 2017
Purchases(f)
Sales  
Settlements(g)
Transfers into
level 3(h)
Assets:(a)
               
Trading assets:               
Debt instruments:               
Mortgage-backed securities:               
U.S. government agencies$392
 $(11) $161
$(171)  $(70)$49
$(43)$307
 $(20) 
Residential – nonagency83
 19
 53
(30)  (64)132
(133)60
 11
 
Commercial – nonagency17
 9
 27
(44)  (13)64
(49)11
 1
 
Total mortgage-backed securities492
 17
 241
(245)  (147)245
(225)378
 (8) 
U.S. Treasury and government agencies—
 —
 —
—
  —
1
—
1
 —
 
Obligations of U.S. states and municipalities649
 18
 152
(70)  (5)—
—
744
 15
 
Non-U.S. government debt securities46
 —
 559
(518)  —
62
(71)78
 —
 
Corporate debt securities576
 11
 872
(612)  (497)157
(195)312
 18
 
Loans4,837
 333
 2,389
(2,832)  (1,323)806
(1,491)2,719
 43
 
Asset-backed securities302
 32
 354
(356)  (56)75
(198)153
 —
 
Total debt instruments6,902
 411
 4,567
(4,633)  (2,028)1,346
(2,180)4,385
 68
 
Equity securities231
 39
 176
(148)  (4)59
(58)295
 21
 
Other761
 100
 30
(46)  (162)17
(10)690
 39
 
Total trading assets – debt and equity instruments7,894
 550
(c) 
4,773
(4,827)  (2,194)1,422
(2,248)5,370
 128
(c) 
Net derivative receivables:(b)
—
   



  







 

 
Interest rate1,263
 72
 60
(82)  (1,040)(8)(1)264
 (473) 
Credit98
 (164) 1
(6)  —
77
(41)(35) 32
 
Foreign exchange(1,384) 43
 13
(10)  854
(61)149
(396) 42
 
Equity(2,252) (417) 1,116
(551)  (245)(1,482)422
(3,409) (161) 
Commodity(85) (149) —
—
  (433)(6)(1)(674) (718) 
Total net derivative receivables(2,360) (615)
(c) 
1,190
(649)  (864)(1,480)528
(4,250) (1,278)
(c) 
Available-for-sale securities:    



  





—
 

 
Mortgage-backed securities1
 —
 —
—
  —
—
—
1
 —
 
Asset-backed securities663
 15
 —
(50)  (352)—
—
276
 14
 
Total available-for-sale securities664
 15
(d) 
—
(50)  (352)—
—
277
 14
(d) 
Loans570
 35
(c) 
—
(26)  (303)—
—
276
 3
(c) 
Mortgage servicing rights6,096
 (232)
(e) 
1,103
(140)  (797)—
—
6,030
 (232)
(e) 
Other assets2,223
 244
(c) 
66
(177)  (870)—
(221)1,265
 74
(c) 
                
 Fair value measurements using significant unobservable inputs  
Year ended
December 31, 2017
(in millions)		Fair value at January 1, 2017 Total realized/unrealized (gains)/losses      
Transfers (out of) level 3(h)
Fair value at Dec. 31, 2017 Change in unrealized (gains)/losses related to financial instruments held at Dec. 31, 2017
PurchasesSalesIssuances 
Settlements(g)
Transfers into
level 3(h)
Liabilities:(a)
               
Deposits$2,117
 $152
(c)(i) 
$—
$—
$3,027
 $(291)$11
$(874)$4,142
 $198
(c)(i) 
Federal funds purchased and securities loaned or sold under repurchase agreements—
 —
 —
—
—
 —
—
—
—
 —
 
Short-term borrowings1,134
 42
(c)(i) 
—
—
3,289
 (2,748)150
(202)1,665
 7
(c)(i) 
Trading liabilities – debt and equity instruments43
 (3)
(c) 
(46)48
—
 3
3
(9)39
 —
 
Accounts payable and other liabilities13
 (2) (1)—
—
 3
—
—
13
 (2) 
Beneficial interests issued by consolidated VIEs48
 2
(c) 
(122)39
—
 (6)78
—
39
 —
 
Long-term debt12,850
 1,067
(c)(i) 
—
—
12,458
 (10,985)1,660
(925)16,125
 552
(c)(i) 

Fair value measurements using significant unobservable inputs
Year ended
December 31, 2019
(in millions)		Fair value at January 1, 2019Total realized/unrealized gains/(losses)
Transfers (out of) level 3(i)
Fair value at Dec. 31, 2019Change in unrealized gains/(losses) related to financial instruments held at Dec. 31, 2019
Purchases(g)
Sales
Settlements(h)
Transfers into
level 3(i)
Assets:(a)
Trading assets:
Debt instruments:
Mortgage-backed securities:
U.S. GSEs and government agencies$549 $(62)$773 $(310) $(134)$1 $(20)$797 $(58)
Residential – nonagency64 25 83 (86) (20)15 (58)23 2 
Commercial – nonagency11 2 20 (26) (14)15 (4)4 1 
Total mortgage-backed securities624 (35)876 (422)(168)31 (82)824 (55)
U.S. Treasury, GSEs and government agencies0 0 0 0  0 0 0 0 0 
Obligations of U.S. states and municipalities689 13 85 (159) (8)0 (610)10 13 
Non-U.S. government debt securities155 1 290 (287) 0 14 (18)155 4 
Corporate debt securities334 47 437 (247) (52)112 (73)558 40 
Loans(b)
738 29 456 (519) (82)437 (386)673 13 
Asset-backed securities127 0 37 (93) (40)28 (22)37 (3)
Total debt instruments2,667 55 2,181 (1,727) (350)622 (1,191)2,257 12 
Equity securities232 (41)58 (103)(22)181 (109)196 (18)
Other301 (36)50 (26)(54)2 (5)232 91 
Total trading assets – debt and equity instruments3,200 (22)(d)2,289 (1,856) (426)805 (1,305)2,685 85 (d)
Net derivative receivables:(c)
Interest rate(38)(394)109 (125)5 (7)118 (332)(599)
Credit(107)(36)20 (9)8 29 (44)(139)(127)
Foreign exchange(297)(551)17 (67)312 (22)1 (607)(380)
Equity(2,225)(310)397 (573)(503)(405)224 (3,395)(1,608)
Commodity(1,129)497 36 (348)89 (6)845 (16)130 
Total net derivative receivables(3,796)(794)(d)579 (1,122) (89)(411)1,144 (4,489)(2,584)(d)
Available-for-sale securities:
Mortgage-backed securities1 0 0 0 0 0 0 1 0 
Asset-backed securities0 0 0 0 0 0 0 0 0 
Total available-for-sale securities1 0 

0 0  0 0 0 1 0 
Loans(b)
856 59 (d)236 (188)(482)188 (153)516 38 (d)
Mortgage servicing rights6,130 (1,180)(e)1,489 (789)(951)0 0 4,699 (1,180)(e)
Other assets(b)
1,161 (150)(d)229 (166) (156)6 (7)917 (180)(d)
Fair value measurements using significant unobservable inputs
Year ended
December 31, 2019
(in millions)		Fair value at January 1, 2019Total realized/unrealized (gains)/losses 
Transfers (out of) level 3(i)
Fair value at Dec. 31, 2019Change in unrealized (gains)/losses related to financial instruments held at Dec. 31, 2019
PurchasesSalesIssuances
Settlements(h)
Transfers into
level 3(i)
Liabilities:(a)
Deposits$4,169 $278 (d)(f)$0 $0 $916 $(806)$12 $(1,209)$3,360 $307 (d)(f)
Short-term borrowings1,523 229 (d)(f)0 0 3,441 (3,356)85 (248)1,674 155 (d)(f)
Trading liabilities – debt and equity instruments50 2 (d)(22)41 0 1 16 (47)41 3 (d)
Accounts payable and other liabilities10 (2)(d)(84)115 0 0 6 0 45 29 (d)
Beneficial interests issued by consolidated VIEs1 (1)(d)0 0 0 0 0 0 0 0  
Long-term debt19,418 2,815 (d)(f)0 0 10,441 (8,538)651 (1,448)23,339 2,822 (d)(f)
172184JPMorgan Chase & Co./20182020 Form 10-K


 Fair value measurements using significant unobservable inputs  
Year ended
December 31, 2016
(in millions)
Fair value at January 1, 2016Total realized/unrealized gains/(losses)        
Transfers (out of) level 3(h)
Fair value at
Dec. 31, 2016
Change in unrealized gains/(losses) related to financial instruments held at Dec. 31, 2016
Purchases(f)
 Sales  
Settlements(g)
 
Transfers into
level 3(h)
Assets:(a)
                
Trading assets:                
Debt instruments:                
Mortgage-backed securities:                
U.S. government agencies$715
$(20) $135
 $(295)  $(115) $111
$(139)$392
 $(36) 
Residential – nonagency194
4
 252
 (319)  (20) 67
(95)83
 5
 
Commercial – nonagency115
(11) 69
 (29)  (3) 173
(297)17
 3
 
Total mortgage-backed securities1,024
(27) 456
 (643)  (138) 351
(531)492
 (28) 
Obligations of U.S. states and municipalities651
19
 149
 (132)  (38) —
—
649
 —
 
Non-U.S. government debt securities74
(4) 91
 (97)  (7) 19
(30)46
 (7) 
Corporate debt securities736
2
 445
 (359)  (189) 148
(207)576
 (22) 
Loans6,604
(343) 2,228
 (2,598)  (1,311) 1,044
(787)4,837
 (169) 
Asset-backed securities1,832
39
 655
 (712)  (968) 288
(832)302
 19
 
Total debt instruments10,921
(314) 4,024
 (4,541)  (2,651) 1,850
(2,387)6,902
 (207) 
Equity securities265
—
 90
 (108)  (40) 29
(5)231
 7
 
Physical commodities—
—
 —
 —
  —
 —
—
—
 —
 
Other744
79
 649
 (287)  (360) 26
(90)761
 28
 
Total trading assets – debt and equity instruments11,930
(235)
(c) 
4,763
 (4,936)  (3,051) 1,905
(2,482)7,894
 (172)
(c) 
Net derivative receivables:(b)
   

 

  

 





 

 
Interest rate876
756
 193
 (57)  (713) (14)222
1,263
 (144) 
Credit549
(742) 10
 (2)  211
 36
36
98
 (622) 
Foreign exchange(725)67
 64
 (124)  (649) (48)31
(1,384) (350) 
Equity(1,514)(145) 277
 (852)  213
 94
(325)(2,252) (86) 
Commodity(935)194
 1
 10
  645
 8
(8)(85) (36) 
Total net derivative receivables(1,749)130
(c) 
545
 (1,025)  (293) 76
(44)(2,360) (1,238)
(c) 
Available-for-sale securities:



 

 

  

 





 

 
Mortgage-backed securities1
—
 —
 —
  —
 —
—
1
 —
 
Asset-backed securities823
1
 —
 —
  (119) —
(42)663
 1
 
Total available-for-sale securities824
1
(d) 
—
 —
  (119) —
(42)664
 1
(d) 
Loans1,518
(49)
(c) 
259
 (7)  (838) —
(313)570
 —
 
Mortgage servicing rights6,608
(163)
(e) 
679
 (109)  (919) —
—
6,096
 (163)
(e) 
Other assets2,401
130
(c) 
487
 (496)  (299) —
—
2,223
 48
(c) 
                 
 Fair value measurements using significant unobservable inputs  
Year ended
December 31, 2016
(in millions)
Fair value at January 1, 2016Total realized/unrealized (gains)/losses       
Transfers into
level 3(h)
Transfers (out of) level 3(h)
Fair value at Dec. 31, 2016Change in unrealized (gains)/losses related to financial instruments held at Dec. 31, 2016
Purchases SalesIssuances 
Settlements(g)
 
Liabilities:(a)
                
Deposits$2,950
$(56)
(c) 
$—
 $—
$1,375
 $(1,283) $—
$(869)$2,117
 $23
(c) 
Federal funds purchased and securities loaned or sold under repurchase agreements—
—
 —
 —
—
 (2) 6
(4)—
 —
 
Short-term borrowings639
(230)
(c) 
—
 —
1,876
 (1,210) 114
(55)1,134
 (70)
(c) 
Trading liabilities – debt and equity instruments63
(12)
(c) 
(15) 23
—
 (22) 13
(7)43
 (18)
(c) 
Accounts payable and other liabilities19
—
 —
 —
—
 (6) —
—
13
 —

Beneficial interests issued by consolidated VIEs549
(31)
(c) 
—
 —
143
 (613) —
—
48
 6
(c) 
Long-term debt11,447
147
(c) 
—
 —
8,140
 (5,810) 315
(1,389)12,850
 639
(c) 

Fair value measurements using significant unobservable inputs
Year ended
December 31, 2018
(in millions)		Fair value at January 1, 2018Total realized/unrealized gains/(losses)
Transfers (out of) level 3(i)
Fair value at
Dec. 31, 2018		Change in unrealized gains/(losses) related to financial instruments held at Dec. 31, 2018
Purchases(g)
Sales
Settlements(h)
Transfers into
level 3(i)
Assets:(a)
Trading assets:
Debt instruments:
Mortgage-backed securities:
U.S. GSEs and government agencies$307 $(23)$478 $(164)$(73)$94 $(70)$549 $(21)
Residential – nonagency60 (2)78 (50)(7)59 (74)64 1 
Commercial – nonagency11 2 18 (18)(17)36 (21)11 (2)
Total mortgage-backed securities378 (23)574 (232)(97)189 (165)624 (22)
U.S. Treasury, GSEs and government agencies1 0 0 0 0 0 (1)0 0 
Obligations of U.S. states and municipalities744 (17)112 (70)(80)0 0 689 (17)
Non-U.S. government debt securities78 (22)459 (277)(12)23 (94)155 (9)
Corporate debt securities312 (18)364 (309)(48)262 (229)334 (1)
Loans(b)
612 1 941 (536)(219)619 (680)738 (13)
Asset-backed securities153 28 98 (41)(55)45 (101)127 22 
Total debt instruments2,278 (51)2,548 (1,465)(511)1,138 (1,270)2,667 (40)
Equity securities295 (40)118 (120)(1)107 (127)232 9 
Other690 (285)55 (40)(118)3 (4)301 (301)
Total trading assets – debt and equity instruments3,263 (376)(d)2,721 (1,625)(630)1,248 (1,401)3,200 (332)(d)
Net derivative receivables:(c)
Interest rate264 150 107 (133)(430)(15)19 (38)187 
Credit(35)(40)5 (7)(57)4 23 (107)(28)
Foreign exchange(396)103 52 (20)30 (108)42 (297)(63)
Equity(3,409)198 1,676 (2,208)1,805 (617)330 (2,225)561 
Commodity(674)(73)1 (72)(301)7 (17)(1,129)146 
Total net derivative receivables(4,250)338 (d)1,841 (2,440)1,047 (729)397 (3,796)803 (d)
Available-for-sale securities:— 
Mortgage-backed securities1 0 0 0 0 0 0 1 0 
Asset-backed securities276 1 0 0 (277)0 0 0 — 
Total available-for-sale securities277 1 (j)0 0 (277)0 0 1 0 

Loans(b)
2,152 9 (d)412 (1,256)(496)194 (159)856 (4)(d)
Mortgage servicing rights6,030 230 (e)1,246 (636)(740)0 0 6,130 230 (e)
Other assets(b)
1,496 (319)(d)195 (38)(176)4 (1)1,161 (331)(d)
Fair value measurements using significant unobservable inputs
Year ended
December 31, 2018
(in millions)		Fair value at January 1, 2018Total realized/unrealized (gains)/losses
Transfers into
level 3(i)
Transfers (out of) level 3(i)
Fair value at Dec. 31, 2018Change in unrealized (gains)/losses related to financial instruments held at Dec. 31, 2018
PurchasesSalesIssuances
Settlements(h)
Liabilities:(a)
Deposits$4,142 $(136)(d)(f)$0 $0 $1,437 $(736)$2 $(540)$4,169 $(204)(d)(f)
Short-term borrowings1,665 (329)(d)(f)0 0 3,455 (3,388)272 (152)1,523 (131)(d)(f)
Trading liabilities – debt and equity instruments39 19 (d)(99)114 0 (1)14 (36)50 16 (d)
Accounts payable and other liabilities13 0  (12)5 0 0 4 0 10 0  
Beneficial interests issued by consolidated VIEs39 0  0 1 0 (39)0 0 1 0 
Long-term debt16,125 (1,169)(d)(f)0 0 11,919 (7,769)1,143 (831)19,418 (1,385)(d)(f)
JPMorgan Chase & Co./20182020 Form 10-K173185
Notes to consolidated financial statements

(a)(a)Level 3 assets at fair value as a percentage of total Firm assets accounted for at fair value (including assets measured at fair value on a nonrecurring basis) were 3%, 3% and 4% at December 31, 2018, 2017 and 2016 respectively. Level 3 liabilities as a percentage of total Firm liabilities accounted for at fair value (including liabilities measured at fair value on a nonrecurring basis) were 15%, 15% and 12% at December 31, 2018, 2017 and 2016, respectively.
(b)All level 3 derivatives are presented on a net basis, irrespective of underlying counterparty.
(c)Predominantly reported in principal transactions revenue, except for changes in fair value for CCB mortgage loans, and lending-related commitments originated with the intent to sell, and mortgage loan purchase commitments, which are reported in mortgage fees and related income.
(d)
Realized gains/(losses) on AFSsecurities, as well as other-than-temporary impairment (“OTTI”) losses that are recorded in earnings, are reported in investment securities gains/(losses). Unrealized gains/(losses) are reported in OCI. Realized gains/(losses) and foreign exchange hedge accounting adjustments recorded in income on AFS securities were $1 million, zero and zero for the years ended December 31, 2018, 2017 and 2016, respectively. Unrealized gains/(losses) recorded on AFS securities in OCI were zero, $15 million and $1 million for the years ended December 31, 2018, 2017 and 2016, respectively.
(e)Changes in fair value for MSRs are reported in mortgage fees and related income.
(f)Loan originations are included in purchases.
(g)Includes financial assets and liabilities that have matured, been partially or fully repaid, impacts of modifications, deconsolidations associated with beneficial interests in VIEs and other items.
(h)All transfers into and/or out of level 3 are based on changes in the observability and/or significance of the valuation inputs and are assumed to occur at the beginning of the quarterly reporting period in which they occur.
(i)
Realized (gains)/losses due to DVA for fair value option elected liabilities are reported in principal transactions revenue, and they were not material for the years ended December 31, 2018 and 2017, respectively. Unrealized (gains)/losses are reported in OCI, and they were $(277) million and $(48) million for the years ended December 31, 2018 and 2017, respectively.
Level 3 analysis
Consolidated balance sheets changes
Level 3 assets (including assets measured at fair value on a nonrecurring basis) were 0.7%1%, 2% and 3% at December 31, 2020, 2019 and 2018, respectively. Level 3 liabilities at fair value as a percentage of total Firm liabilities at fair value (including liabilities measured at fair value on a nonrecurring basis) were 9%, 16% and 15% at December 31, 2020, 2019 and 2018, respectively.
(b)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans and other assets. Prior-period amounts have been revised to conform with the current presentation.
(c)All level 3 derivatives are presented on a net basis, irrespective of underlying counterparty.
(d)Predominantly reported in principal transactions revenue, except for changes in fair value for CCB mortgage loans, and lending-related commitments originated with the intent to sell, and mortgage loan purchase commitments, which are reported in mortgage fees and related income.
(e)Changes in fair value for MSRs are reported in mortgage fees and related income.
(f)Realized (gains)/losses due to DVA for fair value option elected liabilities are reported in principal transactions revenue, and they were not material for the years ended December 31, 2020, 2019 and 2018, respectively. Unrealized (gains)/losses are reported in OCI, and they were $221 million, $319 million and $(277) million for the years ended December 31, 2020, 2019 and 2018, respectively.
(g)Loan originations are included in purchases.
(h)Includes financial assets and liabilities that have matured, been partially or fully repaid, impacts of modifications, deconsolidation associated with beneficial interests in VIEs and other items.
(i)All transfers into and/or out of level 3 are based on changes in the observability and/or significance of the valuation inputs and are assumed to occur at the beginning of the quarterly reporting period in which they occur.
(j)Realized gains/(losses) on AFS securities, as well as other-than-temporary impairment (“OTTI”) losses that are recorded in earnings, are reported in investment securities gains/(losses). Unrealized gains/(losses) are reported in OCI. There were 0 realized gains/(losses) and foreign exchange hedge accounting adjustments recorded in income on AFS securities for the years ended December 31, 2020 and 2019, respectively and $1 million recorded for the year ended December 31, 2018. There were 0 material unrealized gains/(losses) recorded on AFS securities in OCI for the years ended December 31, 2020, 2019 and 2018 respectively.

Level 3 analysis
Consolidated balance sheets changes
Level 3 assets at fair value including assets measured at fair value on a nonrecurring basis were 0.5% of total Firm assets at December 31, 2018.2020. The following describes significant changes to level 3 assets since December 31, 2017,2019, for those items measured at fair value on a recurring basis. For further information on changes impacting items measured at fair value on a nonrecurring basis, referRefer to Assets and liabilities measured at fair value on a nonrecurring basis on page 176.189 for further information on changes impacting items measured at fair value on a nonrecurring basis.
For the year ended December 31, 20182020
Level 3 assets were $17.2$16.4 billion at December 31, 2018,2020, reflecting a decreasean increase of $2.1$2.9 billion from December 31, 2017,2019.
The increase for the year ended December 31, 2020 was driven by:
•$907 million increase in gross interest rate derivative receivables and $1.4 billion increase in gross equity derivative receivables largely due to:to gains net of settlements.
•$1.21.8 billion increase in non-trading loans due to net transfers.
partially offset by
•$1.4 billion decrease in trading assets — debt and equity instruments predominantly driven by a decrease of $1.0 billion in trading loans primarilyMSRs due to losses and settlements and net sales.partially offset by purchases.
Refer to the sections below for additional information.
Transfers between levels for instruments carried at
fair value on a recurring basis
During the year ended December 31, 2018,2020, significant transfers from level 2 into level 3 included the following:
•$1.8 billion of total debt and equity instruments, predominantly equity securities and trading loans, driven by a decrease in observability.
•$2.6 billion of gross equity derivative receivables and $3.5 billion of gross equity derivative payables as a result
of a decrease in observability and an increase in the significance of unobservable inputs.
•$880 million of gross interest rate derivative payables as a result of a decrease in observability and an increase in the significance of unobservable inputs.
•$2.6 billion of non-trading loans driven by a decrease in observability.
•$1.2 billion of long-term debt driven by a decrease in observability and an increase in the significance of unobservable inputs for structured notes.
During the year ended December 31, 2020, significant transfers from level 3 into level 2 included the following:
•$2.0 billion of total debt and equity instruments, predominantly due to corporate debt and trading loans, driven by an increase in observability.
•$2.4 billion of gross equity derivative receivables and $2.4 billion of gross equity derivative payables as a result of an increase in observability and a decrease in the significance of unobservable inputs.
•$943 million of deposits as a result of an increase in observability and a decrease in the significance of unobservable inputs.
•$1.3 billion of long-term debt driven by an increase in observability and a decrease in the significance of unobservable inputs for structured notes.
During the year ended December 31, 2019, significant transfers from level 2 into level 3 included the following:
•$993 million of total debt and equity instruments, the majority of which were trading loans, driven by a decrease in observability.
•$904 million of gross equity derivative payables as a result of a decrease in observability and an increase in the significance of unobservable inputs.

186JPMorgan Chase & Co./2020 Form 10-K

During the year ended December 31, 2019, significant transfers from level 3 into level 2 included the following:
•$1.5 billion of total debt and equity instruments, the majority of which were obligations of U.S. states and municipalities and trading loans, driven by an increase in observability.
•$1.1 billion of gross equity derivative receivables and $1.3 billion of gross equity derivative payables as a result of an increase in observability and a decrease in the significance of unobservable inputs.
•$962 million of gross commodities derivative payables as a result of an increase in observability.
•$1.2 billion of deposits as a result of an increase in observability and a decrease in the significance of unobservable inputs.
•$1.4 billion of long-term debt as a result of an increase in observability and a decrease in the significance of unobservable inputs.
During the year ended December 31, 2018, significant transfers from level 2 into level 3 included the following:
•$1.4 billion of total debt and equity instruments, the majority of which were trading loans, driven by a decrease in observability.
•$1.0 billion of gross equity derivative receivables and $1.6 billion of gross equity derivative payables as a result of a decrease in observability and an increase in the significance of unobservable inputs.
•$1.1 billion of long-term debt driven by a decrease in observability and an increase in the significance of unobservable inputs for certain structured notes.
During the year ended December 31, 2018, significant transfers from level 3 into level 2 included the following:
•$1.5 billion of total debt and equity instruments, the majority of which were trading loans, driven by an increase in observability.
•$1.2 billion of gross equity derivative receivables and $1.5 billion of gross equity derivative payables as a result of an increase in observability and a decrease in the significance of unobservable inputs.
During the year ended December 31, 2018, transfers from level 2 into level 3 included the following:
$1.4 billion of total debt and equity instruments, the majority of which were trading loans, driven by a decrease in observability.
$1.0 billion of gross equity derivative receivables and $1.6 billion of gross equity derivative payables as a result of a decrease in observability and an increase in the significance of unobservable inputs.
$1.1 billion of long-term debt driven by a decrease in observability and an increase in the significance of unobservable inputs for certain structured notes.
During the year ended December 31, 2017, transfers from level 3 into level 2 included the following:
$1.5 billion of trading loans driven by an increase in observability.
$1.2 billion of gross equity derivative payables as a result of an increase in observability and a decrease in the significance of unobservable inputs.
During the year ended December 31, 2017, transfers from level 2 into level 3 included the following:
$1.0 billion of gross equity derivative receivables and $2.5 billion of gross equity derivative payables as a result of a decrease in observability and an increase in the significance of unobservable inputs.
$1.7 billion of long-term debt driven by a decrease in observability and an increase in the significance of unobservable inputs for certain structured notes.
During the year ended December 31, 2016, transfers from level 3 into level 2 included the following:
$1.4 billion of long-term debt driven by an increase in observability and a reduction in the significance of unobservable inputs for certain structured notes.
During the year ended December 31, 2016, transfers from level 2 into level 3 included the following:
$1.1 billion of gross equity derivative receivables and $1.0 billion of gross equity derivative payables as a result of an decrease in observability and an increase in the significance of unobservable inputs.
$1.0 billion of trading loans driven by a decrease in observability.
All transfers are based on changes in the observability and/or significance of the valuation inputs and are assumed to occur at the beginning of the quarterly reporting period in which they occur.
Gains and losses
The following describes significant components of total realized/unrealized gains/(losses) for instruments measured at fair value on a recurring basis for the years ended December 31, 2018, 20172020, 2019 and 2016. For further information on these2018. These amounts exclude any effects of the Firm’s risk management activities where the financial instruments referare classified as level 1 and 2 of the fair value hierarchy. Refer to Changes in level 3 recurring fair value measurements rollforward tables on pages 170-174.182-186 for further information on these instruments.
2020
•$10 million of net gains on assets driven by gains in net interest rate derivative receivables due to market movements largely offset by losses in MSRs reflecting faster prepayment speeds on lower rates. Refer to Note 15 for additional information on MSRs.
•$102 million of net gains on liabilities driven by market movements in short-term borrowings.
2019
•$2.1 billion of net losses on assets largely due to MSRs reflecting faster prepayment speeds on lower rates. Refer to Note 15 for additional information on MSRs.
•$3.3 billion of net losses on liabilities predominantly driven by market movements in long-term debt.
2018
•$1.6 billion of net gains on liabilities largely driven by market movements in long-term debt.
2017
$1.3 billion of net losses on liabilities predominantly driven by market movements in long-term debt.
2016
There were no individually significant movements for the year ended December 31, 2016.

174JPMorgan Chase & Co./20182020 Form 10-K187
Notes to consolidated financial statements


Credit and funding adjustments – derivatives
Derivatives are generally valued using models that use as their basis observable market parameters. These market parameters generally do not consider factors such as counterparty nonperformance risk, the Firm’s own credit quality, and funding costs. Therefore, it is generally necessary to make adjustments to the base estimate of fair value to reflect these factors.
CVA represents the adjustment, relative to the relevant benchmark interest rate, necessary to reflect counterparty nonperformance risk. The Firm estimates CVA using a scenario analysis to estimate the expected positive credit exposure across all of the Firm’s existing positions with each counterparty, and then estimates losses based on the probability of default and estimated recovery rate as a result of a counterparty credit event considering contractual factors designed to mitigate the Firm’s credit exposure, such as collateral and legal rights of offset. The key inputs to this methodology are (i) the probability of a default event occurring for each counterparty, as derived from observed or estimated CDS spreads; and (ii) estimated recovery rates implied by CDS spreads, adjusted to consider the differences in recovery rates as a derivative creditor relative to those reflected in CDS spreads, which generally reflect senior unsecured creditor risk.
FVA represents the adjustment to reflect the impact of funding and is recognized where there is evidence that a market participant in the principal market would incorporate it in a transfer of the instrument. The Firm’s FVA framework, applied to uncollateralized (including partially collateralized) over-the-counter (“OTC”) derivatives incorporates key inputs such as: (i) the expected funding requirements arising from the Firm’s positions with
each counterparty and collateral arrangements; and (ii) the estimated market funding cost in the principal market which, for derivative liabilities, considers the Firm’s credit risk (DVA). For collateralized derivatives, the fair value is estimated by discounting expected future cash flows at the relevant overnight indexed swap rate given the underlying collateral agreement with the counterparty, and therefore a separate FVA is not necessary.
The following table provides the impact of credit and funding adjustments on principal transactions revenue in the respective periods, excluding the effect of any associated hedging activities. The FVA presented below includes the impact of the Firm’s own credit quality on the inception value of liabilities as well as the impact of changes in the Firm’s own credit quality over time.
Year ended December 31,
(in millions)		2018 2017 2016
Credit and funding adjustments:     
Derivatives CVA$193
 $802
 $(84)
Derivatives FVA(74) (295) 7

Year ended December 31,
(in millions)		202020192018
Credit and funding adjustments:
Derivatives CVA$(337)$241 $193 
Derivatives FVA(64)199 (74)
Valuation adjustments on fair value option elected liabilities
The valuation of the Firm’s liabilities for which the fair value option has been elected requires consideration of the Firm’s own credit risk. DVA on fair value option elected liabilities reflects changes (subsequent to the issuance of the liability) in the Firm’s probability of default and LGD, which are estimated based on changes in the Firm’s credit spread observed in the bond market. Realized (gains)/losses due to DVA for fair value option elected liabilities are reported in principal transactions revenue. Unrealized (gains)/losses are reported in OCI. Refer to page 174186 in this Note and Note 2324 for further information.



188JPMorgan Chase & Co./20182020 Form 10-K175
Notes to consolidated financial statements

Assets and liabilities measured at fair value on a nonrecurring basis
The following tables present the assets and liabilities held as of December 31, 20182020 and 2017,2019, respectively, for which a nonrecurring fair value adjustment wasadjustments were recorded during the years ended December 31, 20182020 and 2017, 2019, respectively, by major product category and fair value hierarchy.
Fair value hierarchyTotal fair value
December 31, 2020 (in millions)Level 1Level 2Level 3
Loans$0 $1,611 (c)$972 (d)$2,583 
Other assets(a)
0 5 979 984 
Total assets measured at fair value on a nonrecurring basis$0 $1,616 $1,951  $3,567 
Accounts payable and other liabilities(b)
0 0 12 12 
Total liabilities measured at fair value on a nonrecurring basis$0 $0 $12 $12 
 Fair value hierarchy Total fair value
December 31, 2018 (in millions)Level 1
Level 2
 Level 3
 
Loans$—
$273
 $264
(b) 
$537
Other assets(a)
—
8
 815
 823
Total assets measured at fair value on a nonrecurring basis$—
$281
 $1,079
  
$1,360
Fair value hierarchyTotal fair value
Fair value hierarchy Total fair value
December 31, 2017 (in millions)Level 1
Level 2
 Level 3
 
December 31, 2019 (in millions)December 31, 2019 (in millions)Level 1Level 2Level 3Total fair value
Loans$—
$238
 $596
 $834
Loans$0 $3,462 (c)$269 
Other assets—
283
 183
 466
Other assets0 14 1,043 (e)1,057 
Total assets measured at fair value on a nonrecurring basis$—
$521
 $779
 $1,300
Total assets measured at fair value on a nonrecurring basis$0 $3,476 $1,312 $4,788 
(a) Primarily includes equity securities without readily determinable fair values that were adjusted based on observable price changes in orderly transactions from an identical or similar investment of the same issuer (measurement alternative) as a result of the adoption of the recognition and measurement guidance.. Of the $815$979 million in level 3 assets measured at fair value on a nonrecurring basis as of December 31, 2018, $6672020, $535 million related to such equity securities.securities adjusted based on the measurement alternative. These equity securities are classified as level 3 due to the infrequency of the observable prices and/or the restrictions on the shares.
(b) There were 0 liabilities measured at fair value on a nonrecurring basis at December 31, 2019.
(c) Primarily includes certain mortgage loans that were reclassified to held-for-sale.
(d) Of the $264$972 million in level 3 assets measured at fair value on a nonrecurring basis as of December 31, 2018, $2252020, $602 million related to residential real estate loans carried at the net realizable value of the underlying collateral (e.g., collateral-dependent loans and other loans charged off in accordance with regulatory guidance)loans). These amounts are classified as level 3 as they are valued using information from broker’s price opinions, appraisals and automated valuation models and discounted based upon the Firm’s experience with actual liquidation values. These discounts ranged from 13% to 54%46% with a weighted average of 25%27%.

(e) Prior-period amounts have been revised to conform with the current presentation.
There were no material liabilities measured at fair value on a nonrecurring basis at December 31, 2018 and 2017.
Nonrecurring fair value changes
The following table presents the total change in value of assets and liabilities for which a fair value adjustment hasadjustments have been recognized for the years ended December 31, 2018, 20172020, 2019 and 2016,2018, related to financial instrumentsassets and liabilities held at those dates.
December 31, (in millions)202020192018
Loans(a)
$(393)  $(274)$(68)
Other assets(b)
(529) 182 (c)132 

Accounts payable and other liabilities(11) 0 0 
Total nonrecurring fair value gains/(losses)$(933)$(92)$64 
(a)
December 31, (in millions)2018
 2017
 2016
 
Loans$(68) $(159) $(209) 
Other assets132
(a) 
(148) 37
 
Accounts payable and other liabilities—
 (1) —
 
Total nonrecurring fair value gains/(losses)$64
 $(308) $(172) 

Includes the impact of certain mortgage loans that were reclassified to held-for-sale.
(a) (b)Included $(134) million, $201 million and $149 million for the yearyears ended December 31, 2020, 2019 and 2018, respectively,of net (losses)/gains as a result of the measurement alternative.
For(c)Prior-period amounts have been revised to conform with the current presentation.
Refer to Note 12 for further information about the measurement of impaired collateral-dependent loans, and other loans where the carrying value is based on the fair value of the underlying collateral (e.g., residential mortgage loans charged off in accordance with regulatory guidance), refer to Note 12.






loans.

176JPMorgan Chase & Co./20182020 Form 10-K189

Notes to consolidated financial statements

Equity securities without readily determinable fair values
As a result of the adoption of the recognition and measurement guidance and the election of the measurement alternative in the first quarter of 2018, theThe Firm measures certain equity securities without readily determinable fair values at cost less impairment (if any), plus or minus observable price changes from an identical or similar investment of the same issuer, with such changes recognized in other income.
In its determination of the new carrying values upon observable price changes, the Firm may adjust the prices if deemed necessary to arrive at the Firm’s estimated fair values. Such adjustments may include adjustments to reflect the different rights and obligations of similar securities, and other adjustments that are consistent with the Firm’s valuation techniques for private equity direct investments.
The following table presents the carrying value of equity securities without readily determinable fair values held as of December 31, 2018, 2020 and 2019, that are measured under the measurement alternative and the related adjustments recorded during the periods presented for those securities with observable price changes. These securities are included in the nonrecurring fair value tables when applicable price changes are observable.
As of or for the year ended December 31,
(in millions)20202019
Other assets
Carrying value(a)
$2,368 $2,441 
Upward carrying value changes(b)
167 

243 (d)
Downward carrying value changes/impairment(c)
(301)(42)
(a)The period-end carrying values reflect cumulative purchases and sales in addition to upward and downward carrying value changes.
(b)The cumulative upward carrying value changes between January 1, 2018 and December 31, 2020 were $708 million.
 As of or for the
(in millions)
Year ended
 December 31, 2018
Other assets 
Carrying value$1,510
Upward carrying value changes309
Downward carrying value changes/impairment(160)
(c)The cumulative downward carrying value changes/impairment between January 1, 2018 and December 31, 2020 were $(430) million.
(d)Prior-period amounts have been revised to conform with the current presentation.

Included in other assets above is the Firm’s interest in approximately 40 million Visa Class B common shares, recorded at a nominal carrying value. These shares are subject to certain transfer restrictions currently and will be convertible into Visa Class A common shares upon final resolution of certain litigation matters involving Visa. The conversion rate of Visa Class B common shares into Visa Class A common shares is 1.6298 1.6228 at December 31, 2018,2020, and may be adjusted by Visa depending on developments related to the litigation matters.

Additional disclosures about the fair value of financial instruments that are not carried on the Consolidated balance sheets at fair value
U.S. GAAP requires disclosure of the estimated fair value of certain financial instruments. Financial instruments, within the scope of these disclosure requirementswhich are included in the following table. However, this table does not include other items, such as nonfinancial assets, intangible assets, certain financial instruments, and all nonfinancial instruments are excluded from the scope of these disclosure requirements. Accordingly, the fair value disclosures provided in the following table include only a partial estimate of the fair value of JPMorgan Chase’s assets and liabilities. For example, the Firm has developed long-term relationships with its customers through its deposit base and credit card accounts, commonly referred to as core deposit intangibles and credit cardcustomer relationships. In the opinion of management, these items, in the aggregate, add significant value to JPMorgan Chase, but their fair value is not disclosed in this Note.table.

Financial instruments for which carrying value approximates fair value
Certain financial instruments that are not carried at fair value on the Consolidated balance sheets are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. These instruments include cash and due from banks, deposits with banks, federal funds sold, securities purchased under resale agreements and securities borrowed, short-term receivables and accrued interest receivable, short-term borrowings, federal funds purchased, securities loaned and sold under repurchase agreements, accounts payable, and accrued liabilities. In addition, U.S. GAAP requires that the fair value of deposit liabilities with no stated maturity (i.e., demand, savings and certain money market deposits) be equal to their carrying value; recognition of the inherent funding value of these instruments is not permitted.

190JPMorgan Chase & Co./20182020 Form 10-K177
Notes to consolidated financial statements

The following table presents by fair value hierarchy classification the carrying values and estimated fair values at December 31, 20182020 and 2017, 2019, of financial assets and liabilities, excluding financial instruments that are carried at fair value on a recurring basis, and their classification within the fair value hierarchy.
December 31, 2020December 31, 2019
Estimated fair value hierarchyEstimated fair value hierarchy
(in billions)Carrying
value		Level 1Level 2Level 3Total estimated
fair value		Carrying
value		Level 1Level 2Level 3Total estimated
fair value
Financial assets
Cash and due from banks$24.9 $24.9 $0 $0 $24.9 $21.7 $21.7 $0 $0 $21.7 
Deposits with banks502.7 502.7 0 0 502.7 241.9 241.9 0 0 241.9 
Accrued interest and accounts receivable89.4 0 89.3 0.1 89.4 71.3 0 71.2 0.1 71.3 
Federal funds sold and securities purchased under resale agreements58.3 0 58.3 0 58.3 234.6 0 234.6 0 234.6 
Securities borrowed107.7 0 107.7 0 107.7 133.5 0 133.5 0 133.5 
Investment securities, held-to-maturity201.8 53.2 152.3 0 205.5 47.5 0.1 48.8 0 48.9 
Loans, net of allowance for loan losses(a)
940.1 0 210.9 755.6 966.5 939.5 0 214.1 734.9 949.0 
Other81.8 0 80.0 1.9 81.9 61.3 0 60.6 0.8 61.4 
Financial liabilities
Deposits$2,129.8 $0 $2,128.9 $0 $2,128.9 $1,533.8 $0 $1,534.1 $0 $1,534.1 
Federal funds purchased and securities loaned or sold under repurchase agreements59.5 0 59.5 0 59.5 183.1 0 183.1 0 183.1 
Short-term borrowings28.3 0 28.3 0 28.3 35.0 0 35.0 0 35.0 
Accounts payable and other liabilities186.6 0 181.9 4.3 186.2 164.0 0.1 160.0 3.5 163.6 
Beneficial interests issued by consolidated VIEs17.5 0 17.6 0 17.6 17.8 0 17.9 0 17.9 
Long-term debt204.8 0 209.2 3.2 212.4 215.5 0 218.3 3.5 221.8 
 December 31, 2018 December 31, 2017
  Estimated fair value hierarchy   Estimated fair value hierarchy 
(in billions)
Carrying
value
Level 1Level 2Level 3
Total estimated
fair value
 
Carrying
value
Level 1Level 2Level 3
Total estimated
fair value
Financial assets           
Cash and due from banks$22.3
$22.3
$—
$—
$22.3
 $25.9
$25.9
$—
$—
$25.9
Deposits with banks256.5
256.5
—
—
256.5
 405.4
401.8
3.6
—
405.4
Accrued interest and accounts receivable72.0
—
71.9
0.1
72.0
 67.0
—
67.0
—
67.0
Federal funds sold and securities purchased under resale agreements308.4
—
308.4
—
308.4
 183.7
—
183.7
—
183.7
Securities borrowed106.9
—
106.9
—
106.9
 102.1
—
102.1
—
102.1
Investment securities, held-to-maturity31.4
—
31.5
—
31.5
 47.7
—
48.7
—
48.7
Loans, net of allowance for loan losses(a)
968.0
—
241.5
728.5
970.0
 914.6
—
213.2
707.1
920.3
Other(b)
60.5
—
59.6
1.0
60.6
 53.9
—
52.1
9.2
61.3
Financial liabilities           
Deposits$1,447.4
$—
$1,447.5
$—
$1,447.5
 $1,422.7
$—
$1,422.7
$—
$1,422.7
Federal funds purchased and securities loaned or sold under repurchase agreements181.4
—
181.4
—
181.4
 158.2
—
158.2
—
158.2
Short-term borrowings62.1
—
62.1
—
62.1
 42.6
—
42.4
0.2
42.6
Accounts payable and other liabilities160.6
0.2
157.0
3.0
160.2
 152.0
—
148.9
2.9
151.8
Beneficial interests issued by consolidated VIEs20.2
—
20.2
—
20.2
 26.0
—
26.0
—
26.0
Long-term debt and junior subordinated deferrable interest debentures227.1
—
224.6
3.3
227.9
 236.6
—
240.3
3.2
243.5
Effective January 1, 2018,(a)Fair value is typically estimated using a discounted cash flow model that incorporates the Firm adopted several new accounting standards. Certaincharacteristics of the new accounting standards were applied retrospectivelyunderlying loans (including principal, contractual interest rate and accordingly, prior period amounts were revised.contractual fees) and other key inputs, including expected lifetime credit losses, interest rates, prepayment rates, and primary origination or secondary market spreads. For additional information, refercertain loans, the fair value is measured based on the value of the underlying collateral. Carrying value of the loan takes into account the loan’s allowance for loan losses, which represents the loan’s expected credit losses over its remaining expected life. The difference between the estimated fair value and carrying value of a loan is generally attributable to Note 1.changes in market interest rates, including credit spreads, market liquidity premiums and other factors that affect the fair value of a loan but do not affect its carrying value.
(a)Fair value is typically estimated using a discounted cash flow model that incorporates the characteristics of the underlying loans (including principal, contractual interest rate and contractual fees) and other key inputs, including expected lifetime credit losses, interest rates, prepayment rates, and primary origination or secondary market spreads. For certain loans, the fair value is measured based on the value of the underlying collateral. The difference between the estimated fair value and carrying value of a financial asset or liability is the result of the different methodologies used to determine fair value as compared with carrying value. For example, credit losses are estimated for a financial asset’s remaining life in a fair value calculation but are estimated for a loss emergence period in the allowance for loan loss calculation; future loan income (interest and fees) is incorporated in a fair value calculation but is generally not considered in the allowance for loan losses.
(b)The prior period amounts have been revised to conform with the current period presentation.
The majority of the Firm’s lending-related commitments are not carried at fair value on a recurring basis on the Consolidated balance sheets. The carrying value of the wholesale allowance for lending-related commitments and the estimated fair value of these wholesale lending-related commitments were as follows for the periods indicated.
December 31, 2020December 31, 2019
Estimated fair value hierarchyEstimated fair value hierarchy
(in billions)
Carrying value(a)(b)
Level 1Level 2Level 3Total estimated fair value
Carrying value(a)(b)
Level 1Level 2Level 3Total estimated fair value
Wholesale lending-related commitments$2.2 $0 $0 $2.1 $2.1 $1.2 $0 $0 $1.9 $1.9 
(a)Excludes the current carrying values of the guarantee liability and the offsetting asset, each of which is recognized at fair value at the inception of the guarantees.
(b)Includes the wholesale allowance for lending-related commitments.
 December 31, 2018 December 31, 2017
  Estimated fair value hierarchy   Estimated fair value hierarchy 
(in billions)
Carrying value(a)
Level 1Level 2Level 3Total estimated fair value 
Carrying value(a)
Level 1Level 2Level 3Total estimated fair value
Wholesale lending-related commitments$1.0
$—
$—
$2.1
$2.1
 $1.1
$—
$—
$1.6
$1.6

(a)Excludes the current carrying values of the guarantee liability and the offsetting asset, each of which is recognized at fair value at the inception of the guarantees.
The Firm does not estimate the fair value of consumer off-balance sheet lending-related commitments. In many cases, the Firm can reduce or cancel these commitments by providing the borrower notice or, in some cases as permitted by law, without notice. ForRefer to page 173 of this Note for a further discussion of the valuation of lending-related commitments, refer to page 161 of this Note.commitments.


178JPMorgan Chase & Co./20182020 Form 10-K191
Notes to consolidated financial statements


Note 3 – Fair value option
The fair value option provides an option to elect fair value as an alternative measurement for selected financial assets, financial liabilities, unrecognized firm commitments, and written loan commitments.
The Firm has elected to measure certain instruments at fair value for several reasons including to mitigate income statement volatility caused by the differences between the measurement basis of elected instruments (e.g., certain instruments elected were previouslythat otherwise would be accounted for on an accrual basis) and the associated risk management arrangements that are accounted for on a fair value basis, as well as tobetter reflect those instruments that are managed on a fair value basis.
The Firm’s election of fair value includes the following instruments:
•
Loans purchased or originated as part of securitization warehousing activity, subject to bifurcation accounting, or managed on a fair value basis, including lending-related commitments
•
Certain securities financing agreements, such as those with an embedded derivative and/or a maturity of greater than one year
•
Owned beneficial interests in securitized financial assets that contain embedded credit derivatives, which would otherwise be required to be separately accounted for as a derivative instrument
•
Structured notes, which are predominantly financial instruments that contain embedded derivatives, that are issued as part of Certain securities financing agreements
•Owned beneficial interests in securitized financial assets that contain embedded credit derivatives, which would otherwise be required to be separately accounted for as a derivative instrument
•Structured notes, which are predominantly financial instruments that contain embedded derivatives, that are issued as part of client-driven activities
•Certain long-term beneficial interests issued by CIB’s client-driven activities
•
Certain long-term beneficial interests issued by CIB’s consolidated securitization trusts where the underlying assets are carried at fair value

192JPMorgan Chase & Co./20182020 Form 10-K179
Notes to consolidated financial statements

Changes in fair value under the fair value option election
The following table presents the changes in fair value included in the Consolidated statements of income for the years ended December 31, 2020, 2019 and 2018, 2017 and 2016, for items for which the fair value option was elected. The profit and loss information presented below only includes the financial instruments that were elected to be measured at fair value; related risk management instruments, which are required to be measured at fair value, are not included in the table.
202020192018
December 31, (in millions)Principal transactionsAll other income
Total changes in fair value recorded(f)
Principal transactionsAll other income
Total changes in fair value recorded(f)
Principal transactionsAll other income
Total changes in fair value recorded(f)
Federal funds sold and securities purchased under resale agreements$12 $0 $12 $(36)$0 $(36)$(35)$0 $(35)
Securities borrowed143 0 143 133 0 133 22 0 22 
Trading assets:
Debt and equity instruments, excluding loans1,546 (1)(d)1,545 2,482 (1)(d)2,481 (1,680)1 (d)(1,679)
Loans reported as trading
 assets:
Changes in instrument-specific credit risk(a)
135 0  135 248 0  248 15 0  15 
Other changes in fair value(a)
(19)0  (19)(1)0  (1)28 0  28 
Loans:
Changes in instrument-specific credit risk(a)
190 7 (d)197 475 2 (d)477 385 1 (d)386 
Other changes in fair value(a)
470 3,239 (d)3,709 267 1,224 (d)1,491 138 185 (d)323 
Other assets(a)
103 (65)(e)38 8 6 (e)14 11 (45)(e)(34)
Deposits(b)
(726)0 (726)(1,730)0 (1,730)181 0 181 
Federal funds purchased and securities loaned or sold under repurchase agreements(6)0 (6)(8)0 (8)11 0 11 
Short-term borrowings(b)
294 0 294 (693)0 (693)862 0 862 
Trading liabilities2 0 2 6 0 6 1 0 1 
Other liabilities(94)0 (94)(16)0 (16)0 0 0 
Long-term debt(b)(c)
(2,120)(1)(d)(2,121)(6,173)1 (d)(6,172)2,695 0 2,695 
(a)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans and other assets. Prior-period amounts have been revised to conform with the current presentation.
(b)Unrealized gains/(losses) due to instrument-specific credit risk (DVA) for liabilities for which the fair value option has been elected are recorded in OCI and subsequently recorded in principal transactions revenue when realized. Realized gains/(losses) due to instrument-specific credit risk recorded in principal transactions revenue were $20 million for the year ended December 31,2020 and were 0t material for the years ended December 31, 2019 and 2018.
(c)Long-term debt measured at fair value predominantly relates to structured notes. Although the risk associated with the structured notes is actively managed, the gains/(losses) reported in this table do not include the income statement impact of the risk management instruments used to manage such risk.
(d)Reported in mortgage fees and related income.
(e)Reported in other income.
(f)Changes in fair value exclude contractual interest, which is included in interest income and interest expense for all instruments other than hybrid financial instruments. Refer to Note 7 for further information regarding interest income and interest expense.
 2018 2017 2016
December 31, (in millions)Principal transactionsAll other income
Total changes in fair value recorded(e)
 Principal transactionsAll other income
Total changes in fair value recorded(e)
 Principal transactionsAll other income
Total changes in fair value recorded(e)
Federal funds sold and securities purchased under resale agreements$(35)$—
 $(35) $(97)$—
 $(97) $(76)$—
 $(76)
Securities borrowed22
—
 22
 50
—
 50
 1
—
 1
Trading assets:        

    

Debt and equity instruments, excluding loans(1,680)1
(c) 
(1,679) 1,943
2
(c) 
1,945
 120
(1)
(c) 
119
Loans reported as trading
 assets:
        

    

Changes in instrument-specific credit risk414
1
(c) 
415
 330
14
(c) 
344
 461
43
(c) 
504
Other changes in fair value160
185
(c) 
345
 217
747
(c) 
964
 79
684
(c) 
763
Loans:        

    

Changes in instrument-specific credit risk(1)—
 (1) (1)—
 (1) 13
—
 13
Other changes in fair value(1)—
 (1) (12)3
(c) 
(9) (7)—
 (7)
Other assets5
(45)
(d) 
(40) 11
(55)
(d) 
(44) 20
62
(d) 
82
Deposits(a)
181
—
 181
 (533)—
 (533) (134)—
 (134)
Federal funds purchased and securities loaned or sold under repurchase agreements11
—
 11
 11
—
 11
 19
—
 19
Short-term borrowings(a) 
862
—
 862
 (747)—
 (747) (236)—
 (236)
Trading liabilities1
—
 1
 (1)—
 (1) 6
—
 6
Beneficial interests issued by consolidated VIEs—
—
 —
 —
—
 —
 23
—
 23
Long-term debt(a)(b)
2,695
—
 2,695
 (2,022)—
 (2,022) (773)—
 (773)
(a)Unrealized gains/(losses) due to instrument-specific credit risk (DVA) for liabilities for which the fair value option has been elected is recorded in OCI, while realized gains/(losses) are recorded in principal transactions revenue. Realized gains/(losses) due to instrument-specific credit risk recorded in principal transactions revenue were not material for the years ended December 31, 2018, 2017 and 2016.
(b)Long-term debt measured at fair value predominantly relates to structured notes. Although the risk associated with the structured notes is actively managed, the gains/(losses) reported in this table do not include the income statement impact of the risk management instruments used to manage such risk.
(c)Reported in mortgage fees and related income.
(d)Reported in other income.
(e)Changes in fair value exclude contractual interest, which is included in interest income and interest expense for all instruments other than hybrid financial instruments. For further information regarding interest income and interest expense, refer to Note 7.

Determination of instrument-specific credit risk for items for which athe fair value electionoption was madeelected
The following describes how the gains and losses that are attributable to changes in instrument-specific credit risk, were determined.
•
•
Loans and lending-related commitments: For floating-rate instruments, all changes in value are attributed to instrument-specific credit risk. For fixed-rate instruments, an allocation of the changes in value for the period is made between those changes in value that are interest rate-related and changes in value that are credit-related. Allocations are generally based on an analysis of borrower-specific credit spread and recovery information, where available, or benchmarking to similar entities or industries.
•
Long-term debt: Changes in value attributable to instrument-specific credit risk were derived principally from observable changes in the Firm’s credit spread as observed in the bond market.
•
Securities financing agreements: Generally, for these types of agreements, there is a requirement that collateral be maintained with a market value equal to or in excess of the principal amount loaned; as a result, there would be no adjustment or an immaterial adjustment for instrument-specific credit risk related to these agreements.

•Long-term debt: Changes in value attributable to instrument-specific credit risk were derived principally from observable changes in the Firm’s credit spread as observed in the bond market.
•Securities financing agreements: Generally, for these types of agreements, there is a requirement that collateral be maintained with a market value equal to or in excess of the principal amount loaned; as a result, there would be no adjustment or an immaterial adjustment for instrument-specific credit risk related to these agreements.
180JPMorgan Chase & Co./20182020 Form 10-K193

Notes to consolidated financial statements

Difference between aggregate fair value and aggregate remaining contractual principal balance outstanding
The following table reflects the difference between the aggregate fair value and the aggregate remaining contractual principal balance outstanding as ofDecember 31, 20182020 and 2017, 2019, for loans, long-term debt and long-term beneficial interests for which the fair value option has been elected.
20202019
December 31, (in millions)Contractual principal outstandingFair valueFair value over/(under) contractual principal outstandingContractual principal outstandingFair valueFair value over/(under) contractual principal outstanding
Loans
Nonaccrual loans
Loans reported as trading assets(a)
$3,386 $555 $(2,831)$2,563 $234 $(2,329)
Loans(a)
1,867 1,507 (360)964 696 (268)
Subtotal5,253 2,062 (3,191)3,527 930 (2,597)
90 or more days past due and government guaranteed(b)
Loans reported as trading assets0 0 0 0 0 0 
Loans328 317 (11)138 129 (9)
Subtotal328 317 (11)138 129 (9)
All other performing loans(c)
Loans reported as trading assets(a)
7,917 6,439 (1,478)8,288 6,779 (1,509)
Loans(a)
42,022 42,650 628 43,955 44,130 175 
Subtotal49,939 49,089 (850)52,243 50,909 (1,334)
Total loans$55,520 $51,468 $(4,052)$55,908 $51,968 $(3,940)
Long-term debt
Principal-protected debt$40,560 (e)$40,526 $(34)$40,124 (e)$39,246 $(878)
Nonprincipal-protected debt(d)
NA36,291 NANA36,499 NA
Total long-term debtNA$76,817 NANA$75,745 NA
Long-term beneficial interests
Nonprincipal-protected debt(d)
NA$41 NANA$36 NA
Total long-term beneficial interestsNA$41 NANA$36 NA
(a)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans and other assets. Prior-period amounts have been revised to conform with the current presentation.
(b)These balances are excluded from nonaccrual loans as the loans are insured and/or guaranteed by U.S. government agencies.
 2018 2017
December 31, (in millions)Contractual principal outstanding Fair valueFair value over/(under) contractual principal outstanding Contractual principal outstanding Fair valueFair value over/(under) contractual principal outstanding
Loans(a)
         
Nonaccrual loans         
Loans reported as trading assets$4,240
 $1,350
$(2,890) $4,219
 $1,371
$(2,848)
Loans39
 —
(39) 39
 —
(39)
Subtotal4,279
 1,350
(2,929) 4,258
 1,371
(2,887)
All other performing loans         
Loans reported as trading assets42,215
 40,403
(1,812) 38,157
 36,590
(1,567)
Loans3,186
 3,151
(35) 2,539
 2,508
(31)
Total loans$49,680
 $44,904
$(4,776) $44,954
 $40,469
$(4,485)
Long-term debt         
Principal-protected debt$32,674
(c) 
$28,718
$(3,956) $26,297
(c) 
$23,848
$(2,449)
Nonprincipal-protected debt(b)
NA
 26,168
NA
 NA
 23,671
NA
Total long-term debtNA
 $54,886
NA
 NA
 $47,519
NA
Long-term beneficial interests         
Nonprincipal-protected debt(b)
NA
 $28
NA
 NA
 $45
NA
Total long-term beneficial interestsNA

$28
NA
 NA
 $45
NA
(a)
There were no(c)There were 0 performing loans that were ninety days or more past due as of December 31, 2018 and 2017.
(b)Remaining contractual principal is not applicable to nonprincipal-protected structured notes and long-term beneficial interests. Unlike principal-protected structured notes and long-term beneficial interests, for which the Firm is obligated to return a stated amount of principal at maturity, nonprincipal-protected structured notes and long-term beneficial interests do not obligate the Firm to return a stated amount of principal at maturity, but for structured notes to return an amount based on the performance of an underlying variable or derivative feature embedded in the note. However, investors are exposed to the credit risk of the Firm as issuer for both nonprincipal-protected and principal-protected notes.
(c)Where the Firm issues principal-protected zero-coupon or discount notes, the balance reflects the contractual principal payment at maturity or, if applicable, the contractual principal payment at the Firm’s next call date.

AtDecember 31, 20182020 and 2019.
(d)Remaining contractual principal is not applicable to nonprincipal-protected structured notes and long-term beneficial interests. Unlike principal-protected structured notes and long-term beneficial interests, for which the Firm is obligated to return a stated amount of principal at maturity, nonprincipal-protected structured notes and long-term beneficial interests do not obligate the Firm to return a stated amount of principal at maturity, but for structured notes to return an amount based on the performance of an underlying variable or derivative feature embedded in the note. However, investors are exposed to the credit risk of the Firm as issuer for both nonprincipal-protected and principal-protected notes.
(e)2017Where the Firm issues principal-protected zero-coupon or discount notes, the balance reflects the contractual principal payment at maturity or, if applicable, the contractual principal payment at the Firm’s next call date.,
At December 31, 2020 and 2019, the contractual amount of lending-related commitments for which the fair value option was elected was$6.9 $18.1 billion and $7.4$8.6 billion, respectively, with a corresponding fair value of$(82) $(39) million and $(76)$(120) million,, respectively. ForRefer to Note 28 for further information regarding off-balance sheet lending-related financial instruments, referinstruments. Prior-period amounts have been revised to Noteconform with the current presentation.
27.
194JPMorgan Chase & Co./2020 Form 10-K

Structured note products by balance sheet classification and risk component
The following table presents the fair value of structured notes, by balance sheet classification and the primary risk type.
 December 31, 2018 December 31, 2017
(in millions)Long-term debtShort-term borrowingsDepositsTotal Long-term debtShort-term borrowingsDepositsTotal
Risk exposure         
Interest rate$24,137
$62
$12,372
$36,571
 $22,056
$69
$8,058
$30,183
Credit4,009
995
—
5,004
 4,329
1,312
—
5,641
Foreign exchange3,169
157
38
3,364
 2,841
147
38
3,026
Equity21,382
5,422
7,368
34,172
 17,581
7,106
6,548
31,235
Commodity372
34
1,207
1,613
 230
15
4,468
4,713
Total structured notes$53,069
$6,670
$20,985
$80,724
 $47,037
$8,649
$19,112
$74,798



December 31, 2020December 31, 2019
(in millions)Long-term debtShort-term borrowingsDepositsTotalLong-term debtShort-term borrowingsDepositsTotal
Risk exposure
Interest rate$38,129 $65 $5,057 $43,251 $35,470 $34 $16,692 $52,196 
Credit6,409 1,022 0 7,431 5,715 875 0 6,590 
Foreign exchange3,613 92 0 3,705 3,862 48 5 3,915 
Equity26,943 5,021 6,893 38,857 29,294 4,852 8,177 42,323 
Commodity250 13 232 495 472 32 1,454 1,958 
Total structured notes$75,344 $6,213 $12,182 $93,739 $74,813 $5,841 $26,328 $106,982 
JPMorgan Chase & Co./20182020 Form 10-K181195
Notes to consolidated financial statements

Note 4 – Credit risk concentrations
Concentrations of credit risk arise when a number of clients, counterparties or customers are engaged in similar business activities or activities in the same geographic region, or when they have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions.
JPMorgan Chase regularly monitors various segments of its credit portfolios to assess potential credit risk concentrations and to obtain additional collateral when deemed necessary and permitted underthe Firm’sagreements. Senior management is significantly involved in the credit approval and review process, and risk levels are adjusted as needed to reflectthe Firm’srisk appetite.
Inthe Firm’sconsumer portfolio, concentrations are managed primarily by product and by U.S. geographic region, with a key focus on trends and concentrations at the portfolio level, where potential credit risk concentrations can be remedied through changes in underwriting policies and portfolio guidelines. For Refer to Note 12for additional information on the geographic composition of the Firm’s consumer loan portfolios, refer to Note 12. portfolios. In the wholesale portfolio, credit risk concentrations are evaluated primarily by industry and monitored regularly on both an aggregate portfolio level and on an individual client or counterparty basis.
The Firm’swholesale exposure is managed through loan syndications and participations, loan sales, securitizations, credit derivatives, master netting agreements, collateral and other risk-reduction techniques. ForRefer to Note 12 for additional information on loans, refer to Note 12.loans.
The Firmdoes not believe that its exposure to any particular loan productor industry segment (e.g., real estate), or its exposure to residential real estate loans with high LTV ratios, results in a significant concentration of credit risk.
Terms of loan products and collateral coverage are included in the Firm’s assessment when extending credit and establishing its allowance for loan losses.

182196JPMorgan Chase & Co./20182020 Form 10-K


The table below presents both on–balance sheet and off–balance sheet consumer and wholesale-relatedwholesale credit exposure by the Firm’s three credit portfolio segments as of December 31, 20182020 and 2017.2019. The wholesale industry of risk category is generally based on the client or counterparty’s primary business activity.
In conjunction with the adoption of CECL, the Firm reclassified risk-rated loans and lending-related commitments from the consumer, excluding credit card portfolio segment to the wholesale portfolio segment, to align with the methodology applied when determining the allowance. Prior-period amounts have been revised to conform with the current presentation. Refer to Note 1 for further information.
20202019
Credit exposure(h)(i)
On-balance sheet
Off-balance sheet(i)(k)
Credit exposure(h)(i)
On-balance sheet
Off-balance sheet(i)(k)
December 31, (in millions)
Loans(i)
Derivatives
Loans(i)
Derivatives
Consumer, excluding credit card$375,898 $318,579 (j)$— $57,319 $357,986 $317,817 $— $40,169 
Credit card(a)
802,722 144,216 — 658,506 819,644 168,924 — 650,720 
Total consumer-related(a)
1,178,620 462,795 — 715,825 1,177,630 486,741 — 690,889 
Wholesale-related(b)
Real Estate148,498 118,299 1,385 28,814 150,919 117,709 619 32,591 
Individuals and Individual Entities(c)
122,870 109,746 1,750 11,374 105,027 94,616 694 9,717 
Consumer & Retail108,437 39,013 2,802 66,622 106,986 36,985 1,424 68,577 
Technology, Media &
Telecommunications		72,150 14,687 4,252 53,211 60,033 15,322 2,766 41,945 
Asset Managers66,573 31,059 9,277 26,237 54,304 24,008 7,160 23,136 
Industrials66,470 21,143 1,851 43,476 62,483 22,063 878 39,542 
Healthcare60,118 19,405 3,252 37,461 50,824 17,607 2,078 31,139 
Banks & Finance Cos54,032 31,004 8,044 14,984 50,786 31,191 5,165 14,430 
Automotive43,331 17,128 5,995 20,208 35,118 18,844 368 15,906 
Oil & Gas39,159 11,267 1,643 26,249 41,641 13,101 852 27,688 
State & Municipal Govt(d)
38,286 18,054 2,347 17,885 30,095 13,271 2,000 14,824 
Utilities30,124 4,874 3,340 21,910 34,843 5,157 2,573 27,113 
Chemicals & Plastics17,176 4,884 856 11,436 17,499 4,864 459 12,176 
Central Govt17,025 3,396 12,313 1,316 14,865 2,840 10,477 1,548 
Transportation16,232 6,566 1,495 8,171 14,497 5,253 715 8,529 
Metals & Mining15,542 4,854 882 9,806 15,586 5,364 402 9,820 
Insurance13,141 1,042 2,527 9,572 12,348 1,356 2,282 8,710 
Securities Firms8,048 469 4,838 2,741 7,381 757 4,507 2,117 
Financial Markets Infrastructure6,515 19 3,757 2,739 4,121 13 2,482 1,626 
All other(e)
100,713 58,038 7,024 35,651 79,598 51,357 1,865 26,376 
Subtotal1,044,440 514,947 79,630 449,863 948,954 481,678 49,766 417,510 
Loans held-for-sale and loans at fair value35,111 35,111 — — 29,201 29,201 — — 
Receivables from customers(f)
47,710 — — — 33,706 — — — 
Total wholesale-related1,127,261 550,058 79,630 449,863 1,011,861 510,879 49,766 417,510 
Total exposure(g)(h)
$2,305,881 $1,012,853 $79,630 $1,165,688 $2,189,491 $997,620 $49,766 $1,108,399 
(a)Also includes commercial card lending-related commitments primarily in CB and CIB.
As a result of continued growth and the relative size of the portfolio, exposure to “Individuals,” which was previously disclosed in “All Other,” is now separately disclosed(b)The industry rankings presented in the table below as “Individualsof December 31, 2019, are based on the industry rankings of the corresponding exposures at December 31, 2020, not actual rankings of such exposures at December 31, 2019.
(c)Individuals and Individual Entities.” This categoryEntities predominantly consists ofWealth Managementclients within AWM and includes exposure to personal investment companies and personal and testamentary trusts.
(d)Predominantly allIn addition to the credit risk exposure to states and municipal governments (both U.S. and non-U.S.) at December 31, 2020 and 2019, noted above, the Firm held: $7.2 billion and $6.5 billion, respectively, of trading assets; $20.4 billion and $29.8 billion, respectively, of AFS securities; and $12.8 billion and $4.8 billion, respectively, of HTM securities, issued by U.S. state and municipal governments. Refer to Note 2 and Note 10 for further information.
(e)All other includes: SPEs and Private education and civic organizations, representing approximately 92% and 8%, respectively, at December 31, 2020 and 90% and 10%, respectively, at December 31, 2019 . Refer to Note 14 for more information on exposures to SPEs.
(f)Receivables from customers reflect held-for-investment margin loans to brokerage clients in CIB, CCB and AWM that are collateralized by assets maintained in the clients’ brokerage accounts (e.g., cash on deposit, liquid and readily marketable debt or equity securities). Because of this collateralization, no allowance for credit losses is generally held against these receivables. To manage its credit risk the Firm establishes margin requirements and monitors the required margin levels on an ongoing basis, and requires clients to deposit additional cash or other collateral, or to reduce positions, when appropriate. These receivables are reported within accrued interest and accounts receivable on the Firm’s Consolidated balance sheets.
(g)Excludes cash placed with banks of $516.9 billion and $254.0 billion, at December 31, 2020 and 2019, respectively, which is predominantly placed with various central banks, primarily Federal Reserve Banks.
(h)Credit exposure is secured, largely bynet of risk participations and excludes the benefit of credit derivatives used in credit portfolio management activities held against derivative receivables or loans and liquid securities and other cash and marketable securities. collateral held against derivative receivables.
(i)In the table below, prior periodthird quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans, which resulted in a corresponding reclassification of certain off-balance sheet commitments. Prior-period amounts have been revised to conform with the current period presentation.
 2018 2017 
 
Credit exposure(g)
On-balance sheet
Off-balance sheet(h)
 
Credit exposure(g)
On-balance sheet
Off-balance sheet(h)
 
December 31, (in millions)LoansDerivatives LoansDerivatives 
Consumer, excluding credit card$419,798
$373,732
$—
$46,066
 $421,234
$372,681
$—
$48,553
 
Receivables from customers(a)
154
—
—
—
 133
—
—
—
 
Total Consumer, excluding credit card419,952
373,732
—
46,066
 421,367
372,681
—
48,553
 
Credit card762,011
156,632
—
605,379
 722,342
149,511
—
572,831
 
Total consumer-related1,181,963
530,364
—
651,445
 1,143,709
522,192
—
621,384
 
Wholesale-related(b)
          
Real Estate143,316
115,737
164
27,415
 139,409
113,648
153
25,608
 
Individuals and Individual Entities(c)
97,077
86,586
1,017
9,474
 87,371
77,768
1,252
8,351
 
Consumer & Retail94,815
36,921
1,093
56,801
 87,679
31,044
1,114
55,521
 
Technology, Media & Telecommunications72,646
16,980
2,667
52,999
 59,274
13,665
2,265
43,344
 
Industrials58,528
19,126
958
38,444
 55,272
18,161
1,163
35,948
 
Banks & Finance Cos49,920
28,825
5,903
15,192
 49,037
25,879
6,816
16,342
 
Healthcare48,142
16,347
1,874
29,921
 55,997
16,273
2,191
37,533
 
Asset Managers42,807
16,806
9,033
16,968
 32,531
11,480
7,998
13,053
 
Oil & Gas42,600
13,008
559
29,033
 41,317
12,621
1,727
26,969
 
Utilities28,172
5,591
1,740
20,841
 29,317
6,187
2,084
21,046
 
State & Municipal Govt(d)
27,351
10,319
2,000
15,032
 28,633
12,134
2,888
13,611
 
Central Govt18,456
3,867
12,869
1,720
 19,182
3,375
13,937
1,870
 
Automotive17,339
5,170
399
11,770
 14,820
4,903
342
9,575
 
Chemicals & Plastics16,035
4,902
181
10,952
 15,945
5,654
208
10,083
 
Transportation15,660
6,391
1,102
8,167
 15,797
6,733
977
8,087
 
Metals & Mining15,359
5,370
488
9,501
 14,171
4,728
702
8,741
 
Insurance12,639
1,356
2,569
8,714
 14,089
1,411
2,804
9,874
 
Financial Markets Infrastructure7,484
18
5,941
1,525
 5,036
351
3,499
1,186
 
Securities Firms4,558
645
2,029
1,884
 4,113
952
1,692
1,469
 
All other(e)
68,284
45,197
1,627
21,460
 60,529
35,931
2,711
21,887
 
Subtotal881,188
439,162
54,213
387,813
 829,519
402,898
56,523
370,098
 
Loans held-for-sale and loans at fair value15,028
15,028
—
—
 5,607
5,607
—
—
 
Receivables from customers and other(a)
30,063
—
—
—
 26,139
—
—
—
 
Total wholesale-related926,279
454,190
54,213
387,813
 861,265
408,505
56,523
370,098
 
Total exposure(f)(g)
$2,108,242
$984,554
$54,213
$1,039,258
 $2,004,974
$930,697
$56,523
$991,482
 
(j)At December 31, 2020, included $19.2 billion of loans in Business Banking under the PPP. PPP loans are guaranteed by the SBA. Other than in certain limited circumstances, the Firm typically does not recognize charge-offs, classify as nonaccrual nor record an allowance for loan losses on these loans.
(a)Receivables from customers primarily represent held-for-investment margin loans to brokerage customers (Prime Services in CIB, AWM and CCB) that are collateralized through assets maintained in the clients’ brokerage accounts, as such no allowance is held against these receivables. These receivables are reported within accrued interest and accounts receivable on the Firm’s Consolidated balance sheets.
(b)The industry rankings presented in the table as of December 31, 2017, are based on the industry rankings of the corresponding exposures at December 31, 2018, not actual rankings of such exposures at December 31, 2017.
(c)Individuals and Individual Entities predominantly consists of Wealth Management clients within AWM and includes exposure to personal investment companies and personal and testamentary trusts.
(d)In addition to the credit risk exposure to states and municipal governments (both U.S. and non-U.S.) at December 31, 2018 and 2017, noted above, the Firm held: $7.8 billion and $9.8 billion, respectively, of trading securities; $37.7 billion and $32.3 billion, respectively, of AFS securities; and $4.8 billion and $14.4 billion, respectively, of held-to-maturity (“HTM”) securities, issued by U.S. state and municipal governments. For further information, refer to Note 2 and Note 10.
(e)All other includes: SPEs and Private education and civic organizations, representing approximately 92% and 8%, respectively, at December 31, 2018 and 90% and 10%, respectively, at December 31, 2017. For more information on exposures to SPEs, refer to Note 14.
(f)Excludes cash placed with banks of $268.1 billion and $421.0 billion, at December 31, 2018 and 2017, respectively, which is predominantly placed with various central banks, primarily Federal Reserve Banks.
(g)Credit exposure is net of risk participations and excludes the benefit of credit derivatives used in credit portfolio management activities held against derivative receivables or loans and liquid securities and other cash collateral held against derivative receivables.
(h)Represents lending-related financial instruments.

(k)Represents lending-related financial instruments.
JPMorgan Chase & Co./20182020 Form 10-K183197
Notes to consolidated financial statements

Note 5 – Derivative instruments
Derivative contracts derive their value from underlying asset prices, indices, reference rates, other inputs or a combination of these factors and may expose counterparties to risks and rewards of an underlying asset or liability without having to initially invest in, own or exchange the asset or liability. JPMorgan Chase makes markets in derivatives for clients and also uses derivatives to hedge or manage its own risk exposures. Predominantly all of the Firm’s derivatives are entered into for market-making or risk management purposes.
Market-making derivatives
The majority of the Firm’s derivatives are entered into for market-making purposes. Clients use derivatives to mitigate or modify interest rate, credit, foreign exchange, equity and commodity risks. The Firm actively manages the risks from its exposure to these derivatives by entering into other derivative contracts or by purchasing or selling other financial instruments that partially or fully offset the exposure from client derivatives.
Risk management derivatives
The Firm manages certain market and credit risk exposures using derivative instruments, including derivatives in hedge accounting relationships and other derivatives that are used to manage risks associated with specified assets and liabilities.
The Firm generally uses interest rate contractsderivatives to manage the risk associated with changes in interest rates. Fixed-rate assets and liabilities appreciate or depreciate in market value as interest rates change. Similarly, interest income and expense increasesincrease or decreasesdecrease as a result of variable-rate assets and liabilities resetting to current market rates, and as a result of the repayment and subsequent origination or issuance of fixed-rate assets and liabilities at current market rates.Gains and losses on the derivative instruments related to these assets and liabilities are expected to substantially offset this variability.
Foreign currency forward contractsderivatives are used to manage the foreign exchange risk associated with certain foreign currency–denominated (i.e., non-U.S. dollar) assets and liabilities and forecasted transactions, as well as the Firm’s net investments in certain non-U.S. subsidiaries or branches whose functional currencies are not the U.S. dollar. As a result of fluctuations in foreign currencies, the U.S. dollar–equivalent values of the foreign currency–denominated assets and liabilities or the forecasted revenues or expenses increase or decrease. Gains or losses on the derivative instruments related to these foreign currency–denominated assets or liabilities, or forecasted transactions, are expected to substantially offset this variability.
Commodities contractsderivatives are used to manage the price risk of certain commodities inventories. Gains or losses on these derivative instruments are expected to substantially offset the depreciation or appreciation of the related inventory.
Credit derivatives are used to manage the counterparty credit risk associated with loans and lending-related commitments. Credit derivatives compensate the purchaser when the entity referenced in the contract experiences a credit event, such as bankruptcy or a failure to pay an obligation when due. Credit derivatives primarily consist of CDS. ForRefer to the Credit derivatives section on pages 209-211 of this Note for a further discussion of credit derivatives, refer to the discussion in the Credit derivatives section onpages 195-197of this Note.derivatives.
For more information about risk management derivatives, referRefer to the risk management derivatives gains and losses table onpage 195209 of this Note, and the hedge accounting gains and losses tables on pages 192-195 206-208 of this Note.Note for more information about risk management derivatives.
Derivative counterparties and settlement types
The Firm enters into OTC derivatives,, which are negotiated and settled bilaterally with the derivative counterparty. The Firm also enters into, as principal, certain ETD such as futures and options, and OTC-cleared derivative contracts with CCPs.ETD contracts are generally standardized contracts traded on an exchange and cleared by the CCP, which is the Firm’s counterparty from the inception of the transactions. OTC-cleared derivatives are traded on a bilateral basis and then novated to the CCP for clearing.
Derivative clearing services
The Firm provides clearing services for clients in which the Firm acts as a clearing member at certain derivative exchanges and clearing houses. The Firm does not reflect the clients’ derivative contracts in its Consolidated Financial Statements. ForRefer to Note 28 for further information on the Firm’s clearing services, refer to Note 27.services.
Accounting for derivatives
All free-standing derivatives that the Firm executes for its own account are required to be recorded on the Consolidated balance sheets at fair value.
As permitted under U.S. GAAP,, the Firm nets derivative assets and liabilities, and the related cash collateral receivables and payables, when a legally enforceable master netting agreement exists between the Firm and the derivative counterparty. ForRefer to Note 1for further discussion of the offsetting of assets and liabilities, refer to Note 1. liabilities. The accounting for changes in value of a derivative depends on whether or not the transaction has been designated and qualifies for hedge accounting. Derivatives that are not designated as hedges are reported and measured at fair value through earnings. The tabular disclosures on pages 188-195 202-209 of this Note provide additional information on the amount of, and reporting for, derivative assets, liabilities, gains and losses. ForRefer to Notes 2 and 3 for a further discussion of derivatives embedded in structured notes, refer to Notes 2 and 3.notes.

184198JPMorgan Chase & Co./20182020 Form 10-K


Derivatives designated as hedges
The Firm adopted new hedge accounting guidance in the first quarter of 2018, which required prospective amendments to the disclosures, as reflected in this Note. For additional information on the impact upon adoption of the new guidance, refer to Notes 1 and 23.
The Firm applies hedge accounting to certain derivatives executed for risk management purposes – generally interest rate, foreign exchange and commodity derivatives. However, JPMorgan Chase does not seek to apply hedge accounting to all of the derivatives involved in the Firm’s risk management activities. For example, the Firm does not apply hedge accounting to purchased CDS used to manage the credit risk of loans and lending-related commitments, because of the difficulties in qualifying such contracts as hedges. For the same reason, the Firm does not apply hedge accounting to certain interest rate,, foreign exchange,, and commodity derivatives used for risk management purposes.
To qualify for hedge accounting, a derivative must be highly effective at reducing the risk associated with the exposure being hedged. In addition, for a derivative to be designated as a hedge, the risk management objective and strategy must be documented. Hedge documentation must identify the derivative hedging instrument, the asset or liability or forecasted transaction and type of risk to be hedged, and how the effectiveness of the derivative is assessed prospectively and retrospectively. To assess effectiveness, the Firm uses statistical methods such as regression analysis, nonstatistical methods such as dollar-value comparisons of the change in the fair value of the derivative to the change in the fair value or cash flows of the hedged item, and qualitative comparisons of critical terms and the evaluation of any changes in those terms. The extent to which a derivative has been, and is expected to continue to be, highly effective at offsetting changes in the fair value or cash flows of the hedged item must be assessed and documented at least quarterly. If it is determined that a derivative is not highly effective at hedging the designated exposure, hedge accounting is discontinued.
There are three types of hedge accounting designations: fair value hedges, cash flow hedges and net investment hedges. JPMorgan Chase uses fair value hedges primarily to hedge fixed-rate long-term debt, AFS securities and certain commodities inventories. For qualifying fair value hedges, the changes in the fair value of the derivative, and in the value of the hedged item for the risk being hedged, are recognized in earnings. Certain amounts excluded from the assessment of effectiveness are recorded in OCI and recognized in earnings over the life of the derivative. If the hedge relationship is terminated, then the adjustment to the hedged item continues to be reported as part of the basis of the hedged item, and for benchmark interest rate hedges, is amortized to earnings as a yield adjustment. Derivative amounts affecting earnings are recognized consistent with the classification of the hedged item – primarily net interest income and principal transactions revenue.
JPMorgan Chase uses cash flow hedges primarily to hedge the exposure to variability in forecasted cash flows from floating-rate assets and liabilities and foreign currency–denominated revenue and expense. For qualifying cash flow hedges, changes in the fair value of the derivative are recorded in OCI and recognized in earnings as the hedged item affects earnings. Derivative amounts affecting earnings are recognized consistent with the classification of the hedged item – primarily noninterest revenue, net interest income interest expense, noninterest revenue and compensation expense. If the hedge relationship is terminated, then the change in value of the derivative recorded in AOCI is recognized in earnings when the cash flows that were hedged affect earnings. For hedge relationships that are discontinued because a forecasted transaction is not expected to not occur according to the original hedge forecast, any related derivative values recorded in AOCI are immediately recognized in earnings.
JPMorgan Chase uses net investment hedges to protect the value of the Firm’s net investments in certain non-U.S. subsidiaries or branches whose functional currencies are not the U.S. dollar. For qualifying net investment hedges, changes in the fair value of the derivatives due to changes in spot foreign exchange rates are recorded in OCI as translation adjustments. Amounts excluded from the assessment of effectiveness are recorded directly in earnings.

JPMorgan Chase & Co./20182020 Form 10-K185199
Notes to consolidated financial statements

The following table outlines the Firm’s primary uses of derivatives and the related hedge accounting designation or disclosure category.
Type of DerivativeUse of DerivativeDesignation and disclosureAffected segment or unitPage reference
Manage specifically identified risk exposures in qualifying hedge accounting relationships:
•
Interest rate
Hedge fixed rate assets and liabilitiesFair value hedgeCorporate192206-207
•
Interest rate
Hedge floating-rate assets and liabilitiesCash flow hedgeCorporate194208
•
Foreign exchange
Hedge foreign currency-denominated assets and liabilitiesFair value hedgeCorporate192206-207
•
Foreign exchange
Hedge foreign currency-denominated forecasted revenue and expenseCash flow hedgeCorporate194208
•
Foreign exchange
Hedge the value of the Firm’s investments in non-U.S. dollar functional currency entitiesNet investment hedgeCorporate195208
•
Commodity
Hedge commodity inventoryFair value hedgeCIB192206-207
Manage specifically identified risk exposures not designated in qualifying hedge accounting relationships:
•
Interest rate
Manage the risk of theassociated with mortgage pipeline,commitments, warehouse loans and MSRsSpecified risk managementCCB195209
•
Credit
Manage the credit risk ofassociated with wholesale lending exposuresSpecified risk managementCIB195209
•
Interest rate and foreign exchange
Manage the risk ofassociated with certain other specified assets and liabilitiesSpecified risk managementCorporate195209
Market-making derivatives and other activities:
•
Various
Market-making and related risk managementMarket-making and otherCIB195209
•
Various
Other derivativesMarket-making and otherCIB, AWM, Corporate195209


186200JPMorgan Chase & Co./20182020 Form 10-K


Notional amount of derivative contracts
The following table summarizes the notional amount of derivative contracts outstanding as of December 31, 20182020 and 2017.2019.
Notional amounts(b)
December 31, (in billions)20202019
Interest rate contracts
Swaps$20,986 $21,228 
Futures and forwards3,057 3,152 
Written options3,375 3,938 
Purchased options3,675 4,361 
Total interest rate contracts31,093 32,679 
Credit derivatives(a)
1,201 1,242 
Foreign exchange contracts
Cross-currency swaps3,924 3,604 
Spot, futures and forwards6,871 5,577 
Written options830 700 
Purchased options825 718 
Total foreign exchange contracts12,450 10,599 
Equity contracts
Swaps448 406 
Futures and forwards140 142 
Written options676 646 
Purchased options621 611 
Total equity contracts1,885 1,805 
Commodity contracts
Swaps138 147 
Spot, futures and forwards198 211 
Written options124 135 
Purchased options105 124 
Total commodity contracts565 617 
Total derivative notional amounts$47,194 $46,942 
 
Notional amounts(b)
December 31, (in billions)2018 2017 
Interest rate contracts    
Swaps$21,763
 $21,043
 
Futures and forwards3,562
 4,904
 
Written options3,997
 3,576
 
Purchased options4,322
 3,987
 
Total interest rate contracts33,644
 33,510
 
Credit derivatives(a)
1,501
 1,522
 
Foreign exchange contracts   
 
Cross-currency swaps3,548
 3,953
 
Spot, futures and forwards5,871
 5,923
 
Written options835
 786
 
Purchased options830
 776
 
Total foreign exchange contracts11,084
 11,438
 
Equity contracts    
Swaps346
 367
 
Futures and forwards101
 90
 
Written options528
 531
 
Purchased options490
 453
 
Total equity contracts1,465
 1,441
 
Commodity contracts   
 
Swaps134
 133
(c) 
Spot, futures and forwards156
 168
 
Written options135
 98
 
Purchased options120
 93
 
Total commodity contracts545
 492
(c) 
Total derivative notional amounts$48,239
 $48,403
(c) 
(a)For(a)     Refer to the Credit derivatives discussion on pages 209-211 for more information on volumes and types of credit derivative contracts, refer to the Credit derivatives discussion on pages 195-197.
(b)Represents the sum of gross long and gross short third-party notional derivative contracts.
(c)The prior period amounts have been revised to conform with the current period presentation.

(b)     Represents the sum of gross long and gross short third-party notional derivative contracts.
While the notional amounts disclosed above give an indication of the volume of the Firm’s derivatives activity, the notional amounts significantly exceed, in the Firm’s view, the possible losses that could arise from such transactions. For most derivative contracts, the notional amount is not exchanged; it is used simply as a reference amount used to calculate payments.


JPMorgan Chase & Co./20182020 Form 10-K187201
Notes to consolidated financial statements

Impact of derivatives on the Consolidated balance sheets
The following table summarizes information on derivative receivables and payables (before and after netting adjustments) that are reflected on the Firm’s Consolidated balance sheets as ofDecember 31, 20182020 and 2017, 2019, by accounting designation (e.g., whether the derivatives were designated in qualifying hedge accounting relationships or not) and contract type.
Free-standing derivative receivables and payables(a)
Gross derivative receivablesGross derivative payables
December 31, 2020
(in millions)		Not designated as hedgesDesignated as hedgesTotal derivative receivables
Net derivative receivables(b)
Not designated as hedgesDesignated as hedgesTotal derivative payables
Net derivative payables(b)
Trading assets and liabilities
Interest rate$390,659 $831 $391,490 $35,725 $353,627 $0 $353,627 $13,012 
Credit13,503 0 13,503 680 15,192 0 15,192 1,995 
Foreign exchange205,359 901 206,260 15,781 214,229 1,697 215,926 21,433 
Equity74,798 0 74,798 20,673 81,413 0 81,413 25,898 
Commodity20,579 924 21,503 6,771 20,834 1,895 22,729 8,285 
Total fair value of trading assets and liabilities$704,898 $2,656 $707,554 $79,630 $685,295 $3,592 $688,887 $70,623 
Gross derivative receivablesGross derivative payables
December 31, 2019
(in millions)		Not designated as hedgesDesignated as hedgesTotal derivative receivables
Net derivative receivables(b)
Not designated as hedgesDesignated as hedgesTotal derivative payables
Net derivative payables(b)
Trading assets and liabilities
Interest rate$312,451 $843 $313,294 $27,421 $279,272 $1 $279,273 $8,603 
Credit14,876 0 14,876 701 15,121 0 15,121 1,652 
Foreign exchange138,179 308 138,487 9,005 144,125 983 145,108 13,158 
Equity45,727 0 45,727 6,477 52,741 0 52,741 12,537 
Commodity16,914 328 17,242 6,162 19,736 149 19,885 7,758 
Total fair value of trading assets and liabilities$528,147 $1,479 $529,626 $49,766 $510,995 $1,133 $512,128 $43,708 
(a)Balances exclude structured notes for which the fair value option has been elected. Refer to Note 3 for further information.
(b)As permitted under U.S. GAAP, the Firm has elected to net derivative receivables and derivative payables and the related cash collateral receivables and payables when a legally enforceable master netting agreement exists.
Free-standing derivative receivables and payables(a)
          
 Gross derivative receivables   Gross derivative payables  
December 31, 2018
(in millions)		Not designated as hedges Designated as hedgesTotal derivative receivables 
Net derivative receivables(b)
 Not designated as hedges Designated as hedges Total derivative payables 
Net derivative payables(b)
Trading assets and liabilities               
Interest rate$267,871
 $833
 $268,704
 $23,214
 $242,782
 $—
 $242,782
 $7,784
Credit20,095
 —
 20,095
 612
 20,276
 —
 20,276
 1,667
Foreign exchange167,057
 628
 167,685
 13,450
 164,392
 825
 165,217
 12,785
Equity49,285
 —
 49,285
 9,946
 51,195
 —
 51,195
 10,161
Commodity20,223
 247
 20,470
 6,991
 22,297
 121
 22,418
 9,372
Total fair value of trading assets and liabilities$524,531
 $1,708
 $526,239
 $54,213
 $500,942
 $946
 $501,888
 $41,769
                
 Gross derivative receivables   Gross derivative payables  
December 31, 2017
(in millions)		Not designated as hedges Designated as hedgesTotal derivative receivables 
Net derivative receivables(b)
 Not designated as hedges Designated as hedges Total derivative payables 
Net derivative payables(b)
Trading assets and liabilities               
Interest rate$314,962
(c) 
$1,030
(c) 
$315,992
 $24,673
 $284,433
(c) 
$3
(c) 
$284,436
 $7,129
Credit23,205
 —
 23,205
 869
 23,252
 —
 23,252
 1,299
Foreign exchange159,740
 491
 160,231
 16,151
 154,601
 1,221
 155,822
 12,473
Equity40,040
 —
 40,040
 7,882
 45,395
 —
 45,395
 9,192
Commodity20,066
 19
 20,085
 6,948
 21,498
 403
 21,901
 7,684
Total fair value of trading assets and liabilities$558,013
(c) 
$1,540
(c) 
$559,553
 $56,523
 $529,179
(c) 
$1,627
(c) 
$530,806
 $37,777
(a)Balances exclude structured notes for which the fair value option has been elected. Refer to Note 3 for further information.
(b)As permitted under U.S. GAAP, the Firm has elected to net derivative receivables and derivative payables and the related cash collateral receivables and payables when a legally enforceable master netting agreement exists.
(c)The prior period amounts have been revised to conform with the current period presentation.



188202JPMorgan Chase & Co./20182020 Form 10-K



Derivatives netting
The following tables present, as of December 31, 20182020 and 2017,2019, gross and net derivative receivables and payables by contract and settlement type. Derivative receivables and payables, as well as the related cash collateral from the same counterparty, have been netted on the Consolidated balance sheets where the Firm has obtained an appropriate legal opinion with respect to the master netting agreement. Where such a legal opinion has not been either sought or obtained, amounts are not eligible for netting on the Consolidated balance sheets, and those derivative receivables and payables are shown separately in the tables below.
In addition to the cash collateral received and transferred that is presented on a net basis with derivative receivables and payables, the Firm receives and transfers additional collateral (financial instruments and cash). These amounts mitigate counterparty credit risk associated with the Firm’s derivative instruments, but are not eligible for net presentation:
•
•
collateral that consists of non-cash financial instruments (generally U.S. government and agency securities and other G7 government securities) and cash collateral held at third party custodians, which are shown separately as “Collateral not nettable on the Consolidated balance sheets” in the tables below, up to the fair value exposure amount.
•
the amount of collateral held or transferred that exceeds the fair value exposure at the individual counterparty level, as of the date presented, which is excluded from the tables below; and
•
collateral held or transferred that relates to derivative receivables or payables where an appropriate legal opinion has not been either sought or obtained with respect to the master netting agreement, which is excluded from the tables below.
 2018 2017
December 31, (in millions)Gross derivative receivablesAmounts netted on the Consolidated balance sheetsNet derivative receivables Gross derivative receivables Amounts netted on the Consolidated balance sheets
Net
derivative receivables
U.S. GAAP nettable derivative receivables           
Interest rate contracts:           
OTC$258,227
$(239,498) $18,729
 $305,569
 $(284,917) $20,652
 
OTC–cleared6,404
(5,856) 548
 6,531
 (6,318) 213
 
Exchange-traded(a)
322
(136) 186
 185
 (84) 101
 
Total interest rate contracts264,953
(245,490) 19,463
 312,285
 (291,319) 20,966
 
Credit contracts:           
OTC12,648
(12,261) 387
 15,390
 (15,165) 225
 
OTC–cleared7,267
(7,222) 45
 7,225
 (7,170) 55
 
Total credit contracts19,915
(19,483) 432
 22,615
 (22,335) 280
 
Foreign exchange contracts:           
OTC163,862
(153,988) 9,874
 155,289
 (142,420) 12,869
 
OTC–cleared235
(226) 9
 1,696
 (1,654) 42
 
Exchange-traded(a)
32
(21) 11
 141
 (7) 134
 
Total foreign exchange contracts164,129
(154,235) 9,894
 157,126
 (144,081) 13,045
 
Equity contracts:           
OTC26,178
(23,879) 2,299
 22,024
 (19,917) 2,107
 
Exchange-traded(a)
18,876
(15,460) 3,416
 14,188
 (12,241) 1,947
 
Total equity contracts45,054
(39,339) 5,715
 36,212
 (32,158) 4,054
 
Commodity contracts:           
OTC7,448
(5,261) 2,187
 7,204
(e) 
(4,436) 2,768
(e) 
Exchange-traded(a)
8,815
(8,218) 597
 8,854
 (8,701) 153
 
Total commodity contracts16,263
(13,479) 2,784
 16,058
(e) 
(13,137) 2,921
(e) 
Derivative receivables with appropriate legal opinion510,314
(472,026) 38,288
(d) 
544,296
(e) 
(503,030) 41,266
(d)(e) 
Derivative receivables where an appropriate legal opinion has not been either sought or obtained15,925
  15,925
 15,257
(e) 
  15,257
(e) 
Total derivative receivables recognized on the Consolidated balance sheets$526,239
  $54,213
 $559,553
   $56,523
 
Collateral not nettable on the Consolidated balance sheets(b)(c)
   (13,046)     (13,363) 
Net amounts   $41,167
     $43,160
 

collateral that consists of liquid securities and other cash collateral held at third-party custodians, which are shown separately as “Collateral not nettable on the Consolidated balance sheets” in the tables below, up to the fair value exposure amount. Liquid securities represent high quality liquid assets as defined in the LCR rule;

•the amount of collateral held or transferred that exceeds the fair value exposure at the individual counterparty level, as of the date presented, which is excluded from the tables below; and
•collateral held or transferred that relates to derivative receivables or payables where an appropriate legal opinion has not been either sought or obtained with respect to the master netting agreement, which is excluded from the tables below.
20202019
December 31, (in millions)Gross derivative receivablesAmounts netted on the Consolidated balance sheetsNet derivative receivablesGross derivative receivablesAmounts netted on the Consolidated balance sheetsNet
derivative receivables
U.S. GAAP nettable derivative receivables
Interest rate contracts:
OTC$367,056 $(337,451)$29,605 $299,205 $(276,255)$22,950 
OTC–cleared18,340 (17,919)421 9,442 (9,360)82 
Exchange-traded(a)
554 (395)159 347 (258)89 
Total interest rate contracts385,950 (355,765)30,185 308,994 (285,873)23,121 
Credit contracts:
OTC9,052 (8,514)538 10,743 (10,317)426 
OTC–cleared4,326 (4,309)17 3,864 (3,858)6 
Total credit contracts13,378 (12,823)555 14,607 (14,175)432 
Foreign exchange contracts:
OTC201,349 (189,655)11,694 136,252 (129,324)6,928 
OTC–cleared834 (819)15 185 (152)33 
Exchange-traded(a)
35 (5)30 10 (6)4 
Total foreign exchange contracts202,218 (190,479)11,739 136,447 (129,482)6,965 
Equity contracts:
OTC34,030 (27,374)6,656 23,106 (20,820)2,286 
Exchange-traded(a)
28,294 (26,751)1,543 19,654 (18,430)1,224 
Total equity contracts62,324 (54,125)8,199 42,760 (39,250)3,510 
Commodity contracts:
OTC10,924 (7,901)3,023 7,093 (5,149)1,944 
OTC–cleared20 (20)0 28 (28)0 
Exchange-traded(a)
6,833 (6,811)22 6,154 (5,903)251 
Total commodity contracts17,777 (14,732)3,045 13,275 (11,080)2,195 
Derivative receivables with appropriate legal opinion681,647 (627,924)53,723 (d)516,083 (479,860)36,223 (d)
Derivative receivables where an appropriate legal opinion has not been either sought or obtained25,907 25,907 13,543 13,543 
Total derivative receivables recognized on the Consolidated balance sheets$707,554 $79,630 $529,626 $49,766 
Collateral not nettable on the Consolidated balance sheets(b)(c)
(14,806)(13,052)
Net amounts$64,824 $36,714 
JPMorgan Chase & Co./20182020 Form 10-K189203
Notes to consolidated financial statements

20202019
December 31, (in millions)Gross derivative payablesAmounts netted on the Consolidated balance sheetsNet derivative payablesGross derivative payablesAmounts netted on the Consolidated balance sheetsNet
derivative payables
U.S. GAAP nettable derivative payables
Interest rate contracts:
OTC$331,854 $(320,780)$11,074 $267,311 $(260,229)$7,082 
OTC–cleared19,710 (19,494)216 10,217 (10,138)79 
Exchange-traded(a)
358 (341)17 365 (303)62 
Total interest rate contracts351,922 (340,615)11,307 277,893 (270,670)7,223 
Credit contracts:
OTC10,671 (9,141)1,530 11,570 (10,080)1,490 
OTC–cleared4,075 (4,056)19 3,390 (3,389)1 
Total credit contracts14,746 (13,197)1,549 14,960 (13,469)1,491 
Foreign exchange contracts:
OTC210,803 (193,672)17,131 142,360 (131,792)10,568 
OTC–cleared836 (819)17 186 (152)34 
Exchange-traded(a)
34 (2)32 12 (6)6 
Total foreign exchange contracts211,673 (194,493)17,180 142,558 (131,950)10,608 
Equity contracts:
OTC35,330 (28,763)6,567 27,594 (21,778)5,816 
Exchange-traded(a)
34,491 (26,752)7,739 20,216 (18,426)1,790 
Total equity contracts69,821 (55,515)14,306 47,810 (40,204)7,606 
Commodity contracts:
OTC10,365 (7,544)2,821 8,714 (6,235)2,479 
OTC–cleared32 (32)0 30 (30)0 
Exchange-traded(a)
7,391 (6,868)523 6,012 (5,862)150 
Total commodity contracts17,788 (14,444)3,344 14,756 (12,127)2,629 
Derivative payables with appropriate legal opinion665,950 (618,264)47,686 (d)497,977 (468,420)29,557 (d)
Derivative payables where an appropriate legal opinion has not been either sought or obtained22,937 22,937 14,151 14,151 
Total derivative payables recognized on the Consolidated balance sheets$688,887 $70,623 $512,128 $43,708 
Collateral not nettable on the Consolidated balance sheets(b)(c)
(11,964)(6,960)
Net amounts$58,659 $36,748 
(a)Exchange-traded derivative balances that relate to futures contracts are settled daily.
 2018 2017
December 31, (in millions)Gross derivative payablesAmounts netted on the Consolidated balance sheetsNet derivative payables Gross derivative payables Amounts netted on the Consolidated balance sheets
Net
derivative payables
U.S. GAAP nettable derivative payables           
Interest rate contracts:           
OTC$233,404
$(228,369) $5,035
 $276,960
 $(271,294) $5,666
 
OTC–cleared7,163
(6,494) 669
 6,004
 (5,928) 76
 
Exchange-traded(a)
210
(135) 75
 127
 (84) 43
 
Total interest rate contracts240,777
(234,998) 5,779
 283,091
 (277,306) 5,785
 
Credit contracts:           
OTC13,412
(11,895) 1,517
 16,194
 (15,170) 1,024
 
OTC–cleared6,716
(6,714) 2
 6,801
 (6,784) 17
 
Total credit contracts20,128
(18,609) 1,519
 22,995
 (21,954) 1,041
 
Foreign exchange contracts:           
OTC160,930
(152,161) 8,769
 150,966
 (141,789) 9,177
 
OTC–cleared274
(268) 6
 1,555
 (1,553) 2
 
Exchange-traded(a)
16
(3) 13
 98
 (7) 91
 
Total foreign exchange contracts161,220
(152,432) 8,788
 152,619
 (143,349) 9,270
 
Equity contracts:           
OTC29,437
(25,544) 3,893
 28,193
 (23,969) 4,224
 
Exchange-traded(a)
16,285
(15,490) 795
 12,720
 (12,234) 486
 
Total equity contracts45,722
(41,034) 4,688
 40,913
 (36,203) 4,710
 
Commodity contracts:           
OTC8,930
(4,838) 4,092
 7,697
(e) 
(5,508) 2,189
(e) 
Exchange-traded(a)
8,259
(8,208) 51
 8,870
 (8,709) 161
 
Total commodity contracts17,189
(13,046) 4,143
 16,567
(e) 
(14,217) 2,350
(e) 
Derivative payables with appropriate legal opinion485,036
(460,119) 24,917
(d) 
516,185
(e) 
(493,029) 23,156
(d)(e) 
Derivative payables where an appropriate legal opinion has not been either sought or obtained16,852
  16,852
 14,621
(e) 
  14,621
(e) 
Total derivative payables recognized on the Consolidated balance sheets$501,888
  $41,769
 $530,806
   $37,777
 
Collateral not nettable on the Consolidated balance sheets(b)(c)
   (4,449)     (4,180) 
Net amounts   $37,320
     $33,597
 
(a)Exchange-traded derivative balances that relate to futures contracts are settled daily.
(b)Represents liquid security collateral as well as cash collateral held at third-party custodians related to derivative instruments where an appropriate legal opinion has been obtained. For some counterparties, the collateral amounts of financial instruments may exceed the derivative receivables and derivative payables balances. Where this is the case, the total amount reported is limited to the net derivative receivables and net derivative payables balances with that counterparty.
(c)Derivative collateral relates only to OTC and OTC-cleared derivative instruments.
(d)Net derivatives receivable included cash collateral netted of $55.2 billion and $55.5 billion at December 31, 2018 and 2017, respectively. Net derivatives payable included cash collateral netted of $43.3 billion and $45.5 billion at December 31, 2018 and 2017, respectively. Derivative cash collateral relates to OTC and OTC-cleared derivative instruments.
(e)The prior period amounts have been revised to conform with the current period presentation.

(b)Includes liquid securities and other cash collateral held at third-party custodians related to derivative instruments where an appropriate legal opinion has been obtained. For some counterparties, the collateral amounts of financial instruments may exceed the derivative receivables and derivative payables balances. Where this is the case, the total amount reported is limited to the net derivative receivables and net derivative payables balances with that counterparty. In the fourth quarter of 2020, the Firm refined its approach for disclosing additional collateral held by the Firm that may be used as security when the fair value of the client’s exposure is in the Firm’s favor. Prior-period amounts have been revised to conform with the current presentation.
(c)Derivative collateral relates only to OTC and OTC-cleared derivative instruments.
(d)Net derivatives receivable included cash collateral netted of $88.0 billion and $65.9 billion at December 31, 2020 and 2019, respectively. Net derivatives payable included cash collateral netted of $78.4 billion and $54.4 billion at December 31, 2020 and 2019, respectively. Derivative cash collateral relates to OTC and OTC-cleared derivative instruments.

190204JPMorgan Chase & Co./20182020 Form 10-K



Liquidity risk and credit-related contingent features
In addition to the specific market risks introduced by each derivative contract type, derivatives expose JPMorgan Chase to credit risk — the risk that derivative counterparties may fail to meet their payment obligations under the derivative contracts and the collateral, if any, held by the Firm proves to be of insufficient value to cover the payment obligation. It is the policy of JPMorgan Chase to actively pursue, where possible, the use of legally enforceable master netting arrangements and collateral agreements to mitigate derivative counterparty credit risk. The amount ofrisk inherent in derivative receivables reported on the Consolidated balance sheets is the fair value of the derivative contracts after giving effect to legally enforceable master netting agreements and cash collateral held by the Firm.receivables.
While derivative receivables expose the Firm to credit risk, derivative payables expose the Firm to liquidity risk, as the derivative contracts typically require the Firm to post cash or securities collateral with counterparties as the fair v
aluevalue of the contracts moves in the counterparties’ favor or upon specified downgrades in the Firm’s and its subsidiaries’ respective credit ratings. Certain derivative contracts also provide for termination of the contract, generally upon a downgrade of either the Firm or the counterparty, at the fair value of the derivative contracts. The following table shows the aggregate fair value of net derivative payables related to OTC and OTC-cleared derivatives that contain contingent collateral or termination features that may be triggered upon a ratings downgrade, and the associated collateral the Firm has posted in the normal course of business, at December 31, 20182020 and 2017.2019.
OTC and OTC-cleared derivative payables containing downgrade triggers
December 31, (in millions)20182017
Aggregate fair value of net derivative payables$9,396
$11,916
Collateral posted8,907
9,973

OTC and OTC-cleared derivative payables containing downgrade triggers
December 31, (in millions)20202019
Aggregate fair value of net derivative payables$27,712 $14,819 
Collateral posted26,289 13,329 

The following table shows the impact of a single-notch and two-notch downgrade of the long-term issuer ratings of JPMorgan Chase & Co. and its subsidiaries,, predominantly JPMorgan Chase Bank, National Association (“JPMorgan Chase Bank, N.A.”), at December 31, 20182020 and 2017, 2019, related to OTC and OTC-cleared derivative contracts with contingent collateral or termination features that may be triggered upon a ratings downgrade. Derivatives contracts generally require additional collateral to be posted or terminations to be triggered when the predefined threshold rating is breached. A downgrade by a single rating agency that does not result in a rating lower than a preexisting corresponding rating provided by another major rating agency will generally not result in additional collateral (except in certain instances in which additional initial margin may be required upon a ratings downgrade), nor in termination payments requirements. The liquidity impact in the table is calculated based upon a downgrade below the lowest current rating of the rating agencies referred to in the derivative contract.
Liquidity impact of downgrade triggers on OTC and OTC-cleared derivatives
20202019
December 31, (in millions)Single-notch downgradeTwo-notch downgradeSingle-notch downgradeTwo-notch downgrade
Amount of additional collateral to be posted upon downgrade(a)
$119 $1,243 $189 $1,467 
Amount required to settle contracts with termination triggers upon downgrade(b)
153 2,449 104 1,398 
(a)Includes the additional collateral to be posted for initial margin.
(b)Amounts represent fair values of derivative payables, and do not reflect collateral posted.
Liquidity impact of downgrade triggers on OTC and OTC-cleared derivatives
 2018 2017
December 31, (in millions)Single-notch downgradeTwo-notch downgrade Single-notch downgradeTwo-notch downgrade
Amount of additional collateral to be posted upon downgrade(a)
$76
$947
 $79
$1,989
Amount required to settle contracts with termination triggers upon downgrade(b)
172
764
 320
650
(a)Includes the additional collateral to be posted for initial margin.
(b)Amounts represent fair values of derivative payables, and do not reflect collateral posted.

Derivatives executed in contemplation of a sale of the underlying financial asset
In certain instances the Firm enters into transactions in which it transfers financial assets but maintains the economic exposure to the transferred assets by entering into a derivative with the same counterparty in contemplation of the initial transfer. The Firm generally accounts for such transfers as collateralized financing transactions as described in Note 11, but in limited circumstances they may qualify to be accounted for as a sale and a derivative under U.S. GAAP. The amount of such transfers accounted for as a sale where the associated derivative was outstanding at December 31, 2018 was not material and there were no such transfers at both December 31, 2017.


2020 and 2019.
JPMorgan Chase & Co./20182020 Form 10-K191205
Notes to consolidated financial statements

Impact of derivatives on the Consolidated statements of income
The following tables provide information related to gains and losses recorded on derivatives based on their hedge accounting
designation or purpose.
Fair value hedge gains and losses
The following tables present derivative instruments, by contract type, used in fair value hedge accounting relationships, as well as pre-tax gains/(losses) recorded on such derivatives and the related hedged items for the years endedDecember 31, 2018, 20172020, 2019 and 2016, 2018, respectively. The Firm includes gains/(losses) on the hedging derivative in the same line item in the Consolidated statements of income as the related hedged item.
Gains/(losses) recorded in income
Income statement impact of
excluded components(e)
OCI impact
Year ended December 31, 2020
(in millions)		DerivativesHedged itemsIncome statement impactAmortization approachChanges in fair value
Derivatives - Gains/(losses) recorded in OCI(f)
Contract type
Interest rate(a)(b)
$2,962 $(1,889)$1,073 $0 $1,093 $0 
Foreign exchange(c)
793 (619)174 (457)174 25 
Commodity(d)
(2,507)2,650 143 0 137 0 
Total$1,248 $142 $1,390 $(457)$1,404 $25 
Gains/(losses) recorded in income
Income statement impact of excluded components(e)
OCI impact
Year ended December 31, 2019
(in millions)		DerivativesHedged itemsIncome statement impactAmortization approachChanges in fair value
Derivatives - Gains/(losses) recorded in OCI(f)
Contract type
Interest rate(a)(b)
$3,204 $(2,373)$831 $0 $828 $0 
Foreign exchange(c)
154 328 482 (866)482 39 
Commodity(d)
(77)148 71 0 63 0 
Total$3,281 $(1,897)$1,384 $(866)$1,373 $39 
Gains/(losses) recorded in income
Income statement impact of excluded components(e)
OCI impact
Year ended December 31, 2018
(in millions)		DerivativesHedged itemsIncome statement impactAmortization approachChanges in fair value
Derivatives - Gains/(losses) recorded in OCI(f)
Contract type
Interest rate(a)(b)
$(1,145)$1,782 $637 $0 $623 $0 
Foreign exchange(c)
1,092 (616)476 (566)476 (140)
Commodity(d)
789 (754)35 0 26 0 
Total$736 $412 $1,148 $(566)$1,125 $(140)
(a)Primarily consists of hedges of the benchmark (e.g., London Interbank Offered Rate (“LIBOR”)) interest rate risk of fixed-rate long-term debt and AFS securities. Gains and losses were recorded in net interest income.
(b)Excludes the amortization expense associated with the inception hedge accounting adjustment applied to the hedged item. This expense is recorded in net interest income and substantially offsets the income statement impact of the excluded components. Also excludes the accrual of interest on interest rate swaps and the related hedged items.
 Gains/(losses) recorded in income 
Income statement impact of
excluded components(f)

OCI impact
Year ended December 31, 2018
(in millions)		DerivativesHedged itemsIncome statement impact Amortization approachChanges in fair value
Derivatives - Gains/(losses) recorded in OCI(g)
Contract type        
Interest rate(a)(b)
$(1,145)$1,782
$637
 $—
$623
 $—
Foreign exchange(c)
1,092
(616)476
 (566)476
 (140)
Commodity(d)
789
(754)35
 —
26
 —
Total$736
$412
$1,148
 $(566)$1,125
 $(140)
         
 Gains/(losses) recorded in income Income statement impact due to:  
Year ended December 31, 2017
(in millions)		DerivativesHedged itemsIncome statement impact 
Hedge ineffectiveness(e)
Excluded components(f)
  
Contract type        
Interest rate(a)(b)
$(481)$1,359
$878
 $(18)$896
  
Foreign exchange(c)
(3,509)3,507
(2) —
(2)  
Commodity(d)
(1,275)1,348
73
 29
44
  
Total$(5,265)$6,214
$949
 $11
$938
  
         
 Gains/(losses) recorded in income Income statement impact due to:  
Year ended December 31, 2016
(in millions)
DerivativesHedged itemsIncome statement impact 
Hedge ineffectiveness(e)
Excluded components(f)
  
Contract type        
Interest rate(a)(b)
$(482)$1,338
$856
 $6
$850
  
Foreign exchange(c)
2,435
(2,261)174
 —
174
  
Commodity(d)
(536)586
50
 (9)59
  
Total$1,417
$(337)$1,080
 $(3)$1,083
  
(a)Primarily consists of hedges of the benchmark (e.g., London Interbank Offered Rate (“LIBOR”)) interest rate risk of fixed-rate long-term debt and AFS securities. Gains and losses were recorded in net interest income.
(b)Excludes the amortization expense associated with the inception hedge accounting adjustment applied to the hedged item. This expense is recorded in net interest income and substantially offsets the income statement impact of the excluded components. Also excludes the accrual of interest on interest rate swaps and the related hedged items.
(c)Primarily consists of hedges of the foreign currency risk of long-term debt and AFS securities for changes in spot foreign currency rates. Gains and losses related to the derivatives and the hedged items due to changes in foreign currency rates and the income statement impact of excluded components were recorded primarily in principal transactions revenue and net interest income.
(d)Consists of overall fair value hedges of physical commodities inventories that are generally carried at the lower of cost or net realizable value (net realizable value approximates fair value). Gains and losses were recorded in principal transactions revenue.
(e)Hedge ineffectiveness is the amount by which the gain or loss on the designated derivative instrument does not exactly offset the gain or loss on the hedged item attributable to the hedged risk.
(f)The assessment of hedge effectiveness excludes certain components of the changes in fair values of the derivatives and hedged items such as forward points on foreign exchange forward contracts, time values and cross-currency basis spreads. Under the new hedge accounting guidance, the initial amount of the excluded components may be amortized into income over the life of the derivative, or changes in fair value may be recognized in current period earnings.
(g)Represents the change in value of amounts excluded from the assessment of effectiveness under the amortization approach, predominantly cross-currency basis spreads. The amount excluded at inception of the hedge is recognized in earnings over the life of the derivative.

(c)Primarily consists of hedges of the foreign currency risk of long-term debt and AFS securities for changes in spot foreign currency rates. Gains and losses related to the derivatives and the hedged items due to changes in foreign currency rates and the income statement impact of excluded components were recorded primarily in principal transactions revenue and net interest income.
(d)Consists of overall fair value hedges of physical commodities inventories that are generally carried at the lower of cost or net realizable value (net realizable value approximates fair value). Gains and losses were recorded in principal transactions revenue.
(e)The assessment of hedge effectiveness excludes certain components of the changes in fair values of the derivatives and hedged items such as forward points on foreign exchange forward contracts, time values and cross-currency basis spreads. Excluded components may impact earnings either through amortization of the initial amount over the life of the derivative or through fair value changes recognized in the current period.
(f)Represents the change in value of amounts excluded from the assessment of effectiveness under the amortization approach, predominantly cross-currency basis spreads. The amount excluded at inception of the hedge is recognized in earnings over the life of the derivative.

192206JPMorgan Chase & Co./20182020 Form 10-K


As of December 31, 2018,2020 and 2019, the following amounts were recorded on the Consolidated balance sheets related to certain cumulative fair value hedge basis adjustments that are expected to reverse through the income statement in future periods as an adjustment to yield.
Carrying amount of the hedged items(a)(b)
Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged items:
December 31, 2020
(in millions)		Active hedging relationships
Discontinued hedging relationships(d)(e)
Total
Assets
Investment securities - AFS$139,684 (c)$3,572 $847 $4,419 
Liabilities
Long-term debt$177,611 $3,194 $11,473 $14,667 
Beneficial interests issued by consolidated VIEs746 0 (3)(3)
Carrying amount of the hedged items(a)(b)
Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged items:
December 31, 2019
(in millions)		Active hedging relationships
Discontinued hedging relationships(d)(e)
Total
Assets
Investment securities - AFS$125,860 (c)$2,110 $278 $2,388 
Liabilities
Long-term debt$157,545 $6,719 $161 $6,880 
Beneficial interests issued by consolidated VIEs2,365 0 (8)(8)
  
Carrying amount of the hedged items(a)(b)
 Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged items:
December 31, 2018
(in millions)		  Active hedging relationships
Discontinued hedging relationships(d)
Total
Assets      
Investment securities - AFS $55,313
(c) 
$(1,105)$381
$(724)
Liabilities      
Long-term debt $139,915
 $141
$8
$149
Beneficial interests issued by consolidated VIEs 6,987
 —
(33)(33)
(a)Excludes physical commodities with a carrying value of $6.8 billion to which the Firm applies fair value hedge accounting. As a result of the application of hedge accounting, these inventories are carried at fair value, thus recognizing unrealized gains and losses in current periods. Given the Firm exits these positions at fair value, there is no incremental impact to net income in future periods.
(b)Excludes hedged items where only foreign currency risk is the designated hedged risk, as basis adjustments related to foreign currency hedges will not reverse through the income statement in future periods. The carrying amount excluded for available-for-sale securities is $14.6 billion and for long-term debt is $7.3 billion.
(c)Carrying amount represents the amortized cost.
(d)Represents hedged items no longer designated in qualifying fair value hedging relationships for which an associated basis adjustment exists at the balance sheet date.

(a)Excludes physical commodities with a carrying value of $11.5 billion and $6.5 billion at December 31, 2020 and 2019, respectively, to which the Firm applies fair value hedge accounting. As a result of the application of hedge accounting, these inventories are carried at fair value, thus recognizing unrealized gains and losses in current periods. Since the Firm exits these positions at fair value, there is no incremental impact to net income in future periods.

(b)Excludes hedged items where only foreign currency risk is the designated hedged risk, as basis adjustments related to foreign currency hedges will not reverse through the income statement in future periods. At December 31, 2020 and 2019, the carrying amount excluded for AFS securities is $14.5 billion and $14.9 billion, respectively, and for long-term debt is $6.6 billion and $2.8 billion, respectively.
(c)Carrying amount represents the amortized cost, net of allowance if applicable. Refer to Note 10 for additional information.
(d)Represents basis adjustments existing on the balance sheet date associated with hedged items that have been de-designated from qualifying fair value hedging relationships.
(e)Positive amounts related to assets represent cumulative fair value hedge basis adjustments that will reduce net interest income in future periods. Positive (negative) amounts related to liabilities represent cumulative fair value hedge basis adjustments that will increase (reduce) net interest income in future periods.
JPMorgan Chase & Co./20182020 Form 10-K193207
Notes to consolidated financial statements

Cash flow hedge gains and losses
The following tables present derivative instruments, by contract type, used in cash flow hedge accounting relationships, and the pre-tax gains/(losses) recorded on such derivatives, for the years endedDecember 31, 2018, 20172020, 2019 and 2016, 2018, respectively. The Firm includes the gain/(loss)gains/(losses) on the hedging derivative in the same line item in the Consolidated statements of income as the change in cash flows on the related hedged item.
Derivatives gains/(losses) recorded in income and other comprehensive income/(loss)
Year ended December 31, 2020
(in millions)
Amounts reclassified from AOCI to incomeAmounts recorded in OCI
Total change
in OCI
for period
Contract type
Interest rate(a)
$570 $3,582 $3,012 
Foreign exchange(b)
0 41 41 
Total$570 $3,623 $3,053 
Derivatives gains/(losses) recorded in income and other comprehensive income/(loss)
Year ended December 31, 2019
(in millions)		Amounts reclassified from AOCI to incomeAmounts recorded in OCITotal change
in OCI
for period
Contract type
Interest rate(a)
$(28)$(3)$25 
Foreign exchange(b)
(75)125 200 
Total$(103)$122 $225 
Derivatives gains/(losses) recorded in income and other comprehensive income/(loss)
Year ended December 31, 2018
(in millions)		Amounts reclassified from AOCI to incomeAmounts recorded in OCITotal change
in OCI
for period
Contract type
Interest rate(a)
$44 $(44)$(88)
Foreign exchange(b)
(26)(201)(175)
Total$18 $(245)$(263)
(a)Primarily consists of hedges of LIBOR-indexed floating-rate assets and floating-rate liabilities. Gains and losses were recorded in net interest income.
(b)Primarily consists of hedges of the foreign currency risk of non-U.S. dollar-denominated revenue and expense. The income statement classification of gains and losses follows the hedged item – primarily noninterest revenue and compensation expense.
 Derivatives gains/(losses) recorded in income and other comprehensive income/(loss)
Year ended December 31, 2018
(in millions)
Amounts reclassified from AOCI to incomeAmounts recorded in OCI
Total change
in OCI
for period
Contract type   
Interest rate(a)
$44
$(44)$(88)
Foreign exchange(b)
(26)(201)(175)
Total$18
$(245)$(263)
 Derivatives gains/(losses) recorded in income and other comprehensive income/(loss)
Year ended December 31, 2017
(in millions)
Amounts reclassified from AOCI to income
Amounts recorded in OCI(c)
Total change
in OCI
for period
Contract type   
Interest rate(a)
$(17)$12
$29
Foreign exchange(b)
(117)135
252
Total$(134)$147
$281
    
 Derivatives gains/(losses) recorded in income and other comprehensive income/(loss)
Year ended December 31, 2016
(in millions)
Amounts reclassified from AOCI to income
Amounts recorded in OCI(c)
Total change
in OCI
for period
Contract type   
Interest rate(a)
$(74)$(55)$19
Foreign exchange(b)
(286)(395)(109)
Total$(360)$(450)$(90)
(a)Primarily consists of benchmark interest rate hedges of LIBOR-indexed floating-rate assets and floating-rate liabilities. Gains and losses were recorded in net interest income.
(b)Primarily consists of hedges of the foreign currency risk of non-U.S. dollar-denominated revenue and expense. The income statement classification of gains and losses follows the hedged item – primarily noninterest revenue and compensation expense.
(c)Represents the effective portion of changes in value of the related hedging derivative. Hedge ineffectiveness is the amount by which the cumulative gain or loss on the designated derivative instrument exceeds the present value of the cumulative expected change in cash flows on the hedged item attributable to the hedged risk. The Firm did not recognize any ineffectiveness on cash flow hedges during 2017 and 2016.

The Firm did not experience any forecasted transactions that failed to occur for the years ended 2018, 2017 2020, 2019 and 2016.2018.
Over the next 12 months, the Firm expects that approximately $(74) $818 million (after-tax) of net lossesgains recorded in AOCI at December 31, 2018, 2020, related to cash flow hedges will be recognized in income. For cash flow hedges that have been terminated, the maximum length of time over which the derivative results recorded in AOCI will be recognized in earnings is approximately sixnine years, corresponding to the timing of the originally hedged forecasted cash flows.For open cash flow hedges, the maximum length of time over which forecasted transactions are hedged is approximately six seven years. The Firm’s longer-dated forecasted transactions relate to core lending and borrowing activities.

194JPMorgan Chase & Co./2018 Form 10-K


Net investment hedge gains and losses
The following table presents hedging instruments, by contract type, that were used in net investment hedge accounting relationships, and the pre-tax gains/(losses) recorded on such instruments for the years endedDecember 31, 20182020, 2019 and 2018.
202020192018
Year ended December 31,
(in millions)
Amounts recorded in income(a)(b)
Amounts recorded in
OCI
Amounts recorded in income(a)(b)
Amounts recorded in
OCI
Amounts recorded in income(a)(b)
Amounts recorded in
OCI
Foreign exchange derivatives$(122)$(1,408)$72$64$11$1,219
(a), Certain components of hedging derivatives are permitted to be excluded from the assessment of hedge effectiveness, such as forward points on foreign exchange forward contracts. The Firm elects to record changes in fair value of these amounts directly in other income.
(b)2017Excludes amounts reclassified from AOCI to income on the sale or liquidation of hedged entities. The Firm reclassified net pre-tax gains/(losses) of $3 million and $18 million to other income, and $(17) million to other expense related to the liquidation of certain legal entities during the years ended December 31, 2020, 2019 and 2018, respectively. Refer to Note 24 for further information.
2016.
 2018 2017 2016
Year ended December 31,
(in millions)
Amounts recorded in income(a)(b)
Amounts recorded in
OCI
 
Amounts recorded in income(a)(b)(c)
Amounts recorded in
OCI(d)
 
Amounts recorded in income(a)(b)(c)
Amounts recorded in
OCI(d)
Foreign exchange derivatives$11$1,219 $(152)$(1,244) $(280)$262
(a)208Certain components of hedging derivatives are permitted to be excluded from the assessment of hedge effectiveness, such as forward points on foreign exchange forward contracts. The Firm elects to record changes in fair value of these amounts directly in other income.JPMorgan Chase & Co./2020 Form 10-K
(b)Excludes amounts reclassified from AOCI to income on the sale or liquidation of hedged entities. For additional information, refer to Note 23.
(c)The prior period amounts have been revised to conform with the current period presentation.
(d)Represents the effective portion of changes in value of the related hedging derivative. The Firm did not recognize any ineffectiveness on net investment hedges directly in income during 2017 and 2016.

Gains and losses on derivatives used for specified risk management purposes
The following table presents pre-tax gains/(losses) recorded on a limited number of derivatives, not designated in hedge accounting relationships, that are used to manage risks associated with certain specified assets and liabilities, including certain risks arising from the mortgage pipeline,commitments, warehouse loans, MSRs, wholesale lending exposures, and foreign currency denominated assets and liabilities.
Derivatives gains/(losses)
recorded in income
Year ended December 31,
(in millions)		202020192018
Contract type
Interest rate(a)
$2,994 $1,491 $79 
Credit(b)
(176)(30)(21)
Foreign exchange(c)
43 (5)117 
Total$2,861 $1,456 $175 
(a)Primarily represents interest rate derivatives used to hedge the interest rate risk inherent in mortgage commitments, warehouse loans and MSRs, as well as written commitments to originate warehouse loans. Gains and losses were recorded predominantly in mortgage fees and related income.
 
Derivatives gains/(losses)
recorded in income
Year ended December 31,
(in millions)		2018
 2017
 2016
 
Contract type      
Interest rate(a)
$79
 $331
 $1,174
 
Credit(b)
(21) (74) (282) 
Foreign exchange(c)
117
 (107)
(d) 
(20)
(d) 
Total$175
 $150
(d) 
$872
(d) 
(a)Primarily represents interest rate derivatives used to hedge the interest rate risk inherent in the mortgage pipeline, warehouse loans and MSRs, as well as written commitments to originate warehouse loans. Gains and losses were recorded predominantly in mortgage fees and related income.
(b)Relates to credit derivatives used to mitigate credit risk associated with lending exposures in the Firm’s wholesale businesses. These derivatives do not include credit derivatives used to mitigate counterparty credit risk arising from derivative receivables, which is included in gains and losses on derivatives related to market-making activities and other derivatives. Gains and losses were recorded in principal transactions revenue.
(c)Primarily relates to derivatives used to mitigate foreign exchange risk of specified foreign currency-denominated assets and liabilities. Gains and losses were recorded in principal transactions revenue.
(d)The prior period amounts have been revised to conform with the current period presentation.

(b)Relates to credit derivatives used to mitigate credit risk associated with lending exposures in the Firm’s wholesale businesses. These derivatives do not include credit derivatives used to mitigate counterparty credit risk arising from derivative receivables, which is included in gains and losses on derivatives related to market-making activities and other derivatives. Gains and losses were recorded in principal transactions revenue.
(c)Primarily relates to derivatives used to mitigate foreign exchange risk of specified foreign currency-denominated assets and liabilities. Gains and losses were recorded in principal transactions revenue.
Gains and losses on derivatives related to market-making activities and other derivatives
The Firm makes markets in derivatives in order to meet the needs of customers and uses derivatives to manage certain risks associated with net open risk positions from its market-making activities, including the counterparty credit risk arising from derivative receivables. All derivatives not included in the hedge accounting or specified risk management categories above are included in this category. Gains and losses on these derivatives are primarily recorded in principal transactions revenue. Refer to Note 6 for information on principal transactions revenue.
Credit derivatives
Credit derivatives are financial instruments whose value is derived from the credit risk associated with the debt of a third-party issuer (the reference entity) and which allow one party (the protection purchaser) to transfer that risk to another party (the protection seller). Credit derivatives expose the protection purchaser to the creditworthiness of the protection seller, as the protection seller is required to make payments under the contract when the reference entity experiences a credit event, such as a bankruptcy, a failure to pay its obligation or a restructuring. The seller of credit protection receives a premium for providing protection but has the risk that the underlying instrument referenced in the contract will be subject to a credit event.
The Firm is both a purchaser and seller of protection in the credit derivatives market and uses these derivatives for two primary purposes. First, in its capacity as a market-maker, the Firm actively manages a portfolio of credit derivatives by purchasing and selling credit protection, predominantly on corporate debt obligations, to meet the needs of customers. Second, as an end-user, the Firm uses credit derivatives to manage credit risk associated with lending exposures (loans and unfunded commitments) and derivatives counterparty exposures in the Firm’s wholesale businesses, and to manage the credit risk arising from certain financial instruments in the Firm’s market-making businesses. Following is a summary of various types of credit derivatives.

JPMorgan Chase & Co./20182020 Form 10-K195209
Notes to consolidated financial statements

Credit default swaps
Credit derivatives may reference the credit of either a single reference entity (“single-name”) or a broad-based index. The Firm purchases and sells protection on both single- name and index-reference obligations. Single-name CDS and index CDS contracts are either OTC or OTC-cleared derivative contracts. Single-name CDS are used to manage the default risk of a single reference entity, while index CDS contracts are used to manage the credit risk associated with the broader credit markets or credit market segments. Like the S&P 500 and other market indices, a CDS index consists of a portfolio of CDS across many reference entities. New series of CDS indices are periodically established with a new underlying portfolio of reference entities to reflect changes in the credit markets. If one of the reference entities in the index experiences a credit event, then the reference entity that defaulted is removed from the index. CDS can also be referenced against specific portfolios of reference names or against customized exposure levels based on specific client demands: for example, to provide protection against the first $1 million of realized credit losses in a $10 million portfolio of exposure. Such structures are commonly known as tranche CDS.
For both single-name CDS contracts and index CDS contracts, upon the occurrence of a credit event, under the terms of a CDS contract neither party to the CDS contract has recourse to the reference entity. The protection purchaser has recourse to the protection seller for the difference between the face value of the CDS contract and the fair value of the reference obligation at settlement of the credit derivative contract, also known as the recovery value. The protection purchaser does not need to hold the debt instrument of the underlying reference entity in order to receive amounts due under the CDS contract when a credit event occurs.
Credit-related notes
A credit-related note is a funded credit derivative where the issuer of the credit-related note purchases from the note investor credit protection on a reference entity or an index. Under the contract, the investor pays the issuer the par value of the note at the inception of the transaction, and in return, the issuer pays periodic payments to the investor, based on the credit risk of the referenced entity. The issuer also repays the investor the par value of the note at maturity unless the reference entity (or one of the entities that makes up a reference index) experiences a specified credit event. If a credit event occurs, the issuer is not obligated to repay the par value of the note, but rather, the issuer pays the investor the difference between the par value of the note and the fair value of the defaulted reference obligation at the time of settlement. Neither party to the credit-related note has recourse to the defaulting reference entity.
The following tables present a summary of the notional amounts of credit derivatives and credit-related notes the Firm sold and purchased as of December 31, 20182020 and 2017. 2019. Upon a credit event, the Firm as a seller of protection would typically pay out only a percentage of the full notional amount of net protection sold, as the amount actually required to be paid on the contracts takes into account the recovery value of the reference obligation at the time of settlement. The Firm manages the credit risk on contracts to sell protection by purchasing protection with identical or similar underlying reference entities. Other purchased protection referenced in the following tables includes credit derivatives bought on related, but not identical, reference positions (including indices, portfolio coverage and other reference points) as well as protection purchased through credit-related notes.

196210JPMorgan Chase & Co./20182020 Form 10-K


The Firm does not use notional amounts of credit derivatives as the primary measure of risk management for such derivatives, because the notional amount does not take into account the probability of the occurrence of a credit event, the recovery value of the reference obligation, or related cash instruments and economic hedges, each of which reduces, in the Firm’s view, the risks associated with such derivatives.
Total credit derivatives and credit-related notes
Maximum payout/Notional amount
Protection sold
Protection purchased with identical underlyings(b)
Net protection (sold)/purchased(c)
Other protection purchased(d)
December 31, 2020 (in millions)
Credit derivatives
Credit default swaps$(535,094)$554,565 $19,471 $4,001 
Other credit derivatives(a)
(40,084)57,344 17,260 9,415 
Total credit derivatives(575,178)611,909 36,731 13,416 
Credit-related notes0 0 0 10,248 
Total$(575,178)$611,909 $36,731 $23,664 
Maximum payout/Notional amount
Protection sold
Protection purchased with identical underlyings(b)
Net protection (sold)/purchased(c)
Other protection purchased(d)
December 31, 2019 (in millions)
Credit derivatives
Credit default swaps$(562,338)$571,892 $9,554 $3,936 
Other credit derivatives(a)
(50,395)(e)46,541 (e)(3,854)7,364 
Total credit derivatives(612,733)618,433 5,700 11,300 
Credit-related notes0 0 0 9,606 
Total$(612,733)$618,433 $5,700 $20,906 
(a)Other credit derivatives predominantly consist of credit swap options and total return swaps.
Total credit derivatives and credit-related notes

       
 Maximum payout/Notional amount
 Protection sold 
Protection purchased with identical underlyings(b)
Net protection (sold)/purchased(c)
Other protection purchased(d)
December 31, 2018 (in millions)
Credit derivatives       
Credit default swaps$(697,220)  $707,282
 $10,062
$4,053
Other credit derivatives(a)
(41,244)  42,484
 1,240
8,488
Total credit derivatives(738,464)  749,766
 11,302
12,541
Credit-related notes—
  —
 —
8,425
Total$(738,464)  $749,766
 $11,302
$20,966
        
 Maximum payout/Notional amount
 Protection sold 
Protection purchased with identical underlyings(b)
Net protection (sold)/purchased(c)
Other protection purchased(d)
December 31, 2017 (in millions)
Credit derivatives       
Credit default swaps$(690,224)  $702,098
 $11,874
$5,045
Other credit derivatives(a)
(54,157)  59,158
 5,001
11,747
Total credit derivatives(744,381)  761,256
 16,875
16,792
Credit-related notes(18)  —
 (18)7,915
Total$(744,399)  $761,256
 $16,857
$24,707
(b)Represents the total notional amount of protection purchased where the underlying reference instrument is identical to the reference instrument on protection sold; the notional amount of protection purchased for each individual identical underlying reference instrument may be greater or lower than the notional amount of protection sold.
(a)Other credit derivatives largely consists of credit swap options.
(b)Represents the total notional amount of protection purchased where the underlying reference instrument is identical to the reference instrument on protection sold; the notional amount of protection purchased for each individual identical underlying reference instrument may be greater or lower than the notional amount of protection sold.
(c)Does not take into account the fair value of the reference obligation at the time of settlement, which would generally reduce the amount the seller of protection pays to the buyer of protection in determining settlement value.
(d)Represents protection purchased by the Firm on referenced instruments (single-name, portfolio or index) where the Firm has not sold any protection on the identical reference instrument.
(c)Does not take into account the fair value of the reference obligation at the time of settlement, which would generally reduce the amount the seller of protection pays to the buyer of protection in determining settlement value.
(d)Represents protection purchased by the Firm on referenced instruments (single-name, portfolio or index) where the Firm has not sold any protection on the identical reference instrument.
(e)Prior-period amounts have been revised to conform with the current presentation.
The following tables summarize the notional amounts by the ratings, maturity profile, and total fair value, of credit derivatives and credit-related notes as ofDecember 31, 20182020 and 2017, 2019, whereJPMorgan Chaseis the seller of protection. The maturity profile is based on the remaining contractual maturity of the credit derivative contracts. The ratings profile is based on the rating of the reference entity on which the credit derivative contract is based. The ratings and maturity profile of credit derivatives and credit-related notes where JPMorgan Chase is the purchaser of protection are comparable to the profile reflected below.
Protection sold – credit derivatives and credit-related notes ratings(a)/maturity profile
December 31, 2020
(in millions)
<1 year1–5 years>5 yearsTotal notional amount
Fair value of receivables(b)
Fair value of payables(b)
Net fair value
Risk rating of reference entity
Investment-grade$(93,905)$(307,648)$(35,326)$(436,879)$5,521 $(835)$4,686 
Noninvestment-grade(31,809)(97,337)(9,153)(138,299)3,953 (2,542)1,411 
Total$(125,714)$(404,985)$(44,479)$(575,178)$9,474 $(3,377)$6,097 
December 31, 2019
(in millions)
<1 year(c)
1–5 years>5 yearsTotal notional amount
Fair value of receivables(b)(c)
Fair value of payables(b)(c)
Net fair value
Risk rating of reference entity
Investment-grade$(119,788)$(311,407)$(42,129)$(473,324)$6,168 $(901)$5,267 
Noninvestment-grade(41,799)(87,769)(9,841)(139,409)4,287 (2,817)1,470 
Total$(161,587)$(399,176)$(51,970)$(612,733)$10,455 $(3,718)$6,737 
(a)The ratings scale is primarily based on external credit ratings defined by S&P and Moody’s.
(b)Amounts are shown on a gross basis, before the benefit of legally enforceable master netting agreements including cash collateral netting.
Protection sold – credit derivatives and credit-related notes ratings(a)/maturity profile
    
December 31, 2018
(in millions)
<1 year 1–5 years >5 years Total notional amount 
Fair value of receivables(b)
 
Fair value of payables(b)
 Net fair value
Risk rating of reference entity             
Investment-grade$(115,443) $(402,325) $(43,611) $(561,379) $5,720
 $(2,791) $2,929
Noninvestment-grade(45,897) (119,348) (11,840) (177,085) 4,719
 (5,660) (941)
Total$(161,340) $(521,673) $(55,451) $(738,464) $10,439
 $(8,451) $1,988
December 31, 2017
(in millions)
<1 year 1–5 years >5 years Total notional amount 
Fair value of receivables(b)
 
Fair value of payables(b)
 Net fair value
Risk rating of reference entity             
Investment-grade$(159,286) $(319,726) $(39,429) $(518,441) $8,516
 $(1,134) $7,382
Noninvestment-grade(73,394) (134,125) (18,439) (225,958) 7,407
 (5,313) 2,094
Total$(232,680) $(453,851) $(57,868) $(744,399) $15,923
 $(6,447) $9,476
(a)The ratings scale is primarily based on external credit ratings defined by S&P and Moody’s.
(b)Amounts are shown on a gross basis, before the benefit of legally enforceable master netting agreements and cash collateral received by the Firm.

(c)Prior-period amounts have been revised to conform with the current presentation.
JPMorgan Chase & Co./20182020 Form 10-K197211
Notes to consolidated financial statements

Note 6 – Noninterest revenue and noninterest expense
Noninterest revenue
The Firm records noninterest revenue from certain contracts with customers under ASC 606, in investment banking fees, deposit-related fees, asset management, administration, and commissions, and components of card income. The related contracts are often terminable on demand and the Firm has no remaining obligation to deliver future services. For arrangements with a fixed term, the Firm may commit to deliver services in the future. Revenue associated with these remaining performance obligations typically depends on the occurrence of future events or underlying asset values, and is not recognized until the outcome of those events or values are known.Revenue from Contracts with Customers the Firm has no remaining obligation to deliver future services. For arrangements with a fixed term, the Firm may commit to deliver services in the future. Revenue associated with these remaining performance obligations typically depends on the occurrence of future events or underlying asset values, and is not recognized until the outcome of those events or values are known., in investment banking fees, deposit-related fees, asset management, administration, and commissions, and components of card income. Contracts in the scope of ASC 606 are often terminable on demand and the Firm has no remaining obligation to deliver future services. For arrangements with a fixed term, the Firm may commit to deliver services in the future. Revenue associated with these remaining performance obligations typically depends on the occurrence of future events or underlying asset values, and is not recognized until the outcome of those events or values are known.
The adoption of the revenue recognition guidance in the first quarter of 2018, required gross presentation of certain costs previously offset against revenue, predominantly associated with certain distribution costs (previously offset against asset management, administration and commissions), with the remainder associated with certain underwriting costs (previously offset against investment banking fees). Adoption of the guidance did not result in any material changes in the timing of revenue recognition. This guidance was adopted retrospectively and, accordingly, prior period amounts were revised, which resulted in an increase in both noninterest revenue and noninterest expense. The Firm did not apply any practical expedients. For additional information, refer to Note 1.
Investment banking fees
This revenue category includes debt and equity underwriting and advisory fees. As an underwriter, the Firm helps clients raise capital via public offering and private placement of various types of debt and equity instruments. Underwriting fees are primarily based on the issuance price and quantity of the underlying instruments, and are recognized as revenue typically upon execution of the client’s transaction. The Firm also manages and syndicates loan arrangements. Credit arrangement and syndication fees, included within debt underwriting fees, are recorded as revenue after satisfying certain retention, timing and yield criteria.
The Firm also provides advisory services, by assisting its clients with mergers and acquisitions, divestitures, restructuring and other complex transactions. Advisory fees are recognized as revenue typically upon execution of the client’s transaction.
Year ended December 31,
(in millions)		2018 2017 2016
Underwriting     
Equity$1,684
 $1,466
 $1,200
Debt3,347
 3,802
 3,277
Total underwriting5,031
 5,268
 4,477
Advisory2,519
 2,144
 2,095
Total investment banking fees$7,550
 $7,412
 $6,572
The following table presents the components of investment banking fees.

Year ended December 31,
(in millions)		202020192018
Underwriting
Equity$2,759 $1,648 $1,684 
Debt4,362 3,513 3,347 
Total underwriting7,121 5,161 5,031 
Advisory2,365 2,340 2,519 
Total investment banking fees$9,486 $7,501 $7,550 
Investment banking fees are earned primarily by CIB. Refer to Note 3132 for segment results.
Principal transactions
Principal transactions revenue is driven by many factors, including including:
•the bid-offer spread, which is the difference between the price at which a market participant is willing and able to sell an instrument to the Firmis willing to buy a financial or other instrument and the price at which another market participant is willing and able to buy it from the Firm, and vice versa; and
•is willing to sell that instrument. It also consists ofrealized and unrealized gains and losses on financial instruments and commodities transactions, including those accounted for under the realized (as afair value option, primarily used in client-driven market-making activities, and on private equity investments.
–Realized gains and losses result offrom the sale of instruments, closing out or termination of transactions, or interim cash payments) and unrealized (as a result of changes in valuation)payments.
–Unrealized gains and losses on financial and other instruments (including those accounted for under the fair value option) primarily usedresult from changes in client-driven market-making activities and on private equity investments. valuation.
In connection with its client-driven market-making activities, the Firm transacts in debt and equity instruments, derivatives and commodities, (includingincluding physical commodities inventories and financial instruments that reference commodities).commodities.
Principal transactions revenue also includes certain realized and unrealized gains and losses related to hedge accounting and specified risk-management activities, including: (a) certain to:
•derivatives designated in qualifying hedge accounting relationships, (primarilyprimarily fair value hedges of commodity and foreign exchange risk), (b) certain risk;
•derivatives used for specific risk management purposes, primarily to mitigate credit riskand foreign exchange risk, and (c) other derivatives. Forrisk.
Refer to Note 5 for further information on the income statement classification of gains and losses from derivatives activities, refer to Note 5.activities.
In the financial commodity markets, the Firm transacts in OTC derivatives (e.g., swaps, forwards, options) and ETD that reference a wide range of underlying commodities. In the physical commodity markets, the Firm primarily purchases and sells precious and base metals and may hold other commodities inventories under financing and other arrangements with clients.
The following table presents all realized and unrealized gains and losses recorded in principal transactions revenue. This table excludes interest income and interest expense on trading assets and liabilities, which are an integral part of the overall performance of the Firm’s client-driven market-making activities.activities in CIB and cash deployment activities in Treasury and CIO. Refer to Note 7 for further information on interest income and interest expense.
Trading revenue is presented primarily by instrument type. The Firm’s client-driven market-making businesses generally utilize a variety of instrument types in connection with their market-making and related risk-management activities; accordingly, the trading revenue presented in the table below is not representative of the total revenue of any individual line of business.LOB.

198212JPMorgan Chase & Co./20182020 Form 10-K


Year ended December 31,
(in millions)		202020192018
Trading revenue by
instrument type
Interest rate(a)
$2,575 $2,739 (c)$1,844 (c)
Credit(b)
2,753 1,628 (c)1,625 (c)
Foreign exchange4,253 3,179 (c)3,222 (c)
Equity6,171 5,589 (c)4,822 (c)
Commodity2,088 1,133 (c)895 (c)
Total trading revenue17,840 14,268 12,408 
Private equity gains/
(losses)		181 (250)(349)
Principal transactions$18,021 $14,018 $12,059 
Year ended December 31,
(in millions)		2018 2017 2016
Trading revenue by instrument type     
Interest rate$1,961
 $2,479
 $2,325
Credit1,395
 1,329
 2,096
Foreign exchange3,222
 2,746
 2,827
Equity4,924
 3,873
 2,994
Commodity906
 661
 1,067
Total trading revenue12,408
 11,088
 11,309
Private equity gains(349) 259
 257
Principal transactions$12,059
 $11,347
 $11,566
(a)Includes the impact of changes in funding valuation adjustments on derivatives.

(b)Includes the impact of changes in credit valuation adjustments on derivatives, net of the associated hedging activities.
(c)The prior-period amounts have been revised to conform with the current presentation.
Principal transactions revenue is earned primarily by CIB. Refer to Note 3132 for segment results.
Lending- and deposit-related fees
Lending-related fees include fees earned from loan commitments, standby letters of credit, financial guarantees, and other loan-servicing activities. Deposit-related fees include fees earned in lieu of compensating balances,from providing overdraft and fees earnedother deposit account services, and from performing cash management activities and other deposit account services.activities. Lending- and deposit-related fees in this revenue category are recognized over the period in which the related service is provided.
The following table presents the components of lending- and deposit-related fees.
Year ended December 31, (in millions)202020192018
Lending-related fees$1,271 $1,184 $1,117 
Deposit-related fees(a)
5,240 5,442 5,260 
Total lending- and deposit-related fees$6,511 $6,626 $6,377 
(a)
Year ended December 31, (in millions)2018 2017 2016
Lending-related fees$1,117
 $1,110
 $1,114
Deposit-related fees4,935
 4,823
 4,660
Total lending- and deposit-related fees$6,052
 $5,933
 $5,774

In the first quarter of 2020, the Firm reclassified certain fees from asset management, administration and commissions to lending- and deposit-related fees. Prior-period amounts have been revised to conform with the current presentation.
Lending- and deposit-related fees are earned by CCB, CIB, CB, and AWM. Refer to Note 3132 for segment results.
Asset management, administration and commissions
This revenue category includes fees from investment management and related services, custody, brokerage services and other products. The Firm manages assets on behalf of its clients, including investors in Firm-sponsored Firm-sponsored funds and owners of separately managed investment accounts. Management fees are typically based on the value of assets under management and are collected and recognized at the end of each period over which the management services are provided and the value of the managed assets is known. The Firm also receives performance-based management fees, which are earned based on exceeding certain benchmarks or other performance targets and are accrued and recognized when the probability of reversal is remote, typically at the end of
the related billing period. The Firm has contractual arrangements with third parties to provide distribution and other services in connection with its asset management activities. Amounts paid to these third-party service providers are generally recorded in professional and outside services expense.
The following table presents the components of Firmwide asset management, administration and commissions.
Year ended December 31,
(in millions)		202020192018
Asset management fees
Investment management fees(a)
$11,694 $10,865 $10,768 
All other asset management fees(b)
338 315 270 
Total asset management fees12,032 11,180 11,038 
Total administration fees(c)
2,249 2,197 2,179 
Commissions and other fees
Brokerage commissions(d)
2,959 2,439 2,505 
All other commissions and fees(e)
937 1,092 1,071 
Total commissions and fees3,896 3,531 3,576 
Total asset management, administration and commissions$18,177 $16,908 $16,793 
(a)Represents fees earned from managing assets on behalf of the Firm’s clients, including investors in Firm-sponsored funds and owners of separately managed investment accounts.
(b)Represents fees for services that are ancillary to investment management services, such as commissions earned on the sales or distribution of mutual funds to clients. These fees are recorded as revenue at the time the service is rendered or, in the case of certain distribution fees based on the underlying fund’s asset value and/or investor redemption, recorded over time as the investor remains in the fund or upon investor redemption.
(c)Predominantly includes fees for custody, securities lending, funds services and securities clearance. These fees are recorded as revenue over the period in which the related service is provided.
Year ended December 31,
(in millions)
2018 2017 2016
Asset management fees     
Investment management fees(a)
$10,768
 $10,434
 $9,636
All other asset management fees(b)
270
 296
 338
Total asset management fees11,038
 10,730
 9,974
      
Total administration fees(c)
2,179
 2,029
 1,915
      
Commissions and other fees     
Brokerage commissions(d)
2,505
 2,239
 2,151
All other commissions and fees1,396
 1,289
 1,324
Total commissions and fees3,901
 3,528
 3,475
Total asset management, administration and commissions$17,118
 $16,287
 $15,364
(d)Represents commissions earned when the Firm acts as a broker, by facilitating its clients’ purchases and sales of securities and other financial instruments. Brokerage commissions are collected and recognized as revenue upon occurrence of the client transaction. The Firm reports certain costs paid to third-party clearing houses and exchanges net against commission revenue.
(e)In the first quarter of 2020, the Firm reclassified certain fees from asset management, administration and commissions to lending- and deposit-related fees. Prior-period amounts have been revised to conform with the current presentation.
(a)Represents fees earned from managing assets on behalf of the Firm’s clients, including investors in Firm-sponsored funds and owners of separately managed investment accounts.
(b)The Firm receives other asset management fees for services that are ancillary to investment management services, including commissions earned on sales or distribution of mutual funds to clients. These fees are recorded as revenue at the time the service is rendered or, in the case of certain distribution fees based on the underlying fund’s asset value and/or investor redemption, recorded over time as the investor remains in the fund or upon investor redemption.
(c)The Firm receives administrative fees predominantly from custody, securities lending, fund services and securities clearance services it provides. These fees are recorded as revenue over the period in which the related service is provided.
(d)The Firm acts as a broker, by facilitating its clients’ purchases and sales of securities and other financial instruments. Brokerage commissions are collected and recognized as revenue upon occurrence of the client transaction. The Firm reports certain costs paid to third-party clearing houses and exchanges net against commission revenue.
Asset management, administration and commissions are earned primarily by AWM, CIB CCB, and CB.CCB. Refer to Note 3132 for segment results.
Mortgage fees and related income
This revenue category primarily reflects CCB’s Home Lending net production and net mortgage servicing revenue.
Net production revenue includes fees and income recognized as earned on mortgage loans originated with the intent to sell;sell, and the impact of risk management activities associated with the mortgage pipeline and warehouse loans; and changes in the fair value of any residual interests held from mortgage securitizations.loans. Net production revenue also includes gains and losses on sales of mortgage loans,and lower of cost or fair value adjustments on mortgage loans held-for-sale (excluding certain repurchased loans insured by U.S. government agencies), and changes in the fair value on mortgage loans originated with the intent to sell andof financial instruments measured at fair value under the fair value option, as well as losses recognized as incurred relatedoption. Net mortgage
JPMorgan Chase & Co./2020 Form 10-K213
Notes to the repurchase of previously sold loans.consolidated financial statements
Net mortgage
servicing revenue includes operating revenue earned from servicing third-party mortgage loans, which is recognized over the period in which the service is provided,provided; changes in the fair value of MSRs andMSRs; the impact of risk management activities associated with MSRs.MSRs; and gains and losses on securitization of excess mortgage servicing. Net mortgage servicing revenue also includes gains and losses on sales and lower of cost or fair value adjustments of certain repurchased loans insured by U.S. government agencies.
ForRefer to Note 15 for further discussion ofinformation on risk management activities and MSRs, refer to Note 15.MSRs.
Net interest income from mortgage loans is recorded in interest income.

JPMorgan Chase & Co./2018 Form 10-K199
Notes to consolidated financial statements

Card income
This revenue category includes interchange and other income from credit and debit cardscard transactions; and fees earned from processing card transactions for merchants, both of which are recognized when purchases are made by a cardholder.cardholder and presented net of certain transaction-related costs. Card income also includes account origination costs and annual fees, which are deferred and recognized on a straight-line basis over a 12-month 12-month period.
Certain Chase credit card products offer the cardholder the ability to earn points based on account activity, which the cardholder can choose to redeem for cash and non-cash rewards. The cost to the Firm related to these proprietary rewards programs varies based on multiple factors including the terms and conditions of the rewards programs, cardholder activity, cardholder reward redemption rates and cardholder reward selections. The Firm maintains a liability for its obligations under its rewards programs and reports the current-period cost as a reduction of card income.
Credit card revenue sharing agreements
The Firm has contractual agreements with numerous co-brand partners that grant the Firm exclusive rights to issue co-branded credit card products and market them to the customers of such partners. These partners endorse the co-brand credit card programs and provide their customer or member lists to the Firm. The partners may also conduct marketing activities and provide rewards redeemable under their own loyalty programs that the Firm will grant to co-brand credit cardholders based on account activity. The terms of these agreements generally range from five to ten years.
The Firm typically makes payments to the co-brand credit card partners based on the cost of partners’ marketing activities and loyalty program rewards provided to credit cardholders, new account originations and sales volumes. Payments to partners based on marketing efforts undertaken by the partners are expensed by the Firm as incurred and reported as marketing expense. Payments for partner loyalty program rewards are reported as a reduction of card income when incurred. Payments to partners based on new credit card account originations are accounted for as direct loan origination costs and are deferred and recognized as a reduction of card income on a straight-line basis over a 12-month period. Payments to partners based on sales volumes are reported as a reduction of card income when the related interchange income is earned.
The following table presents the components of card income:
Year ended December 31,
(in millions)		202020192018
Interchange and merchant processing income$18,563 $20,370 $18,808 
Reward costs and partner payments(a)
(13,637)(14,540)(13,320)(c)
Other card income(b)
(491)(754)(745)
Total card income$4,435 $5,076 $4,743 
Year ended December 31,
(in millions)		2018 2017 2016
Interchange and merchant processing income$18,808
 $17,080
 $15,367
Reward costs and partner payments(13,074)
(b) 
(10,820) (9,480)
Other card income(a)
(745) (1,827) (1,108)
Total card income$4,989
 $4,433
 $4,779
(a)
Predominantly represents annual fees and new account origination costs, which are deferred and recognized on a straight-line basis over a 12-month periodand are outside the scope of the revenue recognition guidance, ASC 606, Revenue from Contracts with Customers. In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
(b)Predominantly represents the amortization of account origination costs and annual fees, which are deferred and recognized on a straight-line basis over a 12-month period.
(c)Includes an adjustment to the credit card rewards liability of approximately $330 million, recorded in the second quarter of 2018.
(b)Includes an adjustment to the credit card rewards liability of approximately $330 million, recorded in the second quarter of 2018.
Card income is earned primarily by CCB, CIB and CB. Refer to Note 3132 for segment results.
Other income
Other incomeRefer to Note 18 for information on the Firm’s Consolidated statements of operating lease income included the following:
Year ended December 31, (in millions)2018 2017 2016
Operating lease income$4,540
 $3,613
 $2,724

Operating lease income is recognized on a straight–line basis over the lease term.within other income.
Noninterest expense
Other expense
Other expense on the Firm’s Consolidated statements of income included the following:
Year ended December 31,
(in millions)		202020192018
Legal expense/(benefit)$1,115 $239 $72 
FDIC-related expense717 457 1,239 
Year ended December 31,
(in millions)		2018
 2017
 2016
Legal expense/(benefit)$72
 $(35) $(317)
FDIC-related expense1,239
 1,492
 1,296




200214JPMorgan Chase & Co./20182020 Form 10-K



Note 7 – Interest income and Interest expense
Interest income and interest expense are recorded in the Consolidated statements of income and classified based on the nature of the underlying asset or liability.
The following table presents the components of interest income and interest expense:
Year ended December 31,
(in millions)		202020192018
Interest income
Loans(a)(b)
$43,758 $51,855 $49,032 
 Taxable securities7,843 7,962 5,653 
 Non-taxable securities(c)
1,184 1,329 1,595 
Total investment securities(a)
9,027 9,291 7,248 
Trading assets - debt instruments(b)
7,832 9,141 7,146 
Federal funds sold and securities purchased under resale agreements2,436 6,146 3,819 
Securities borrowed(d)
(302)1,574 913 
Deposits with banks749 3,887 5,907 
All other interest-earning assets(b)(e)
1,023 2,146 2,035 
Total interest income$64,523 $84,040 $76,100 
Interest expense
Interest bearing deposits$2,357 $8,957 $5,973 
Federal funds purchased and securities loaned or sold under repurchase agreements1,058 4,630 3,066 
Short-term borrowings(f)
372 1,248 1,144 
Trading liabilities - debt and all other interest-bearing liabilities(d)(g)
195 2,585 2,387 
Long-term debt5,764 8,807 7,978 
Beneficial interest issued by consolidated VIEs214 568 493 
Total interest expense$9,960 $26,795 $21,041 
Net interest income$54,563 $57,245 $55,059 
Provision for credit losses17,480 5,585 4,871 
Net interest income after provision for credit losses$37,083 $51,660 $50,188 
(a)Includes the amortization/accretion of unearned income (e.g., purchase premiums/discounts, net deferred fees/costs, and others).
(b)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans and other assets. Prior-period amounts have been revised to conform with the current presentation.
(c)Represents securities that are tax-exempt for U.S. federal income tax purposes.
(d)Negative interest income is related to the impact of current interest rates combined with the fees paid on client-driven securities borrowed balances. The negative interest expense related to prime brokerage customer payables is recognized in interest expense and reported within trading liabilities - debt and all other interest-bearing liabilities.
(e)Includes interest earned on brokerage-related held-for-investment customer receivables, which are classified in accrued interest and accounts receivable, and all other interest-earning assets, which are classified in other assets on the Consolidated balance sheets.
(f)Includes commercial paper.
(g)All other interest-bearing liabilities includes interest expense on brokerage-related customer payables.


Year ended December 31,
(in millions)
201820172016
Interest income   
Loans(a)
$47,620
$41,008
$36,634
 Taxable securities5,653
5,535
5,538
 Non-taxable securities(b)
1,595
1,847
1,766
Total investment securities7,248
7,382
7,304
Trading assets8,703
7,610
7,292
Federal funds sold and securities purchased under resale agreements3,819
2,327
2,265
Securities borrowed(c)
728
(37)(332)
Deposits with banks5,907
4,238
1,879
All other interest-earning assets(d)
3,417
1,844
859
Total interest income$77,442
$64,372
$55,901
Interest expense   
Interest bearing deposits$5,973
$2,857
$1,356
Federal funds purchased and securities loaned or sold under repurchase agreements3,066
1,611
1,089
Short-term borrowings(e)
1,144
481
203
Trading liabilities - debt and all other interest-bearing liabilities(f)
3,729
2,070
1,102
Long-term debt7,978
6,753
5,564
Beneficial interest issued by consolidated VIEs493
503
504
Total interest expense$22,383
$14,275
$9,818
Net interest income$55,059
$50,097
$46,083
Provision for credit losses4,871
5,290
5,361
Net interest income after provision for credit losses$50,188
$44,807
$40,722
(a)Includes the amortization/accretion of unearned income (e.g., purchase premiums/discounts, net deferred fees/costs, etc.).
(b)Represents securities that are tax-exempt for U.S. federal income tax purposes.
(c)Negative interest income is related to client-driven demand for certain securities combined with the impact of low interest rates. This is matched book activity and the negative interest expense on the corresponding securities loaned is recognized in interest expense.
(d)Includes held-for-investment margin loans, which are classified in accrued interest and accounts receivable, and all other interest-earning assets, which are classified in other assets on the Consolidated balance sheets.
(e)Includes commercial paper.
(f)Other interest-bearing liabilities include brokerage customer payables.

Interest income and interest expense includes the current-period interest accruals for financial instruments measured at fair value, except for derivatives and financial instruments containing embedded derivatives that would be separately accounted for in accordance with U.S. GAAP, absent the fair value option election; for those instruments, all changes in fair value including any interest elements, are reported in principal transactions revenue. For financial instruments that are not measured at fair value, the related interest is included within interest income or interest expense, as applicable. ForRefer to Notes 12, 10, 11 and 20, for further information on accounting for interest income and interest expense related to loans, investment securities, securities financing activities (i.e., securities purchased or sold under resale or repurchase agreements; securities borrowed; and securities loaned) and long-term debt, refer to Notesrespectively.
12, 10, 11 and 19, respectively.


JPMorgan Chase & Co./20182020 Form 10-K201215
Notes to consolidated financial statements

Note 8 – Pension and other postretirement employee benefit plans
The Firm has various defined benefit pension plans and OPEB plans that provide benefits to its employees in the U.S. and certain non-U.S. locations. The Firm also provides a qualified defined contribution plan in the U.S. and maintains other similar arrangements in certain non-U.S. locations.
The principal defined benefit pension plan in the U.S. is a qualified noncontributory plan that provides benefits to substantially all U.S. employees. In connection with changes who were hired prior to the U.S. Retirement Savings Program during the fourth quarter of 2018, theDecember 2, 2017. The Firm announced that it will freezehas frozen the U.S. defined benefit pension plan. Commencing onplan (the “Plan Freeze”). Effective as of January 1, 2020 (and January 1, 2019 for new hires), new pay credits will behave been directed to the U.S. defined contribution plan. Interest credits will continue to accrue.accrue on the U.S. defined benefit pension plan. As a result of the Plan Freeze, a curtailment was triggered and a remeasurement of the U.S. defined benefit pension obligation and plan assets occurred as of November 30, 2018. The plan design change resulted in an increase to pension expense of $21 million representing the immediate recognition of the prior service cost, but did not have a material impact on the U.S. defined benefit pension plan or the Firm’s Consolidated Financial Statements.
The Firm also has defined benefit pension plans that are offered in certain non-U.S. locations based on factors such as eligible compensation, age and/or years of service. It is the Firm’s policy to fund the pension plans in amounts sufficient to meet the requirements under applicable laws. The Firm does not0t anticipate at this time making any contribution to the U.S. defined benefit pension plan in 2019.2021. The 20192021 contributions to the non-U.S. defined benefit pension plans are expected to be $45 $50 million, of which $30 $35 million are contractually required.
The Firm also has a number of nonqualified noncontributory defined benefit pension plans that are unfunded. These plans provide supplemental defined pension benefits to certain employees.

The Firm offers postretirement medical and life insurance benefits to certain U.S. retirees and postretirement medical benefits to certain qualifying U.S. and U.K. employees.employees.
The Firm partially defrays the cost of its U.S. OPEB obligation through corporate-owned life insurance (“COLI”) purchased on the lives of eligible employees and retirees. While the Firm owns the COLI policies, certain COLI proceeds (death benefits, withdrawals and other distributions) may be used only to reimburse the Firm for its net postretirement benefit claim payments and related administrative expense. The Firm has generally fundedprefunded its postretirement benefit obligations through contributions to the relevant trust on a pay-as-you go basis. On December 21, 2017, the Firm contributed $600 million of cash to the trust as a prefunding of a portion of itsU.S. postretirement benefit obligations. The U.K. OPEB plan is unfunded.   
Pension and OPEB accounting guidance generally requires that the difference between plan assets at fair value and the benefit obligation be measured and recorded on the balance sheet. Plans that are overfunded (excess of plan assets over benefit obligation) are recorded in other assets and plans that are underfunded (excess benefit obligation over plan assets) are recorded withinin other liabilities. Gains or losses resulting from changes in the benefit obligation and the fair value of plan assets are recorded in other comprehensive income (“OCI”)OCI and recognized as part of the net periodic benefit cost over subsequent periods as discussed in the Gains and losses section of this Note. Additionally, income statement items related to pension and OPEB plans (other than benefits earned during the period)year are aggregated and reported in compensation expense; all other components of net withinperiodic defined benefit costs are reported in other expense. expense in the Consolidated statements of income.

202216JPMorgan Chase & Co./20182020 Form 10-K


The following table presents the pretax changes in benefit obligations, plan assets, the net funded status, and the pretax pension and OPEB amounts recorded in AOCI on the Consolidated balance sheets for the Firm’s defined benefit pension and OPEB plans, andplans.
As of or for the year ended December 31,Defined benefit
pension and OPEB plans
(in millions)20202019
Change in projected and accumulated benefit obligations, U.S. defined benefit pension plans
Benefit obligation, beginning of year$(13,277)$(12,173)
Benefits earned during the year(2)(327)
Interest cost on benefit obligations(422)(518)
Plan amendments0 (5)
Net gain/(loss)(1,086)(944)
Benefits paid640 690 
Benefit obligations, end of year, U.S. defined benefit pension plans$(14,147)$(13,277)
Benefit obligations, other defined benefit pension and OPEB plans(4,990)(4,428)
Benefit obligations, end of year$(19,137)$(17,705)
Change in plan assets, U.S. defined benefit pension plans
Fair value of plan assets, beginning of year$16,329 $14,521 
Actual return on plan assets1,901 2,465 
Firm contributions29 33 
Benefits paid(640)(690)
Fair value of plan assets, end of year, U.S. defined benefit pension plans$17,619 $16,329 
Fair value of plan assets, other defined benefit pension and OPEB plans7,798 7,037 
Fair value of plan assets, end of year$25,417 $23,366 
Net funded status, U.S. defined benefit pension plans$3,472 $3,052 
Net funded status, other defined benefit pension and OPEB plans2,808 2,609 
Net funded status$6,280 $5,661 
Amounts recorded in accumulated other comprehensive income/(loss), U.S. defined benefit pension plans
Net gain/(loss), U.S. defined benefit pension plans$(1,558)$(1,745)
Prior service credit/(cost), U.S. defined benefit pension plans(4)(5)
Accumulated other comprehensive income/(loss), end of year, U.S. defined benefit pension plans$(1,562)$(1,750)
Accumulated other comprehensive income/(loss), other defined benefit pension and OPEB plans(24)(66)
Accumulated other comprehensive income/(loss)$(1,586)$(1,816)
The following table presents the weighted-average actuarial annualized assumptions used to value the benefit obligations for the projected and accumulated postretirementU.S. defined benefit obligations.pension plans.
As of or for the year ended December 31,Defined benefit
pension plans
OPEB plans(h)
(in millions)2018 2017 2018 2017
Change in benefit obligation       
Benefit obligation, beginning of year$(16,700) $(15,594) $(684) $(708)
Benefits earned during the year(354) (330) —
 —
Interest cost on benefit obligations(556) (598) (24) (28)
Plan amendments(29) —
 —
 —
Plan curtailment123
 —
 —
 —
Employee contributions(7) (7) (15) (16)
Net gain/(loss)938
(g) 
(721)
(g) 
40
 (4)
Benefits paid873
 841
 69
 76
Plan settlements15
 30
 —
 —
Expected Medicare Part D subsidy receiptsNA
 NA
 —
 (1)
Foreign exchange impact and other185
 (321) 2
 (3)
Benefit obligation, end of year(a)
$(15,512) $(16,700) $(612) $(684)
Change in plan assets       
Fair value of plan assets, beginning of year$19,603
 $17,703
 $2,757
 $1,956
Actual return on plan assets(548) 2,356
 (28) 233
Firm contributions75
 78
 2
 602
Employee contributions7
 7
 15
 —
Benefits paid(873) (841) (113) (34)
Plan settlements(15) (30) —
 —
Foreign exchange impact and other(197) 330
 —
 —
Fair value of plan assets, end of year (a)(b)(c)
$18,052
 $19,603
 $2,633
 $2,757
Net funded status (d)(e)
$2,540

$2,903
 $2,021
 $2,073
Accumulated benefit obligation, end of year$(15,494) $(16,530) NA
 NA
Pretax pension and OPEB amounts recorded in AOCI
Net gain/(loss)$(3,134)
$(2,800) $184

$271
Prior service credit/(cost)(23)
6
 —

—
Accumulated other comprehensive income/(loss), pretax, end of year$(3,157)
$(2,794) $184

$271
Weighted-average actuarial assumptions used to determine benefit obligations
Discount Rate (f)
0.60 - 4.30 %
 0.60 - 3.70 %
 4.20% 3.70%
Rate of compensation increase (f)
2.25 – 3.00
 2.25 – 3.00
 NA
 NA
Interest crediting rate(f)
1.81 - 4.90%
 1.81 - 4.90%
 NA
 NA
Health care cost trend rate:
Assumed for next yearNA
 NA
 5.00
 5.00
UltimateNA
 NA
 5.00
 5.00
Year when rate will reach ultimateNA
 NA
 2019 2018

(a)At December 31, 2018 and 2017, included non-U.S. benefit obligations of $(3.3) billion and $(3.8) billion, and plan assets of $3.5 billion and $3.9 billion, respectively, predominantly in the U.K.
(b)At both December 31, 2018 and 2017, approximately $302 million of U.S. defined benefit pension plan assets included participation rights under participating annuity contracts.
(c)At December 31, 2018 and 2017, defined benefit pension plan amounts that were not measured at fair value included $340 million and $377 million, respectively, of accrued receivables, and $503 million and $587 million, respectively, of accrued liabilities, for U.S. plans.
(d)Represents plans with an aggregate overfunded balance of $5.1 billion and $5.6 billion at December 31, 2018 and 2017, respectively, and plans with an aggregate underfunded balance of $547 million and $612 million at December 31, 2018 and 2017, respectively.
(e)For pension plans with a projected benefit obligation exceeding plan assets, the projected benefit obligation and fair value of plan assets was $1.3 billion and $762 million at December 31, 2018, respectively and $1.4 billion and $811 million at December 31, 2017, respectively. For pension plans with an accumulated benefit obligation exceeding plan assets, the accumulated benefit obligation and fair value of plan assets was $1.3 billion and $762 million at December 31, 2018, respectively, and $1.4 billion and $811 million at December 31, 2017, respectively. For OPEB plans with a projected benefit obligation exceeding plan assets, the projected benefit obligation was $26 million and $32 million at December 31, 2018 and December 31, 2017, respectively, they had no plan assets.
(f)For the U.S. defined benefit pension plans, the discount rate assumption is 4.30% and 3.70% for 2018 and 2017, respectively, and the rate of compensation increase and the interest crediting rate are 2.30% and 4.90%, respectively, for both 2018 and 2017.
(g)At December 31, 2018 and 2017, the gain/(loss) was primarily attributable to the change in the discount rate.
(h)Includes an unfunded postretirement benefit obligation of $26 million and $32 million at December 31, 2018 and 2017, respectively, for the U.K. plan.

U.S. defined benefit
pension plans
As of December 31,20202019
Discount rate 2.50% 3.30%
Rate of compensation increase NA NA
Interest crediting rate 4.65 4.65
JPMorgan Chase & Co./2018 Form 10-K203
Notes to consolidated financial statements

Gains and losses
For the Firm’s defined benefit pension plans, fair value is used to determine the expected return on plan assets. Amortization of net gains and losses is included in annual net periodic benefit cost if, as of the beginning of the year, the net gain or loss exceeds 10% of the greater of the PBOprojected benefit obligation or the fair value of the plan assets. Any excess is amortized over the average future service periodexpected remaining lifetime of defined benefit pension plan participants, which for the U.S. defined benefit pension planplans is currently eight 37 years and for the non-U.S. defined benefit pension plans is the period appropriate for the affected plan. In addition, prior service costs are amortized over the average remaining service period of active employees expected to receive benefits under the plan when the prior service cost is first recognized.Due to the curtailment of the principal U.S. defined benefit pension plan in 2018, all related prior service cost was recognized in the annual net periodic benefit cost.
For the Firm’s OPEB plans, a calculated value that recognizes changes in fair value over a five-year period is used to determine the expected return on plan assets. This value is referred to as the market-related value of assets. Amortization of net gainsyears ended December 31, 2020 and losses, adjusted for gains and losses not yet recognized, is included in annual net periodic benefit cost if, as of the beginning of the year,2019, the net gain or loss exceeds 10% ofwas primarily attributable to a market-driven increase in the greater of the accumulated postretirement benefit obligation or the market-relatedfair value of assets. Any excess net gain or loss is amortized overplan assets, predominantly offset by a decrease in the average expected lifetime of retired participants, which is currently eleven years; however, prior service costs resulting from plan changes are amortized over the average years of service remaining to full eligibility age, which is currently one year.

discount rate.
204JPMorgan Chase & Co./20182020 Form 10-K217

Notes to consolidated financial statements

The following table presents the components of net periodic benefit costs reported in the Consolidated statements of income for the Firm’s U.S. and non-U.S. defined benefit pension, defined contribution and OPEB plans, and in other comprehensive income for the defined benefit pension and OPEB plans, andplans.
Pension and OPEB plans
Year ended December 31, (in millions)202020192018
Components of net periodic benefit cost, U.S. defined benefit pension plans
Benefits earned during the year$2 $327 $323 
Interest cost on benefit obligations422 518 478 
Expected return on plan assets(634)(776)(836)
Amortization:
Net (gain)/loss6 147 80 
Prior service (credit)/cost0 0 (21)
Curtailment (gain)/loss0 0 21 
Net periodic defined benefit plan cost/(credit), U.S. defined benefit pension plans$(204)$216 $45 
Other defined benefit pension and OPEB plans(81)(72)(72)
Total net periodic defined benefit plan cost/(credit)$(285)$144 $(27)
Total defined contribution plans1,332 952 872 
Total pension and OPEB cost included in noninterest expense$1,047 $1,096 $845 
Changes recognized in other comprehensive income, U.S. defined benefit pension plans
Prior service (credit)/cost arising during the year0 5 0 
Net (gain)/loss arising during the year(181)(745)453 
Amortization of net (loss)/gain(6)(147)(80)
Amortization of prior service (cost)/credit0 0 21 
Curtailment (loss)/gain0 0 (21)
Total recognized in other comprehensive income, U.S. defined benefit pension plans$(187)$(887)$373 
Other defined benefit pension and OPEB plans(27)(270)77 
Total recognized in other comprehensive income$(214)$(1,157)$450 
Total recognized in net periodic defined benefit plan cost/(credit) and other comprehensive income$(499)$(1,013)$423 
The following table presents the weighted-average annualized actuarial assumptions forused to determine the net periodic benefit cost.costs for the U.S. defined benefit pension plans.
U.S. defined benefit pension plans
Year ended December 31, (in millions)202020192018
Discount rate3.30%4.30%3.70 / 4.50%
Expected long-term rate of return on plan assets4.005.505.50
Rate of compensation increaseNA2.302.30
Interest crediting rate4.654.904.90
 Pension plans OPEB plans
Year ended December 31, (in millions)2018
2017
2016
 2018
2017
2016
Components of net periodic benefit cost       
Benefits earned during the year$354
$330
$332
 $—
$—
$—
Interest cost on benefit obligations556
598
629
 24
28
31
Expected return on plan assets(981)(968)(1,030) (103)(97)(105)
Amortization:       
Net (gain)/loss103
250
257
 —
—
—
Prior service cost/(credit)(23)(36)(36) —
—
—
Curtailment (gain)/loss21
—
—
 —
—
—
Settlement (gain)/loss2
2
4
 —
—
—
Net periodic defined benefit cost(a)
$32
$176
$156
 $(79)$(69)$(74)
Other defined benefit pension plans(b)
20
24
25
 NA
NA
NA
Total defined benefit plans$52
$200
$181
 $(79)$(69)$(74)
Total defined contribution plans872
814
789
 NA
NA
NA
Total pension and OPEB cost included in noninterest expense$924
$1,014
$970
 $(79)$(69)$(74)
Changes in plan assets and benefit obligations recognized in other comprehensive income    
Prior service (credit)/cost arising during the year29
—
—
 —
—
—
Net (gain)/loss arising during the year467
(669)395
 91
(133)(29)
Amortization of net loss(103)(250)(257) —
—
—
Amortization of prior service (cost)/credit23
36
36
 —
—
—
Curtailment gain/(loss)(21)—
—
 —
—
—
Settlement gain/(loss)(2)(2)(4) —
—
—
Foreign exchange impact and other(30)54
(77) (4)—
—
Total recognized in other comprehensive income$363
$(831)$93
 $87
$(133)$(29)
Total recognized in net periodic benefit cost and other comprehensive income$395
$(655)$249
 $8
$(202)$(103)
Weighted-average assumptions used to determine net periodic benefit costs    
Discount rate(c)
0.60 - 4.50 %
0.60 - 4.30 %
0.90 – 4.50%
 3.70%4.20%4.40%
Expected long-term rate of return on plan assets (c)
0.70 - 5.500.70 - 6.000.80 – 6.50 4.00
5.00
5.75
Rate of compensation increase (c)
2.25 - 3.002.25 - 3.002.25 – 4.30 NA
NA
NA
Interest crediting rate(c)
1.81- 4.90%
1.81- 4.90%
1.56- 4.90%
 NA
NA
NA
Health care cost trend rate       
Assumed for next yearNA
NA
NA
 5.00
5.00
5.50
UltimateNA
NA
NA
 5.00
5.00
5.00
Year when rate will reach ultimateNA
NA
NA
 201820172017

(a)Effective January 1, 2018, benefits earned during the year are reported in compensation expense; all other components of net periodic defined benefit costs are reported within other expense in the Consolidated statements of income.
(b)Includes various defined benefit pension plans which are individually immaterial.
(c)The rate assumptions for the U.S. defined benefit pension plans are at the upper end of the range, except for the rate of compensation increase, which is 2.30% for both 2018 and 2017, and 3.50% for 2016.
Plan assumptions
The Firm’s expected long-term rate of return for defined benefit pension and OPEB plan assets is a blended weighted average, by asset allocation of the projected long-term returns for the various asset classes, taking into consideration local market conditions and the specific allocation of plan assets. Returns on asset classes are developed using a forward-looking approach and are not strictly based on historical returns. Consideration is also given to current market conditions and the short-term portfolio mix of each plan.
The discount rate used in determining the benefit obligation under the U.S. defined benefit pension and OPEB plans plan was provided by the Firm’s actuaries. This rate was selected by reference to the yields on portfolios of bonds with maturity dates and coupons that closely match each of the plan’s projected cash flows. The discount rate for the U.K. defined benefit pension plan represents a rate of appropriate duration from the analysis of yield curves provided by the Firm’s actuaries.
At December 31, 2018,2020, the Firm increaseddecreased the discount rates used to determine its benefit obligations for the U.S. defined benefit pension and OPEB plans in light of curr

JPMorgan Chase & Co./2018 Form 10-K205
Notes to consolidated financial statements

entcurrent market interest rates, which willis expected to decrease expense by approximately $20 $64 million in 2019. 2021. The 20192021 expected long-term rate of return on U.S. defined benefit pension plan assets and U.S. OPEB plan assets are 5.50% and 4.30%, respectively. As of December 31, 2018, the interest crediting rate assumption was 4.90% is 3.00%.
The following table represents the effect of a 25-basis point decline in the two listed rates below on estimated 2019 defined benefit pensionexpected long-term rate of return of 3.00% and OPEB plan expense, as well as the effect on the postretirement benefit obligations.discount rate of 2.50%.
Effect on U.S. defined benefit pension plansEffect on U.S. defined benefit pension plans

(in millions)
(in millions)		Pension expenseBenefit obligation
Expected long-term rate of returnExpected long-term rate of return$43 NA
Discount rateDiscount rate(20)404 

(in millions)
Defined benefit pension and OPEB plan expense Benefit obligation
Expected long-term rate of return$51
 NA
Discount rate$50
 $490




218JPMorgan Chase & Co./2020 Form 10-K

Investment strategy and asset allocation
The assets of the Firm’s defined benefit pension plans are held in various trusts and are invested in well-diversified portfolios of equity and fixed income securities, cash and cash equivalents, and alternative investments. The trust-owned assets of the Firm’s U.S. OPEB plan are invested primarily in fixed income securities. COLI policies used to partially defray the cost of the Firm’s U.S. OPEB plan are invested in separate accounts of an insurance company and are allocated to investments intended to replicate equity and fixed income indices.
The investment policies for the assets of the Firm’s defined benefit pension plans are to optimize the risk-return relationship as appropriate to the needs and goals of each plan using a global portfolio of various asset classes diversified by market segment, economic sector, and issuer.plan. Assets are managed by a combination of internal and external investment managers. The Firm regularly reviews the asset allocations and asset managers, as well as other factors that could impact the portfolios, which are rebalanced when deemed necessary.
Investments held by the Firm’s defined benefit pension and OPEB plans include financial instruments which are exposed to various risks such as interest rate, market and credit risks. Exposure to a concentration of credit risk is mitigated by the broad diversification of both U.S. and non-U.S. investment instruments.investments. Additionally, the investments in each of the collective investment funds and/or registered investment companies are further diversified into various financial instruments. As of December 31, 2018,2020, assets held by the Firm’s defined benefit pension and OPEB plans do not include securities issued by JPMorgan Chase common stock,or its affiliates, except through indirect exposures through investments in third-party stock-index funds.ETFs, mutual funds and collective investment funds managed by third-parties. The defined benefit pension and OPEB plans hold investments in funds that are sponsored or managed by affiliates of JPMorgan Chase in the amount of $3.7 $2.7 billion and $6.0 $3.1 billion,, as of December 31, 2018 2020 and 2017, 2019, respectively.

206JPMorgan Chase & Co./2018 Form 10-K


The following table presents the weighted-average asset allocation of the fair values of total plan assets at December 31 for the years indicated, as well as the respective approved asset allocation ranges by asset class.
U.S. defined benefit pension plan(c)
Asset% of plan assets
December 31,Allocation20202019
Asset class
Debt securities(a)
42-100%77 %74 %
Equity securities0-4015 16 
Real estate0-41 1 
Alternatives(b)
0-157 9 
Total100 %100 %100 %
(a)Debt securities primarily includes cash and cash equivalents, corporate debt, U.S. federal, state, local and non-U.S. government, asset-backed and mortgage-backed securities.
(b)Alternatives primarily include limited partnerships.
(c)Represents the U.S. defined benefit pension plan only as it is the most significant plan. The other U.S. defined benefit pension plans are unfunded. The weighted-average asset allocation for the U.S. OPEB plan was 59% debt securities and 41% equity securities and 60% debt securities and 40% equity securities at December 31, 2020 and 2019, respectively.


Defined benefit pension plans(a)
OPEB plan(d)
 Asset % of plan assets Asset % of plan assets
December 31,Allocation 2018 2017 Allocation 2018 2017
Asset class          
Debt securities(b)
27-100%
 48% 42% 30-70%
 61% 61%
Equity securities10-45
 37
 42
 30-70
 39
 39
Real estate0-10
 2
 3
 —
 —
 —
Alternatives (c)
0-35
 13
 13
 —
 —
 —
Total100% 100% 100% 100% 100% 100%
(a)JPMorgan Chase & Co./2020 Form 10-KRepresents the U.S. defined benefit pension plan only, as that is the most significant plan.219
(b)Debt securities primarily includes cash and cash equivalents, corporate debt, U.S. federal, state, local and non-U.S. government, and mortgage-backed securities.
(c)Alternatives primarily include limited partnerships.
(d)Represents the U.S. OPEB plan only, as the U.K. OPEB plan is unfunded.

Notes to consolidated financial statements
Fair value measurement of the plans’ assets and liabilities
ForRefer to Note 2 for information on fair value measurements, including descriptions of level 1, 2, and 3 of the fair value hierarchy and the valuation methods employed by the Firm.
Pension plan assets and liabilities measured at fair value
Defined benefit pension and OPEB plans
20202019
December 31,
(in millions)
Level 1Level 2Level 3Total fair valueLevel 1Level 2Level 3Total fair value
Equity securities$2,353 $0 $2 $2,355 $2,259 $3 $2 $2,264 
Corporate debt securities0 7,414 11 7,425 0 6,474 2 6,476 
U.S. federal, state, local and non-U.S. government debt securities1,395 360 0 1,755 1,616 401 0 2,017 
Mortgage-backed securities461 1,184 31 1,676 312 681 4 997 
Other(a)
788 861 201 1,850 718 49 250 1,017 
U.S. defined benefit pension plans(b)
$4,997 $9,819 $245 $15,061 $4,905 $7,608 $258 $12,771 
Other defined benefit pension and OPEB
plans(c)
2,034 2,565 2,707 7,306 1,834 2,307 2,431 6,572 
Total assets measured at fair value$7,031 $12,384 $2,952 $22,367 $6,739 $9,915 $2,689 $19,343 
(a) the Firm, refer to Note 2.Other consists primarily of mutual funds, money market funds and participating annuity contracts.
Pension and OPEB plan assets and liabilities measured at fair value        
 Defined benefit pension plans
 2018 2017
December 31,
(in millions)
Level 1 Level 2 Level 3 Total fair value Level 1 Level 2 Level 3 Total fair value
Cash and cash equivalents$343
 $1
 $—
 $344
 $173
 $1
 $—
 $174
Equity securities5,342
 162
 2
 5,506
 6,407
 194
 2
 6,603
Mutual funds—
 —
 —
 —
 325
 —
 —
 325
Collective investment funds(a)
161
 —
 —
 161
 778
 —
 —
 778
Limited partnerships(b)
40
 —
 —
 40
 60
 —
 —
 60
Corporate debt securities(c)
—
 3,540
 3
 3,543
 —
 2,644
 4
 2,648
U.S. federal, state, local and non-U.S. government debt securities1,191
 743
 —
 1,934
 1,096
 784
 —
 1,880
Mortgage-backed securities82
 272
 3
 357
 92
 100
 2
 194
Derivative receivables—
 143
 —
 143
 —
 203
 —
 203
Other(d)
885
 80
 302
 1,267
 2,353
 60
 302
 2,715
Total assets measured at fair value(e)
$8,044
 $4,941
 $310
 $13,295
 $11,284
 $3,986
 $310
 $15,580
Derivative payables$—
 $(96) $—
 $(96) $—
 $(141) $—
 $(141)
Total liabilities measured at fair value(e)
$—
 $(96) $—
 $(96) $—
 $(141) $—
 $(141)

(b)
(a)At December 31, 2018 and 2017, collective investment funds primarily included a mix of short-term investment funds, U.S. and non-U.S. equity investments (including index) and real estate funds.
(b)Unfunded commitments to purchase limited partnership investments for the plans were $521 million and $605 million for 2018 and 2017, respectively.
(c)Corporate debt securities include debt securities of U.S. and non-U.S. corporations.
(d)Other consists primarily of mutual funds, money market funds and participating and non-participating annuity contracts. Mutual funds and money market funds are primarily classified within level 1 of the fair value hierarchy given they are valued using market observable prices. Participating and non-participating annuity contracts are classified within level 3 of the fair value hierarchy due to a lack of market mechanisms for transferring each policy and surrender restrictions.
(e)At December 31, 2018 and 2017, excludes $5.0 billion and $4.4 billion of certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient, which are not required to be classified in the fair value hierarchy, $340 million and $377 million of defined benefit pension plan receivables for investments sold and dividends and interest receivables, $479 million and $561 million of defined benefit pension plan payables for investments purchased, and $24 million and $26 million of other liabilities, respectively.
The assetsAt December 31, 2020 and 2019, excludes $3.2 billion and $3.9 billion, respectively, of certain investments that are measured at fair value using the U.S. OPEB plan consisted of $561net asset value per share (or its equivalent) as a practical expedient, and $606 million and $600$343 million, in corporate debt securities, U.S. federal, state, localrespectively, of net defined benefit pension plan payables, primarily for investments sold and non-U.S. government debt securities and otherpurchased, which are not required to be classified in the fair value hierarchy. Investments in level 1 and level 23 of the valuation hierarchy include $199 million and in cash$250 million of participating annuity contracts at December 31, 2020 and cash equivalents classified2019, respectively.
(c)At December 31, 2020 and 2019, excludes $487 million and $465 million, respectively, of certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient. Investments in level 13 of the valuation hierarchy and $2.1include $2.7 billion and $2.2$2.4 billion of COLI policies at December 31, 2020 and 2019, respectively.

Changes in level 3 fair value measurements using significant unobservable inputs
Investments classified in level 3 of the valuation hierarchy at December 31, 2018 and 2017, respectively.increased $263 million in 2020 from $2.7 billion to $3.0 billion, consisting of $343 million in unrealized gains, partially offset by $113 million in settlements. In addition, there were transfers into level 3 of $33 million. In 2019, there was an increase of $307 million from $2.4 billion to $2.7 billion, consisting of $401 million in unrealized gains, partially offset by $85 million in settlements.

JPMorgan Chase & Co./2018 Form 10-K207
Notes to consolidated financial statements

Changes in level 3 fair value measurements using significant unobservable inputs    

(in millions)
 Fair value, Beginning balance Actual return on plan assets Purchases, sales and settlements, net Transfers in and/or out of level 3 Fair value, Ending balance
Realized gains/(losses) Unrealized gains/(losses)
Year ended December 31, 2018
   U.S. defined benefit pension plan
       Annuity contracts and other (a)
 $310
 $—
 $—
 $(1) $1
 $310
  U.S. OPEB plan
       COLI policies
 $2,157
 $—
 $(85) $—
 $—
 $2,072
Year ended December 31, 2017
   U.S. defined benefit pension plan
       Annuity contracts and other (a)
 $396
 $—
 $1
 $(87) $—
 $310
   U.S. OPEB plan
       COLI policies
 $1,957
 $—
 $200
 $—
 $—
 $2,157
(a)Substantially all are participating and non-participating annuity contracts.
Estimated future benefit payments
The following table presents benefit payments expected to be paid which includefor the effect of expected future service,U.S. defined benefit pension plans for the years indicated. The OPEB medical and life insurance payments are net of expected retiree contributions.
Year ended December 31,
(in millions)		U.S. defined benefit pension plans
2021$912 
2022918 
2023897 
2024847 
2025829 
Years 2026–20303,843 
Year ended December 31,
(in millions)
 Defined benefit pension plans  OPEB before Medicare Part D subsidy Medicare Part D subsidy
2019 $939
  $62
 $1
2020 932
  60
 1
2021 921
  57
 1
2022 920
  55
 1
2023 919
  52
 —
Years 2024–2028 4,529
  223
 2



208220JPMorgan Chase & Co./20182020 Form 10-K


Note 9 – Employee share-based incentives
Employee share-based awards
In 2018, 20172020, 2019 and 2016, 2018, JPMorgan Chasegranted long-term share-based awards to certain employees under its LTIP, as amended and restated effective May 19, 2015, and further amended and restated effective May 15, 2018. Under the terms of the LTIP, as ofDecember 31, 2018,862020, 67 million shares of common stock were available for issuance through May 2022. The LTIP is the only active plan under which the Firm is currently granting share-based incentive awards. In the following discussion, the LTIP, plus prior Firm plans and plans assumed as the result of acquisitions, are referred to collectively as the “LTI Plans,” and such plans constitute the Firm’s share-based incentive plans.
RSUs are awarded at no cost to the recipient upon their grant. Generally, RSUs are granted annually and vest at a rate of 50% after two years and 50% after three years and are converted into shares of common stock as of the vesting date. In addition, RSUs typically include full-career eligibility provisions, which allow employees to continue to vest upon voluntary termination based on age or service-related requirements, subject to post-employment and other restrictions. All RSU awards are subject to forfeiture until vested and contain clawback provisions that may result in cancellation under certain specified circumstances. Generally,Predominantly all RSUs entitle the recipient to receive cash payments equivalent to any dividends paid on the underlying common stock during the period the RSUs are outstanding and, as such, are considered participating securities as discussed in Note 22.outstanding.
In January 2018, 2017 and 2016, the Firm’s Board of Directors approved the grant of performancePerformance share units (“PSUs”) are granted annually, and approved by the Firm’s Board of Directors, to members of the Firm’s Operating Committee under the variable compensation program for performance years 2017, 2016 and 2015, respectively.program. PSUs are subject to the Firm’s achievement of specified performance criteria over a three-yearthree-year period. The number of awards that vest can range from zero0 to 150% of the grant amount. The awards vestIn addition, dividends that accrue during the vesting period are reinvested in dividend equivalent share units. PSUs and the related dividend equivalent share units are converted into shares of common stock in the quarter after the end of the performance period, which is generally three years. In addition, dividends are notionally reinvested in the Firm’s common stock and will be delivered only in respect of any earned shares.vesting.
Once the PSUs and dividend equivalent share units have vested, the shares of common stock that are delivered, after applicable tax withholding, must be held for an additional two-yeartwo-year period, typically for a total combined vesting and holding period of approximately five to eight years from the grant date.date depending on regulations in certain countries.
Under the LTI Plans, stock options and stock appreciation rights (“SARs”) and stock options have generally been granted with an exercise price equal to the fair value of JPMorgan Chase’s common stock on the grant date. The Firm periodically grants employee SARs and stock options to individual employees.There were no material grants of stock options or SARs
in 2018, 2017 and 2016. SARs generally expire ten years after the grant date. There were no material grants of SARs or stock optionsin 2020, 2019 and 2018.
The Firm separately recognizes compensation expense for each tranche of each award, net of estimated forfeitures, as if it were a separate award with its own vesting date. Generally, for each tranche granted, compensation expense is recognized on a straight-line basis from the grant date until the vesting date of the respective tranche, provided that the employees will not become full-career eligible during the vesting period. For awards with full-career eligibility provisions and awards granted with no future substantive service requirement, the Firm accrues the estimated value of awards expected to be awarded to employees as of the grant date without giving consideration to the impact of post-employment restrictions. For each tranche granted to employees who will become full-career eligible during the vesting period, compensation expense is recognized on a straight-line basis from the grant date until the earlier of the employee’s full-career eligibility date or the vesting date of the respective tranche.
The Firm’s policy for issuing shares upon settlement of employee share-based incentive awards is to issue either new shares of common stock or treasury shares. During 2018, 20172020, 2019 and 2016,2018, the Firm settled all of its employee share-based awards by issuing treasury shares.
Refer to Note 23 for further information on the classification of share-based awards for purposes of calculating earnings per share.





JPMorgan Chase & Co./20182020 Form 10-K209221
Notes to consolidated financial statements

RSUs, PSUs, employeeSARs and stock options and SARs activity
Generally, compensation expense for RSUs and PSUs is measured based on the number of units granted multiplied by the stock price at the grant date, and for employeeSARs and stock options, and SARs, is measured at the grant date using the Black-Scholes valuation model. Compensation expense for these awards is recognized in net income as described previously. The following table summarizes JPMorgan Chase’s RSUs, PSUs, employeeSARs and stock options and SARs activity for 2018.
  RSUs/PSUs Options/SARs
Year ended December 31, 2018 
Number of
units
Weighted-average grant
date fair value
 Number of awards Weighted-average exercise price 
Weighted-average remaining contractual life
(in years)
Aggregate intrinsic value
(in thousands, except weighted-average data, and where otherwise stated)   
Outstanding, January 1 72,733
$66.36
 17,493
 $40.76
   
Granted 20,489
110.46
 46
 113.63
   
Exercised or vested (32,277)58.97
 (5,054) 39.65
   
Forfeited (2,136)84.60
 (1) 112.25
   
Canceled NA
NA
 (21) 45.75
   
Outstanding, December 31 58,809
$85.04
 12,463
 $41.46
 2.4$702,815
Exercisable, December 31 NA
NA
 12,449
 41.37
 2.4702,815

 2020.
RSUs/PSUsSARs/Options
Year ended December 31, 2020Number of
units		Weighted-average grant
date fair value		Number of awardsWeighted-average exercise priceWeighted-average remaining contractual life
(in years)		Aggregate intrinsic value
(in thousands, except weighted-average data, and where otherwise stated)
Outstanding, January 152,239 $99.62 5,527 $41.36 
Granted17,891 132.17 1 137.80 
Exercised or vested(21,502)96.64 (2,389)41.40 
Forfeited(1,118)111.59 (4)122.59 
CanceledNANA(11)39.33 
Outstanding, December 3147,510 $112.85 3,124 $41.25 1.4$265,059 
Exercisable, December 31NANA3,124 41.25 1.4265,059 
The total fair value of RSUs that vested during the years ended December 31, 2020, 2019 and 2018, 2017 and 2016, was $3.6$2.8 billion, $2.9 billion and $2.2$3.6 billion, respectively. The total intrinsic value of options exercised during the years ended December 31, 2020, 2019 and 2018, 2017was $182 million, $503 million and 2016, was $370 million, $651 million and $338 million, respectively.
Compensation expense
The Firm recognized the following noncash compensation expense related to its various employee share-based incentive plans in its Consolidated statements of income.
Year ended December 31, (in millions) 2018
 2017
 2016
Cost of prior grants of RSUs, PSUs and SARs that are amortized over their applicable vesting periods $1,241
 $1,125
 $1,046
Accrual of estimated costs of share-based awards to be granted in future periods including those to full-career eligible employees 1,081
 945
 894
Total noncash compensation expense related to employee share-based incentive plans $2,322
 $2,070
 $1,940

Year ended December 31, (in millions)202020192018
Cost of prior grants of RSUs, PSUs, SARs and stock options that are amortized over their applicable vesting periods$1,101 $1,141 $1,241 
Accrual of estimated costs of share-based awards to be granted in future periods including those to full-career eligible employees1,350 1,115 1,081 
Total noncash compensation expense related to employee share-based incentive plans$2,451 $2,256 $2,322 
At December 31, 2018, 2020, approximately $704 $664 million (pretax) of compensation expense related to unvested awards had not yet been charged to net income. That cost is expected to be amortized into compensation expense over a weighted-average period of 1.6 years. The Firm does not capitalize any compensation expense related to share-based compensation awards to employees.



Cash flows and taxTax benefits
Effective January 1, 2016, the Firm adopted new accounting guidance related to employee share-based payments. As a result of the adoption of this new guidance, all excessIncome tax benefits (including tax benefits from dividends or dividenddividend equivalents) on share-based payment awards are recognized within income tax expense in the Consolidated statements of income.Income tax benefits related to share-based incentive arrangements recognized in the Firm’s Consolidated statements of income for the years ended December 31, 2020, 2019 and 2018, 2017were $837 million, $895 million and 2016, were $1.1 billion, $1.0 billion and $916 million, respectively.
The following table sets forth the cash received from the exercise of stock options under all share-based incentive arrangements, and the actual income tax benefit related to tax deductions from the exercise of the stock options.
Year ended December 31, (in millions) 2018
 2017
 2016
Cash received for options exercised $14
 $18
 $26
Tax benefit 75
 190
 70



210222JPMorgan Chase & Co./20182020 Form 10-K



Note 10 – Investment securities
Investment securities consist of debt securities that are classified as AFS or HTM. Debt securities classified as trading assets are discussed in Note 2. Predominantly all of the Firm’s AFS and HTM securities are held by Treasury and CIO in connection with its asset-liability management activities. At
AFS securities are carried at fair value on the Consolidated balance sheets. Unrealized gains and losses, after any applicable hedge accounting adjustments or allowance for credit losses, are reported in AOCI. The specific identification method is used to determine realized gains and losses on AFS securities, which are included in investment securities gains/(losses) on the Consolidated statements of income. HTM securities, which the Firm has the intent and ability to hold until maturity, are carried at amortized cost, net of allowance for credit losses, on the Consolidated balance sheets.
For both AFS and HTM securities, purchase discounts or premiums are generally amortized into interest income on a level-yield basis over the contractual life of the security. However, premiums on certain callable debt securities are amortized to the earliest call date.
Effective January 1, 2020, the Firm adopted the CECL accounting guidance, which also amended the AFS securities impairment guidance. Refer to Note 1 for further information.
During 2020, the Firm transferred $164.2 billion of investment securities from AFS to HTM for capital management purposes. AOCI included pretax unrealized gains of $5.0 billion on the securities at the dates of transfer.
Unrealized gains or losses at the date of transfer of these securities continue to be reported in AOCI and are amortized into interest income on a level-yield basis over the remaining life of the securities. This amortization will offset the effect on interest income of the amortization of the premium or discount resulting from the transfer recorded at fair value.
Transfers of securities from AFS to HTM are non-cash transactions and are recorded at fair value.

JPMorgan Chase & Co./2020 Form 10-K223
Notes to consolidated financial statements
The amortized costs and estimated fair values of the investment securities portfolio were as follows for the dates indicated.
20202019
December 31, (in millions)
Amortized cost(e)
Gross unrealized gainsGross unrealized lossesFair
value
Amortized cost(e)
Gross unrealized gainsGross unrealized lossesFair
value
Available-for-sale securities
Mortgage-backed securities:
U.S. GSEs and government agencies(a)
$110,979 $2,372 $50 $113,301 $107,811 $2,395 $89 $110,117 
Residential:
U.S.6,246 224 3 6,467 10,223 233 6 10,450 
Non-U.S.3,751 20 5 3,766 2,477 64 1 2,540 
Commercial2,819 71 34 2,856 5,137 64 13 5,188 
Total mortgage-backed securities123,795 2,687 92 126,390 125,648 2,756 109 128,295 
U.S. Treasury and government agencies199,910 2,141 100 201,951 139,162 449 175 139,436 
Obligations of U.S. states and municipalities18,993 1,404 1 20,396 27,693 2,118 1 29,810 
Certificates of deposit0 0 0 0 77 0 0 77 
Non-U.S. government debt securities22,587 354 13 22,928 21,427 377 17 21,787 
Corporate debt securities215 4 3 216 823 22 0 845 
Asset-backed securities:
Collateralized loan obligations10,055 24 31 10,048 25,038 9 56 24,991 
Other6,174 91 16 6,249 5,438 40 20 5,458 
Total available-for-sale securities(b)
381,729 6,705 256 388,178 345,306 5,771 378 350,699 
Held-to-maturity securities(c)
Mortgage-backed securities:
U.S. GSEs and government agencies(a)
107,889 2,968 29 110,828 36,523 1,165 62 37,626 
U.S. Residential4,345 8 30 4,323 0 0 0 0 
Commercial2,602 77 0 2,679 0 0 0 0 
Total mortgage-backed securities114,836 3,053 59 117,830 36,523 1,165 62 37,626 
U.S. Treasury and government agencies53,184 50 0 53,234 51 0 1 50 
Obligations of U.S. states and municipalities12,751 519 0 13,270 4,797 299 0 5,096 
Asset-backed securities:
Collateralized loan obligations21,050 90 2 21,138 6,169 0 0 6,169 
Total held-to-maturity securities, net of allowance for credit losses(d)
201,821 3,712 61 205,472 47,540 1,464 63 48,941 
Total investment securities, net of allowance for credit losses(d)
$583,550 $10,417 $317 $593,650 $392,846 $7,235 $441 $399,640 
(a)Includes AFS U.S. GSE obligations with fair values of $65.8 billion and $78.5 billion, and HTM U.S. GSE obligations with amortized cost of $86.3 billion and $31.6 billion, at December 31, 2020 and 2019, respectively. As of December 31, 2020, mortgage-backed securities issued by Fannie Mae and Freddie Mac each exceeded 10% of JPMorgan Chase’s total stockholders’ equity; the amortized cost and fair value of such securities were $95.7 billion and $98.8 billion, and $54.7 billion and $55.8 billion, respectively.
(b)There was 0 allowance for credit losses on AFS securities at December 31, 2020.
(c)The Firm purchased $12.4 billion, $13.4 billion and $9.4 billion of HTM securities for the years ended December 31, 2020, 2019 and 2018, respectively.
(d)HTM securities measured at amortized cost are reported net of allowance for credit losses of $78 million at December 31, 2020.
(e)Excludes $2.1 billion and $1.9 billion of accrued interest receivables at December 31, 2020 and 2019, respectively. The Firm did 0t reverse through interest income any accrued interest receivables for the years ended December 31, 2020 and 2019.
AtDecember 31, 2020, 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 risk ratings). Risk ratings which correspondare used to identify the credit quality of securities and differentiate risk within the portfolio. The Firm’s internal risk ratings asgenerally align with the qualitative characteristics (e.g., borrower capacity to meet financial commitments and vulnerability to changes in the economic environment) 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 AOCI. 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 the Firm has the intent and ability to hold until maturity, are carried at amortized cost on the Consolidated balance sheets.Moody’s,
For both AFShowever the quantitative characteristics (e.g., probability of default (“PD”) and HTM debt securities, purchase discounts or premiumsloss given default (“LGD”)) may differ as they reflect internal historical experiences and assumptions.Risk ratings are generally amortized into interest incomeassigned at acquisition, are reviewed on a level-yieldregular and ongoing basis by Credit Risk Management and are adjusted as necessary over the contractual life of the security. However, as a result ofinvestment for updated information affecting the adoption of the premium amortization accounting guidance in the first quarter of 2018, premiums on purchased callable debt securities must be amortizedissuer’s ability to the earliest call date for debt securities with call features that are explicit, noncontingent and callable at fixed prices and on preset dates. The guidance primarily impacts obligations of U.S. states and municipalities held in the Firm’s investment securities portfolio. For additional information, refer to Note 23.
As permitted by the new hedge accounting guidance, the Firm also elected to transfer U.S. government agency MBS,
commercial MBS, and obligations of U.S. states and municipalities with a carrying value of $22.4 billion from HTM to AFS in the first quarter of 2018. The transfer of these investment securities resulted in the recognition of a net pretax unrealized gain of $221 million within AOCI. This transfer was a noncash transaction. For additional information, refer to Notes 1, 5 and 23.fulfill its obligations.

The amortized costs and estimated fair values of the investment securities portfolio were as follows for the dates indicated.
 2018 2017
December 31, (in millions)Amortized costGross unrealized gainsGross unrealized losses
Fair
value
 Amortized costGross unrealized gainsGross unrealized losses
Fair
value
Available-for-sale securities           
Mortgage-backed securities:           
U.S. government agencies(a) 
$69,026
$594
$974
 $68,646
 $69,879
$736
$335
 $70,280
Residential:           
U.S5,877
79
31
 5,925
 8,193
185
14
 8,364
Non-U.S.2,529
72
6
 2,595
 2,882
122
1
 3,003
Commercial6,758
43
147
 6,654
 4,932
98
5
 5,025
Total mortgage-backed securities84,190
788
1,158
 83,820
 85,886
1,141
355
 86,672
U.S. Treasury and government agencies55,771
366
78
 56,059
 22,510
266
31
 22,745
Obligations of U.S. states and municipalities36,221
1,582
80
 37,723
 30,490
1,881
33
 32,338
Certificates of deposit75
—
—
 75
 59
—
—
 59
Non-U.S. government debt securities23,771
351
20
 24,102
 26,900
426
32
 27,294
Corporate debt securities1,904
23
9
 1,918
 2,657
101
1
 2,757
Asset-backed securities:           
Collateralized loan obligations19,612
1
176
 19,437
 20,928
69
1
 20,996
Other7,225
57
22
 7,260
 8,764
77
24
 8,817
Total available-for-sale debt securities228,769
3,168
1,543
 230,394
 198,194
3,961
477
 201,678
Available-for-sale equity securities(b)
—
—
—
 —
 547
—
—
 547
Total available-for-sale securities228,769
3,168
1,543
 230,394
 198,741
3,961
477
 202,225
Held-to-maturity securities           
Mortgage-backed securities           
U.S. government agencies(c)
26,610
134
200
 26,544
 27,577
558
40
 28,095
Commercial—
—
—
 —
 5,783
1
74
 5,710
Total mortgage-backed securities26,610
134
200
 26,544
 33,360
559
114
 33,805
Obligations of U.S. states and municipalities4,824
105
15
 4,914
 14,373
554
80
 14,847
Total held-to-maturity securities31,434
239
215
 31,458
 47,733
1,113
194
 48,652
Total investment securities$260,203
$3,407
$1,758
 $261,852
 $246,474
$5,074
$671
 $250,877

224JPMorgan Chase & Co./20182020 Form 10-K211
Notes to consolidated financial statements

(a)Includes total U.S. government-sponsored enterprise obligations with fair values of $50.7 billion and $45.8 billion for the years ended December 31, 2018 and 2017 respectively.
(b)Effective January 1, 2018, the Firm adopted the recognition and measurement guidance. Equity securities that were previously reported as AFS securities were reclassified to other assets upon adoption.
(c)Included total U.S. government-sponsored enterprise obligations with amortized cost of $20.9 billion and $22.0 billion at December 31, 2018 and 2017, respectively.

Investment securities impairment
The following tables present the fair value and gross unrealized losses for investment securities by aging category for AFS securities at December 31, 20182020 and 2017.2019. The tables exclude U.S. Treasury and government agency securities and U.S. GSE and government agency MBS with unrealized losses of $150 million and $264 million, at December 31, 2020 and 2019, respectively; changes in the value of these securities are generally driven by changes in interest rates rather than changes in their credit profile given the explicit or implicit guarantees provided by the U.S. government.
Available-for-sale securities with gross unrealized losses
Less than 12 months12 months or more
December 31, 2020 (in millions)Fair valueGross
unrealized losses		Fair valueGross
unrealized losses		Total fair valueTotal gross unrealized losses
Available-for-sale securities
Mortgage-backed securities:
Residential:
U.S.$562 $3 $32 $0 $594 $3 
Non-U.S.2,507 4 235 1 2,742 5 
Commercial699 18 124 16 823 34 
Total mortgage-backed securities3,768 25 391 17 4,159 42 
Obligations of U.S. states and municipalities49 1 0 0 49 1 
Certificates of deposit0 0 0 0 0 0 
Non-U.S. government debt securities2,709 9 968 4 3,677 13 
Corporate debt securities91 3 5 0 96 3 
Asset-backed securities:
Collateralized loan obligations5,248 18 2,645 13 7,893 31 
Other268 1 685 15 953 16 
Total available-for-sale securities with gross unrealized losses$12,133 $57 $4,694 $49 $16,827 $106 
Available-for-sale securities with gross unrealized losses
Less than 12 months12 months or more
December 31, 2019 (in millions)Fair valueGross
unrealized losses		Fair valueGross
unrealized losses		Total fair valueTotal gross unrealized losses
Available-for-sale securities
Mortgage-backed securities:
Residential:
U.S.$1,072 $3 $423 $3 $1,495 $6 
Non-U.S.13 0 420 1 433 1 
Commercial1,287 12 199 1 1,486 13 
Total mortgage-backed securities2,372 15 1,042 5 3,414 20 
Obligations of U.S. states and municipalities186 1 0 0 186 1 
Certificates of deposit77 0 0 0 77 0 
Non-U.S. government debt securities3,970 13 1,406 4 5,376 17 
Corporate debt securities0 0 0 0 0 0 
Asset-backed securities:
Collateralized loan obligations10,364 11 7,756 45 18,120 56 
Other1,639 9 753 11 2,392 20 
Total available-for-sale securities with gross unrealized losses$18,608 $49 $10,957 $65 $29,565 $114 
 Investment securities with gross unrealized losses
 Less than 12 months 12 months or more  
December 31, 2018 (in millions)Fair valueGross unrealized losses Fair valueGross unrealized lossesTotal fair valueTotal gross unrealized losses
Available-for-sale securities       
Mortgage-backed securities:       
U.S. government agencies$17,656
$318
 $22,728
$656
$40,384
$974
Residential:       
U.S623
4
 1,445
27
2,068
31
Non-U.S.907
5
 165
1
1,072
6
Commercial974
6
 3,172
141
4,146
147
Total mortgage-backed securities20,160
333
 27,510
825
47,670
1,158
U.S. Treasury and government agencies4,792
7
 2,391
71
7,183
78
Obligations of U.S. states and municipalities1,808
15
 2,477
65
4,285
80
Certificates of deposit75
—
 —
—
75
—
Non-U.S. government debt securities3,123
5
 1,937
15
5,060
20
Corporate debt securities478
8
 37
1
515
9
Asset-backed securities:       
Collateralized loan obligations18,681
176
 —
—
18,681
176
Other1,208
6
 2,354
16
3,562
22
Total available-for-sale securities50,325
550
 36,706
993
87,031
1,543
Held-to-maturity securities       
Mortgage-backed securities       
U.S. government agencies4,385
23
 7,082
177
11,467
200
Commercial—
—
 —
—
—
—
Total mortgage-backed securities4,385
23
 7,082
177
11,467
200
Obligations of U.S. states and municipalities12
—
 1,114
15
1,126
15
Total held-to-maturity securities4,397
23
 8,196
192
12,593
215
Total investment securities with gross unrealized losses$54,722
$573
 $44,902
$1,185
$99,624
$1,758

212JPMorgan Chase & Co./20182020 Form 10-K225

Notes to consolidated financial statements

 Investment securities with gross unrealized losses
 Less than 12 months 12 months or more  
December 31, 2017 (in millions)Fair valueGross unrealized losses Fair valueGross unrealized lossesTotal fair valueTotal gross unrealized losses
Available-for-sale securities       
Mortgage-backed securities:       
U.S. government agencies$36,037
$139
 $7,711
$196
$43,748
$335
Residential:       
U.S.1,112
5
 596
9
1,708
14
Non-U.S.—
—
 266
1
266
1
Commercial528
4
 335
1
863
5
Total mortgage-backed securities37,677
148
 8,908
207
46,585
355
U.S. Treasury and government agencies1,834
11
 373
20
2,207
31
Obligations of U.S. states and municipalities949
7
 1,652
26
2,601
33
Certificates of deposit—
—
 —
—
—
—
Non-U.S. government debt securities6,500
15
 811
17
7,311
32
Corporate debt securities—
—
 52
1
52
1
Asset-backed securities:       
Collateralized loan obligations—
—
 276
1
276
1
Other3,521
20
 720
4
4,241
24
Total available-for-sale securities50,481
201
 12,792
276
63,273
477
Held-to-maturity securities       
Mortgage-backed securities       
U.S. government agencies4,070
38
 205
2
4,275
40
Commercial3,706
41
 1,882
33
5,588
74
Total mortgage-backed securities7,776
79
 2,087
35
9,863
114
Obligations of U.S. states and municipalities584
9
 2,131
71
2,715
80
Total held-to-maturity securities8,360
88
 4,218
106
12,578
194
Total investment securities with gross unrealized losses$58,841
$289
 $17,010
$382
$75,851
$671

Other-than-temporaryAs a result of the adoption of the amended AFS securities impairment guidance, an allowance for credit losses on AFS securities is required for impaired securities if a credit loss exists.
AFS securities are considered impaired if the fair value is less than the amortized cost.
AFS and HTM debt securities in unrealized loss positions are analyzed as part of the Firm’s ongoing assessment of OTTI.The Firm considers a decline in fair value to be other-than-temporary when the Firm does not expect to recover the entire amortized cost basis of the security.
For AFS debt securities, the Firm recognizes OTTIimpairment losses in earnings if the Firm has the intent to sell the debt security, or if it is more likely than not that the Firm will be required to sell the debt security before recovery of its amortized cost basis.cost. In these circumstances the impairment loss recognized in investment securities gains/(losses) is equal to the full difference between the amortized cost basis(net of allowance if applicable) and the fair value of the securities.
For impaired debt securities in an unrealized loss position that the Firm has the intent and ability to hold, the securities are evaluated to determine if a credit loss exists. In the event ofIf it is determined that a credit loss onlyexists, that loss is recognized as an allowance for credit losses through the provision for credit losses in the Consolidated Statements of Income, limited by the amount of impairment. Any impairment associated with the credit loss is recognized in income. Amounts relatingnot due to factors other than credit losses areis recorded in OCI.
Factors considered in evaluating potential OTTIcredit losses include adverse conditions specifically related to the industry, geographic area or financial condition of the issuer or underlying collateral of a security; and payment structure of the
security.
security; changes to the rating of the security by a rating agency; the volatility of the fair value changes; and the Firm’s intent and ability to hold the security until recovery.
The Firm’s cash flow evaluations take into account the factors noted above and expectations of relevant market and economic data as of the end of the reporting period. When assessing securities issued in a securitization for OTTI,credit losses, the Firm estimates cash flows considering relevant market and economic data, underlying loan-level data, and structural features of the securitization, such as subordination, excess spread, overcollateralization or other forms of credit enhancement, and compares the losses projected for the underlying collateral (“pool losses”) against the level of credit enhancement in the securitization structure to determine whether these features are sufficient to absorb the pool losses, or whether a credit loss exists. The Firm also performs other analyses to support its cash flow projections, such as first-loss analyses or stress scenarios.
For beneficial interests in securitizations that are rated below “AA” at their acquisition, or that can be contractually prepaid or otherwise settled in such a way that the Firm would not recover substantially all of its recorded investment, the Firm considers anevaluates impairment to be other-than-temporaryfor credit losses when there is an adverse change in expected cash flows.
Allowance for credit losses
Based on its assessment, the Firm did not recognize an allowance for credit losses on impaired AFS securities as of January 1, 2020 or December 31, 2020.

226JPMorgan Chase & Co./20182020 Form 10-K

HTM securities – credit risk
The adoption of the CECL accounting guidance requires management to estimate expected credit losses on HTM securities over the remaining expected life and recognize this estimate as an allowance for credit losses. As a result of the adoption of this guidance, the Firm recognized an allowance for credit losses on HTM obligations of U.S. states and municipalities of $10 million as a cumulative-effect adjustment to retained earnings as of January 1, 2020.
Credit quality indicator
The primary credit quality indicator for HTM securities is the risk rating assigned to each security. At December 31, 2020, all HTM securities were rated investment grade and were current and accruing, with approximately 98% rated at least AA+.
Allowance for credit losses
The allowance for credit losses on HTM obligations of U.S. states and municipalities and commercial mortgage-backed securities is calculated by applying statistical credit loss factors (estimated PD and LGD) to the amortized cost. The credit loss factors are derived using a weighted average of five internally developed eight-quarter macroeconomic scenarios, followed by a single year straight-line interpolation to revert to long run historical information for periods beyond the forecast period. Refer to Note 13 for further information on the eight-quarter macroeconomic forecast.
The allowance for credit losses on HTM collateralized loan obligations and U.S. residential mortgage-backed securities
is calculated as the difference between the amortized cost and the present value of the cash flows expected to be collected, discounted at the security’s effective interest rate. These cash flow estimates are developed based on expectations of underlying collateral performance derived using the eight-quarter macroeconomic forecast and the single year straight-line interpolation, as well as considering the structural features of the security.
The application of different inputs and assumptions into the calculation of the allowance for credit losses is subject to significant management judgment, and emphasizing one input or assumption over another, or considering other inputs or assumptions, could affect the estimate of the allowance for credit losses on HTM securities.
The allowance for credit losses on HTM securities was $78 million as of December 31, 2020, reflecting $68 million recognized in the provision for credit losses for the year ended December 31, 2020.
Selected impacts of investment securities on the Consolidated statements of income
Year ended December 31,
(in millions)		202020192018
Realized gains$3,080 $650 $211 
Realized losses(2,278)(392)(606)
Net investment securities gains/(losses)$802 $258 $(395)
Provision for credit losses$68 NANA

213
JPMorgan Chase & Co./2020 Form 10-K227
Notes to consolidated financial statements

As a result of the adoption of the recognition and measurement guidance in the first quarter of 2018, equity securities are no longer permitted to be classified as AFS. For additional information, refer to Note 1. Additionally, the Firm did not recognize any OTTI for AFS equity securities for the years ended December 31, 2017 and 2016.
For the year ended December 31, 2018, the Firm recognized $22 million of unrealized losses as OTTI on securities it intended to sell and subsequently sold during the year. The Firm does not intend to sell any of the remaining investment securities with an unrealized loss in AOCI as of December 31, 2018, and it is not likely that the Firm will be required to sell these securities before recovery of their amortized cost basis. Further, the Firm did not recognize any credit-related OTTI losses during the year ended December 31, 2018. Accordingly, the Firm believes that the investment securities with an unrealized loss in AOCI as of December 31, 2018, are not other-than-temporarily impaired.
Investment securities gains and losses
The following table presents realized gains and losses and OTTI from AFS securities that were recognized in income.
Year ended December 31,
(in millions)		2018 2017 2016
Realized gains$211
 $1,013
 $401
Realized losses(606) (1,072) (232)
OTTI losses—
 (7) (28)
Net investment securities gains/(losses)(395) (66) 141
      
OTTI losses     
Credit-related losses recognized in income—
 —
 (1)
Investment securities the Firm intends to sell(a)
—
 (7) (27)
Total OTTI losses recognized in income$—
 $(7) $(28)
(a)Excludes realized losses on securities sold of $22 million, $6 million and $24 million for the years ended December 31, 2018, 2017 and 2016, respectively, that had been previously reported as an OTTI loss due to the intention to sell the securities.
Changes in the credit loss component of credit-impaired debt securities
The cumulative credit loss component, including any changes therein, of OTTI losses that have been recognized in income related to AFS securities was not material as of and during the years ended December 31, 2018, 2017 and 2016.

214JPMorgan Chase & Co./2018 Form 10-K


Contractual maturities and yields
The following table presents the amortized cost and estimated fair value at December 31, 2018, 2020, of JPMorgan Chase’s investment securities portfolio by contractual maturity.
By remaining maturity
December 31, 2020 (in millions)		Due in one
year or less		Due after one year through five yearsDue after five years through 10 years
Due after
10 years(b)
Total
Available-for-sale securities
Mortgage-backed securities
Amortized cost$0 $741 $7,797 $115,257 $123,795 
Fair value0 756 8,139 117,495 126,390 
Average yield(a)
0 %1.66 %1.67 %2.57 %2.51 %
U.S. Treasury and government agencies
Amortized cost$33,633 $110,033 $46,827 $9,417 $199,910 
Fair value33,678 111,014 47,675 9,584 201,951 
Average yield(a)
0.42 %0.53 %0.79 %0.48 %0.57 %
Obligations of U.S. states and municipalities
Amortized cost$33 $203 $1,047 $17,710 $18,993 
Fair value33 211 1,111 19,041 20,396 
Average yield(a)
4.11 %4.59 %4.84 %4.80 %4.80 %
Non-U.S. government debt securities
Amortized cost$8,282 $8,011 $5,615 $679 $22,587 
Fair value8,297 8,225 5,726 680 22,928 
Average yield(a)
1.25 %1.70 %0.68 %0.17 %1.24 %
Corporate debt securities
Amortized cost$0 $141 $74 $0 $215 
Fair value0 139 77 0 216 
Average yield(a)
0 %1.21 %1.92 %0 %1.45 %
Asset-backed securities
Amortized cost$554 $2,569 $5,987 $7,119 $16,229 
Fair value554 2,591 5,990 7,162 16,297 
Average yield(a)
1.31 %2.00 %1.33 %1.48 %1.50 %
Total available-for-sale securities
Amortized cost$42,502 $121,698 $67,347 $150,182 $381,729 
Fair value42,562 122,936 68,718 153,962 388,178 
Average yield(a)
0.59 %0.65 %1.00 %2.64 %1.49 %
Held-to-maturity securities
Mortgage-backed securities
Amortized cost$0 $158 $11,908 $102,791 $114,857 
Fair value0 160 12,707 104,963 117,830 
Average yield(a)
0 %1.56 %2.42 %2.94 %2.88 %
U.S. Treasury and government agencies
Amortized cost$501 $42,477 $10,206 $0 $53,184 
Fair value501 42,511 10,222 0 53,234 
Average yield(a)
1.86 %0.60 %0.94 %0 %0.67 %
Obligations of U.S. states and municipalities
Amortized cost$0 $65 $532 $12,211 $12,808 
Fair value0 67 565 12,638 13,270 
Average yield(a)
0 %3.09 %3.57 %3.62 %3.62 %
Asset-backed securities
Amortized cost$0 $0 $11,617 $9,433 $21,050 
Fair value0 0 11,658 9,480 21,138 
Average yield(a)
0 %0 %1.40 %1.33 %1.37 %
Total held-to-maturity securities
Amortized cost$501 $42,700 $34,263 $124,435 $201,899 
Fair value501 42,738 35,152 127,081 205,472 
Average yield(a)
1.86 %0.60 %1.65 %2.88 %2.19 %
(a)Average yield is computed using the effective yield of each security owned at the end of the period, weighted based on the amortized cost of each security. The effective yield considers the contractual coupon, amortization of premiums and accretion of discounts, and the effect of related hedging derivatives. Taxable-equivalent amounts are used where applicable. The effective yield excludes unscheduled principal prepayments; and accordingly, actual maturities of securities may differ from their contractual or expected maturities as certain securities may be prepaid. However, for certain callable debt securities, the average yield is calculated to the earliest call date.
By remaining maturity
December 31, 2018 (in millions)
Due in one
year or less
 Due after one year through five years Due after five years through 10 years 
Due after
10 years(c)
 Total
Available-for-sale securities         
Mortgage-backed securities(a)
         
Amortized cost$519
 $77
 $7,574
 $76,020
 $84,190
Fair value520
 77
 7,616
 75,607
 83,820
Average yield(b)
2.02% 3.50% 3.48% 3.52% 3.51%
U.S. Treasury and government agencies         
Amortized cost$22,439
 $17,945
 $9,618
 $5,769
 $55,771
Fair value22,444
 18,090
 9,588
 5,937
 56,059
Average yield(b)
2.42% 2.90% 2.60% 3.05% 2.67%
Obligations of U.S. states and municipalities         
Amortized cost$177
 $617
 $2,698
 $32,729
 $36,221
Fair value176
 629
 2,790
 34,128
 37,723
Average yield(b)
1.94% 4.30% 5.26% 5.02% 5.01%
Certificates of deposit         
Amortized cost$75
 $—
 $—
 $—
 $75
Fair value75
 —
 —
 —
 75
Average yield(b)
0.49% —% —% —% 0.49%
Non-U.S. government debt securities         
Amortized cost$5,604
 $13,117
 $5,050
 $—
 $23,771
Fair value5,606
 13,314
 5,182
 —
 24,102
Average yield(b)
3.25% 1.95% 1.33% —% 2.13%
Corporate debt securities         
Amortized cost$22
 $950
 $792
 $140
 $1,904
Fair value22
 964
 792
 140
 1,918
Average yield(b)
4.05% 4.64% 4.56% 4.74% 4.60%
Asset-backed securities         
Amortized cost$—
 $3,222
 $4,615
 $19,000
 $26,837
Fair value—
 3,208
 4,592
 18,897
 26,697
Average yield(b)
—% 2.85% 3.12% 3.19% 3.14%
Total available-for-sale securities         
Amortized cost$28,836
 $35,928
 $30,347
 $133,658
 $228,769
Fair value28,843
 36,282
 30,560
 134,709
 230,394
Average yield(b)
2.57% 2.62% 2.98% 3.82% 3.36%
Held-to-maturity securities         
Mortgage-backed securities(a)
         
Amortized Cost$—
 $—
 $3,125
 $23,485
 $26,610
Fair value—
 —
 3,141
 23,403
 26,544
Average yield(b)
—% —% 3.53% 3.34% 3.36%
Obligations of U.S. states and municipalities         
Amortized cost$—
 $—
 $20
 $4,804
 $4,824
Fair value—
 —
 20
 4,894
 4,914
Average yield(b)
—% —% 3.93% 4.12% 4.12%
Total held-to-maturity securities         
Amortized cost$—
 $—
 $3,145
 $28,289
 $31,434
Fair value—
 —
 3,161
 28,297
 31,458
Average yield(b)
—% —% 3.53% 3.47% 3.48%
(a)
As of December 31, 2018, mortgage-backed securities issued by Fannie Mae exceeded 10% of JPMorgan Chase’s total stockholders’ equity; both the amortized cost and fair value of such securities was $52.3 billion(b)Substantially all of the Firm’s U.S. residential MBS and collateralized mortgage obligations are due in 10 years or more, based on contractual maturity. The estimated weighted-average life, which reflects anticipated future prepayments, is approximately 5 years for agency residential MBS, 4 years for agency residential collateralized mortgage obligations and 3 years for nonagency residential collateralized mortgage obligations..
(b)Average yield is computed using the effective yield of each security owned at the end of the period, weighted based on the amortized cost of each security. The effective yield considers the contractual coupon, amortization of premiums and accretion of discounts, and the effect of related hedging derivatives. Taxable-equivalent amounts are used where applicable. The effective yield excludes unscheduled principal prepayments; and accordingly, actual maturities of securities may differ from their contractual or expected maturities as certain securities may be prepaid.
(c)Substantially all of the Firm’s U.S. residential MBS and collateralized mortgage obligations are due in 10 years or more, based on contractual maturity. The estimated weighted-average life, which reflects anticipated future prepayments, is approximately 7 years for agency residential MBS, 3 years for agency residential collateralized mortgage obligations and 2 years for nonagency residential collateralized mortgage obligations.

228JPMorgan Chase & Co./20182020 Form 10-K215

Notes to consolidated financial statements

Note 11 – Securities financing activities
JPMorgan Chase enters into resale, repurchase, securities borrowed and securities loaned agreements (collectively, “securities financing agreements”) primarily to finance the Firm’s inventory positions, acquire securities to cover short sales, accommodate customers’ financing needs,settle other securities obligationsand to deploy the Firm’s excess cash.
Securities financing agreements are treated as collateralized financings on the Firm’s Consolidated balance sheets. Resale and repurchase agreements are generally carried at the amounts at which the securities will be subsequently sold or repurchased. Securities borrowed and securities loaned agreements are generally carried at the amount of cash collateral advanced or received. Where appropriate under applicable accounting guidance, securities financing agreements with the same counterparty are reported on a net basis. ForRefer to Note 1 for further discussion of the offsetting of assets and liabilities, refer to Note 1. liabilities. Fees received and paid in connection with securities financing agreements are recorded over the life of the agreement in interest income and interest expense on the Consolidated statements of income.
The Firm has elected the fair value option for certain securities financing agreements. ForRefer to Note 3 for further information regarding the fair value option, refer to Note 3. option. The securities financing agreements for which the fair value option has been elected are reported within securities purchased under resale agreements, securities loaned or sold under repurchase agreements, and securities borrowed on the Consolidated balance sheets. Generally, for agreements carried at fair value, current-period interest accruals are recorded within interest income and interest expense, with changes in fair value reported in principal transactions revenue. However, for financial instruments containing embedded derivatives that would be separately accounted for in accordance with accounting guidance for hybrid instruments, all changes in fair value, including any interest elements, are reported in principal transactions revenue.
Securities financing agreements not elected under the fair value option are measured at amortized cost. As a result of the Firm’s credit risk mitigation practices described below, the Firm did not hold any allowance for credit losses with respect to resale and securities borrowed arrangements as of December 31, 2020 and 2019.
Credit risk mitigation practices
Securities financing agreements expose the Firm primarily to credit and liquidity risk. To manage these risks, the Firm monitors the value of the underlying securities (predominantly high-quality securities collateral, including government-issued debt and agencyU.S. GSEs and government agencies MBS) that it has received from or provided to its counterparties compared to the value of cash proceeds and exchanged collateral, and either requests additional collateral or returns securities or collateral when appropriate. Margin levels are initially established based upon the counterparty, the type of underlying securities, and the permissible collateral, and are monitored on an ongoing basis.
In resale and securities borrowed agreements, the Firm is exposed to credit risk to the extent that the value of the securities received is less than initial cash principal advanced and any collateral amounts exchanged. In repurchase and securities loaned agreements, credit risk exposure arises to the extent that the value of underlying securities advanced exceeds the value of the initial cash principal received, and any collateral amounts exchanged.
Additionally, the Firm typically enters into master netting agreements and other similar arrangements with its counterparties, which provide for the right to liquidate the underlying securities and any collateral amounts exchanged in the event of a counterparty default.It is also the Firm’s policy to take possession, where possible, of the securities underlying resale and securities borrowed agreements.For Refer to Note 29 for further information regarding assets pledged and collateral received in securities financing agreements, refer to Note 28.
As a result of the Firm’s credit risk mitigation practices with respect to resale and securities borrowed agreements as described above, the Firm did not hold any reserves for credit impairment with respect to these agreements as of December 31, 2018 and 2017.

agreements.

216JPMorgan Chase & Co./20182020 Form 10-K229

Notes to consolidated financial statements

The table below summarizes the gross and net amounts of the Firm’s securities financing agreements, as of December 31, 20182020 and 2017. 2019. When the Firm has obtained an appropriate legal opinion with respect to thea master netting agreement with a counterparty and where other relevant netting criteria under U.S. GAAP are met, the Firm nets, on the Consolidated balance sheets, the balances outstanding under its securities financing agreements with the same counterparty. In addition, the Firm exchanges securities and/or cash collateral with its counterparties; this collateral also reducescounterparty to reduce the economic exposure with the counterparty, but such collateral is not eligible for net Consolidated balance sheet
presentation. Where the Firm has obtained an appropriate legal opinion with respect to the counterparty master netting agreement, such collateral, along with securities financing balances that do not meet all these relevant netting criteria under U.S. GAAP, is presented in the counterparty.table below as “Amounts not nettable on the Consolidated balance sheets,” and reduces the “Net amounts” presented. Where a legal opinion has not been either sought or obtained, the securities financing balances are presented gross in the “Net amounts” below,below.
2020
December 31, (in millions)Gross amountsAmounts netted on the Consolidated balance sheetsAmounts presented on the Consolidated balance sheets
Amounts not
nettable on the Consolidated
balance sheets(b)
Net amounts(c)
Assets
Securities purchased under resale agreements$666,467 $(370,183)$296,284 $(273,206)$23,078 
Securities borrowed193,700 (33,065)160,635 (115,219)45,416 
Liabilities
Securities sold under repurchase agreements$578,060 $(370,183)$207,877 $(191,980)$15,897 
Securities loaned and other(a)
41,366 (33,065)8,301 (8,257)44 
2019
December 31, (in millions)Gross amountsAmounts netted on the Consolidated balance sheetsAmounts presented on the Consolidated balance sheets
Amounts not
nettable on the Consolidated
balance sheets(b)
Net amounts(c)
Assets
Securities purchased under resale agreements$628,609 $(379,463)$249,146 $(231,147)(d)$17,999 (d)
Securities borrowed166,718 (26,960)139,758 (104,990)34,768 
Liabilities
Securities sold under repurchase agreements$555,172 $(379,463)$175,709 $(151,566)$24,143 
Securities loaned and other(a)
36,649 (26,960)9,689 (9,654)35 
(a)Includes securities-for-securities lending agreements of $3.4 billion and related$3.7 billion at December 31, 2020 and 2019, respectively, accounted for at fair value, where the Firm is acting as lender. In the Consolidated balance sheets, the Firm recognizes the securities received at fair value within other assets and the obligation to return those securities within accounts payable and other liabilities.
(b)In some cases, collateral does not reduceexchanged with a counterparty exceeds the net asset or liability balance with that counterparty. In such cases, the amounts presented.reported in this column are limited to the related net asset or liability with that counterparty.
(c) the Firm hasIncludes securities financing agreements that provide collateral rights, but where an appropriate legal opinion with respect to the master netting agreement with the counterparty. Where a legal opinion has not been either sought or obtained, theobtained. At December 31, 2020 and 2019, included $17.0 billion and $11.0 billion, respectively, of securities financing balances are presented gross in the “Net amounts” below,purchased under resale agreements; $42.1 billion and related collateral does not reduce the$31.9 billion, respectively, of securities borrowed; $14.5 billion and $22.7 billion, respectively, of securities sold under repurchase agreements; and $8 million and $7 million, respectively, of securities loaned and other.
(d)The prior period amounts presented.the counterparty. Such collateral, along with securities financing balances that do not meet all these relevant netting criteria under U.S. GAAP, is presented as “Amounts not nettable on the Consolidated balance sheets,” and reduces the “Net amounts” presented below, if the Firm has an appropriate legal opinion with respecthave been revised to the master netting agreementconform with the counterparty. Where a legal opinion has not been either sought or obtained, the securities financing balances are presented gross in the “Net amounts” below, and related collateral does not reduce the amounts presented.current period presentation.
 2018
December 31, (in millions)Gross amountsAmounts netted on the Consolidated balance sheets
Amounts presented on the Consolidated balance sheets(b)
Amounts not nettable on the Consolidated balance sheets(c)
Net amounts(d)
Assets     
Securities purchased under resale agreements$691,116
$(369,612)$321,504
$(308,854)$12,650
Securities borrowed132,955
(20,960)111,995
(79,747)32,248
Liabilities     
Securities sold under repurchase agreements$541,587
$(369,612)$171,975
$(149,125)$22,850
Securities loaned and other(a)
33,700
(20,960)12,740
(12,358)382
 2017
December 31, (in millions)Gross amountsAmounts netted on the Consolidated balance sheets
Amounts presented on the Consolidated balance sheets(b)
Amounts not nettable on the Consolidated balance sheets(c)
Net amounts(d)
Assets     
Securities purchased under resale agreements$448,608
$(250,505)$198,103
$(188,502)$9,601
Securities borrowed113,926
(8,814)105,112
(76,805)28,307
Liabilities     
Securities sold under repurchase agreements$398,218
$(250,505)$147,713
$(129,178)$18,535
Securities loaned and other(a)
27,228
(8,814)18,414
(18,151)263
(a)Includes securities-for-securities lending agreements of $3.3 billion and $9.2 billion at December 31, 2018 and 2017, respectively, accounted for at fair value, where the Firm is acting as lender. These amounts are presented within accounts payable and other liabilities in the Consolidated balance sheets.
(b)Includes securities financing agreements accounted for at fair value. At December 31, 2018 and 2017, included securities purchased under resale agreements of $13.2 billion and $14.7 billion, respectively; securities sold under repurchase agreements of $935 million and $697 million, respectively; and securities borrowed of $5.1 billion and $3.0 billion, respectively. There were no securities loaned accounted for at fair value in either period.
(c)In some cases, collateral exchanged with a counterparty exceeds the net asset or liability balance with that counterparty. In such cases, the amounts reported in this column are limited to the related net asset or liability with that counterparty.
(d)Includes securities financing agreements that provide collateral rights, but where an appropriate legal opinion with respect to the master netting agreement has not been either sought or obtained. At December 31, 2018 and 2017, included $7.9 billion and $7.5 billion, respectively, of securities purchased under resale agreements; $30.3 billion and $25.5 billion, respectively, of securities borrowed; $21.5 billion and $16.5 billion, respectively, of securities sold under repurchase agreements; and $25 million and $29 million, respectively, of securities loaned and other.


230JPMorgan Chase & Co./20182020 Form 10-K217
Notes to consolidated financial statements

The tables below present as of December 31, 20182020 and 20172019 the types of financial assets pledged in securities financing agreements and the remaining contractual maturity of the securities financing agreements.
Gross liability balance
20202019
December 31, (in millions)Securities sold under repurchase agreementsSecurities loaned and otherSecurities sold under repurchase agreementsSecurities loaned and other
Mortgage-backed securities:
U.S. GSEs and government agencies$56,744 $0 $34,119 $0 
Residential - nonagency1,016 0 1,239 0 
Commercial - nonagency855 0 1,612 0 
U.S. Treasury, GSEs and government agencies315,834 143 334,398 29 
Obligations of U.S. states and municipalities1,525 2 1,181 0 
Non-U.S. government debt157,563 1,730 145,548 1,528 
Corporate debt securities22,849 1,864 13,826 1,580 
Asset-backed securities694 0 1,794 0 
Equity securities20,980 37,627 21,455 33,512 
Total$578,060 $41,366 $555,172 $36,649 
 Gross liability balance
 2018 2017
December 31, (in millions)Securities sold under repurchase agreementsSecurities loaned and other Securities sold under repurchase agreementsSecurities loaned and other
Mortgage-backed securities:     
U.S. government agencies$28,811
$—
 $13,100
$—
Residential - nonagency2,165
—
 2,972
—
Commercial - nonagency1,390
—
 1,594
—
U.S. Treasury and government agencies323,078
69
 177,581
14
Obligations of U.S. states and municipalities1,150
—
 1,557
—
Non-U.S. government debt154,900
4,313
 170,196
2,485
Corporate debt securities13,898
428
 14,231
287
Asset-backed securities3,867
—
 3,508
—
Equity securities12,328
28,890
 13,479
24,442
Total$541,587
$33,700
 $398,218
$27,228
Remaining contractual maturity of the agreements
Overnight and continuousGreater than
90 days
2020 (in millions)
Up to 30 days30 – 90 daysTotal
Total securities sold under repurchase agreements$238,667 $230,980 $70,777 $37,636 $578,060 
Total securities loaned and other37,887 1,647 500 1,332 41,366 
Remaining contractual maturity of the agreements
Overnight and continuousGreater than
90 days
2019 (in millions)Up to 30 days30 – 90 daysTotal
Total securities sold under repurchase agreements$225,134 $195,816 (a)$56,020 (a)$78,202 (a)$555,172 
Total securities loaned and other32,028 1,706 937 1,978 36,649 
 Remaining contractual maturity of the agreements
 Overnight and continuous    
Greater than
90 days
 
2018 (in millions)
 Up to 30 days 30 – 90 daysTotal
Total securities sold under repurchase agreements$247,579
 $174,971
 $71,637
$47,400
$541,587
Total securities loaned and other28,402
 997
 2,132
2,169
33,700
 Remaining contractual maturity of the agreements
 Overnight and continuous    
Greater than
90 days
 
2017 (in millions) Up to 30 days 30 – 90 daysTotal
Total securities sold under repurchase agreements$142,185
(a) 
$180,674
(a) 
$41,611
$33,748
$398,218
Total securities loaned and other22,876
 375
 2,328
1,649
27,228

(a)The prior period amounts have been revised to conform with the current period presentation.
(a)The prior period amounts have been revised to conform with the current period presentation.
Transfers not qualifying for sale accounting
At December 31, 20182020 and 2017,2019, the Firm held $701 $598 million and $1.5 billion, $743 million, respectively, of financial assets for which the rights have been transferred to third parties; however, the transfers did not qualify as a sale in accordance with U.S. GAAP. These transfers have been recognized as collateralized financing transactions. The transferred assets are recorded in trading assets and loans, and the corresponding liabilities are recorded predominantly in short-term borrowings on the Consolidated balance sheets.

218JPMorgan Chase & Co./20182020 Form 10-K231
Notes to consolidated financial statements


Note 12 – Loans
Loan accounting framework
The accounting for a loan depends on management’s strategy for the loan, and on whether the loan was credit-impaired at the date of acquisition.loan. The Firm accounts for loans based on the following categories:
•Originated or purchased loans held-for-investment (i.e., “retained”), other than PCI loans
•Loans held-for-sale
•Loans at fair value
PCI loans held-for-investmentEffective January 1, 2020, the Firm adopted the CECL accounting guidance. Refer to Note 1 for further information.
The following provides a detailed accounting discussion of these loan categories:the Firm’s loans by category:
Loans held-for-investment (other than PCI loans)
Originated or purchased loans held-for-investment other than PCI loans, are recorded at the principal amount outstanding, net of the following: charge-offs; interest applied to principal (for loans accounted for on the cost recovery method); unamortized discounts and premiums; and net deferred loan fees or costs. Credit card loans also include billed finance charges and fees net of an allowance for uncollectible amounts.fees.
Interest income
Interest income on performing loans held-for-investment other than PCI loans, is accrued and recognized as interest income at the contractual rate of interest. Purchase price discounts or premiums, as well as net deferred loan fees or costs, are amortized into interest income over the contractual life of the loan as an adjustment of yield.
The Firm classifies accrued interest on loans, including accrued but unbilled interest on credit card loans, in accrued interest and accounts receivables on the Consolidated balance sheets. For credit card loans, accrued interest once billed is then recognized in the loan balances, with the related allowance recorded in the allowance for credit losses. Changes in the allowance for credit losses on accrued interest on credit card loans are recognized in the provision for credit losses and charge-offs are recognized by reversing interest income. Expected losses related to accrued interest on certain performing, modified loans to borrowers impacted by COVID-19 are considered in the Firm’s allowance for loan losses. For other loans, the Firm generally does not recognize an allowance for credit losses on accrued interest receivables, consistent with its policy to write them off no later than 90 days past due by reversing interest income.
Nonaccrual loans
Nonaccrual loans are those on which the accrual of interest has been suspended. Loans (other than credit card loans and certain consumer loans insured by U.S. government agencies) are placed on nonaccrual status and considered nonperforming when full payment of principal and interest is not expected, regardless of delinquency status, or when principal and interest has been in default for a period of 90
days or more, unless the loan is both well-secured and in the process of collection. A loan is determined to be past due when the minimum payment is not received from the borrower by the contractually specified due date or for certain loans (e.g., residential real estate loans), when a monthly payment is due and unpaid for 30 days or more. Finally, collateral-dependent loans are typically maintained on nonaccrual status.
On the date a loan is placed on nonaccrual status, all interest accrued but not collected is reversed against interest income. In addition, the amortization of deferred amounts is suspended. Interest income on nonaccrual loans may be recognized as cash interest payments are received (i.e., on a cash basis) if the recorded loan balance is deemed fully collectible; however, if there is doubt regarding the ultimate collectibility of the recorded loan balance, all interest cash receipts are applied to reduce the
carrying value of the loan (the cost recovery method). For consumer loans, application of this policy typically results in the Firm recognizing interest income on nonaccrual consumer loans on a cash basis.
A loan 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 loan.
As permitted by regulatory guidance, credit card loans are generally exempt from being placed on nonaccrual status; accordingly, interest and fees related to credit card loans continue to accrue until the loan is charged off or paid in full.The Firm separately establishes an allowance, which reduces loans and is charged to interest income, for the estimated uncollectible portion of accrued and billed interest and fee income on credit card loans.
Allowance for loan losses
The allowance for loan losses represents the estimated probableexpected credit losses inherent in the held-for-investment loan portfolio at the balance sheet date and is recognized on the balance sheet as a contra asset, which brings the recorded investmentamortized cost to the net carrying value. Changes in the allowance for loan losses are recorded in the provision for credit losses on the Firm’s Consolidated statements of income. Refer to Note 13 for further information on the Firm’s accounting policies for the allowance for loan losses.
Charge-offs
Consumer loans, other than risk-rated business banking and auto loans, and PCI loans are generally charged off or charged down to the lower of the amortized cost or the net realizable value of the underlying collateral (i.e., fair value less estimated costs to sell), with an offset to the allowance for loan losses, upon reaching specified stages of delinquency in accordance with standards established by the FFIEC. Residential real estate loans, and non-modifiedunmodified credit card loans and scored business banking loans are generally charged off no later than180 dayspast due.Scored auto and modified credit card loans are charged off no later than120 dayspast due.
232JPMorgan Chase & Co./2020 Form 10-K

Certain consumer loans will beare charged off or charged down to their net realizable value earlier than the FFIEC charge-off standards in certain circumstances as follows:
•Loans modified in a TDR that are determined to be collateral-dependent.
•
Loans modified in a TDR that are determined to be collateral-dependent.
Loans to borrowers who have experienced an event that suggests a loss is either known or highly certain are subject to accelerated charge-off standards (e.g., residential real estate and auto loans are charged off or charged down within 60 days of receiving notification of a bankruptcy filing).
•
Auto loans upon repossession of the automobile.
•Auto loans upon repossession of the automobile.
Other than in certain limited circumstances, the Firm typically does not recognize charge-offs on the government-guaranteed portion of loans.

JPMorgan Chase & Co./2018 Form 10-K219
Notes to consolidated financial statements

Wholesale loans, risk-rated business banking loans and risk-rated auto loans are charged off when it is highly certain that a loss has been realized, including situations where a loan is determined to be both impaired and collateral-dependent.realized. The determination of whether to recognize a charge-off 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 or the loan collateral.
When a loan is charged down to the lower of its amortized cost or the estimated net realizable value of the underlying collateral, the determination of the fair value of the collateral depends on the type of collateral (e.g., securities, real estate). In cases where the collateral is in the form of liquid securities, the fair value is based on quoted market prices or broker quotes. For illiquid securities or other financial assets, the fair value of the collateral is generally estimated using a discounted cash flow model.
For residential real estate loans, collateral values are based upon external valuation sources. When it becomes likely that a borrower is either unable or unwilling to pay, the Firm utilizes a broker’s price opinion, appraisal and/or an automated valuation model of the home based on an exterior-only valuation (“exterior opinions”), which is then updated at least everytwelve months,, or more frequently depending on various market factors. As soon as practicable after the Firm receives the property in satisfaction of a debt (e.g., by taking legal title or physical possession), the Firm generally obtains an appraisal based on an inspection that includes the interior of the home (“interior appraisals”). Exterior opinions and interior appraisals are discounted based upon the Firm’s experience with actual liquidation values as compared with the estimated values provided by exterior opinions and interior appraisals, considering state-specific factors.
For commercial real estate loans, collateral values are generally based on appraisals from internal and external valuation sources. Collateral values are typically updated everysixtotwelve months,, either by obtaining a new appraisal or by performing an internal analysis, in accordance with the Firm’s policies. The Firm also considers both borrower- and market-specific factors, which may
result in obtaining appraisal updates or broker price opinions at more frequent intervals.
Loans held-for-sale
Held-for-sale loansLoans held-for-sale are measured at the lower of cost or fair value, with valuation changes recorded in noninterest revenue. For consumer loans, the valuation is performed on a portfolio basis. For wholesale loans, the valuation is performed on an individual loan basis.
Interest income on loans held-for-sale is accrued and recognized based on the contractual rate of interest.
Loan origination fees or costs and purchase price discounts or premiums are deferred in a contra loan account until the related loan is sold. The deferred fees or costs and discounts or premiums are an adjustment to the basis of the loan and therefore are included in the periodic determination of the lower of cost or fair value adjustments and/or the gain or loss recognized at the time of sale.
Held-for-sale loans are subject to the nonaccrual policies described above.
Because held-for-salethese loans are recognized at the lower of cost or fair value, the Firm’s allowance for loan losses and charge-off policies do not apply to these loans. However, loans held-for-sale are subject to the nonaccrual policies described above.
Loans at fair value
Loans used in a market-making strategy or risk managed on afor which the fair value basisoption has been elected are measured at fair value, with changes in fair value recorded in noninterest revenue.
Interest income on these loans is accrued and recognized based on the contractual rate of interest. Changes in fair value are recognized in noninterest revenue. Loan origination fees are recognized upfront in noninterest revenue. Loan origination costs are recognized in the associated expense category as incurred.
Because these loans are recognized at fair value, the Firm’s allowance for loan losses and charge-off policies do not apply to these loans.However, loans at fair value are subject to the nonaccrual policies described above.
Refer to Note 3 for further information on the Firm’s elections of fair value accounting under the fair value option. Refer to Note 2 and Note 3 for further information on loans carried at fair value and classified as trading assets.
PCI loans
PCI loans held-for-investment are initially measured at fair value. PCI loans have evidence of credit deterioration since the loan’s origination date and therefore it is probable, at acquisition, that all contractually required payments will not be collected. Because PCI loans are initially measured at fair value, which includes an estimate of future credit losses, no allowance for loan losses related to PCI loans is recorded at the acquisition date. Refer to page 231 of this Note for information on accounting for PCI loans subsequent to their acquisition.

220JPMorgan Chase & Co./20182020 Form 10-K233

Notes to consolidated financial statements

Loan classification changes
Loans in the held-for-investment portfolio that management decides to sell are transferred to the held-for-sale portfolio at the lower of cost or fair value on the date of transfer. Credit-related losses are charged against the allowance for loan losses; non-credit related losses such as those due to changes in interest rates or foreign currency exchange rates are recognized in noninterest revenue.
In the event that management decides to retain a loan in the held-for-sale portfolio, the loan is transferred to the held-for-investment portfolio at the lower ofamortized cost or fair value on the date of transfer. These loans are subsequently assessed for impairment based on the Firm’s allowance methodology. ForRefer to Note 13 for a further discussion of the methodologies used in establishing the Firm’s allowance for loan losses, refer to Note 13.losses.
Loan modifications
The Firm seeks to modify certain loans in conjunction with its loss-mitigationloss mitigation activities. Through the modification, JPMorgan Chase grants one or more concessions to a borrower who is experiencing financial difficulty in order to minimize the Firm’s economic loss and avoid foreclosure or repossession of the collateral, and to ultimately maximize payments received by the Firm from the borrower. The concessions granted vary by program and by borrower-specific characteristics, and may include interest rate reductions, term extensions, payment deferrals,delays, principal forgiveness, or the acceptance of equity or other assets in lieu of payments.
Such modifications are accounted for and reported as TDRs. A loanLoans with short-term and other insignificant modifications that has been modified in a TDR is generallyare not considered to be impaired until it matures, is repaid, or is otherwise liquidated, regardless of whether the borrower performs under the modified terms. In certain limited cases, the effective interest rate applicable to the modified loan is at or above the current market rate at the time of the restructuring. In such circumstances, and assuming that the loan subsequently performs under its modified terms and the Firm expects to collect all contractual principal and interest cash flows, the loan is disclosed as impaired and as a TDR only during the year of the modification; in subsequent years, the loan isconcessions are not disclosed as an impaired loan or as a TDR so long as repayment of the restructured loan under its modified terms is reasonably assured.
TDRs.
Loans, except for credit card loans, modified in a TDR are generally placed on nonaccrual status, although in many cases such loans were already on nonaccrual status prior to modification. These loans may be returned to performing status (the accrual of interest is resumed) if the following criteria are met: (i) the borrower has performed under the modified terms for a minimum of six months and/or six 6 payments, and (ii) the Firm has an expectation that repayment of the modified loan is reasonably assured based on, for example, the borrower’s debt capacity and level of future earnings, collateral values, LTV ratios, and other current market considerations. In certain limited and well-defined circumstances in which the loan is current at the modification date, such loans are not placed on nonaccrual status at the time of modification.
Because loansLoans modified in TDRs are considered to be impaired, these loans aregenerally measured for impairment using the Firm’s established asset-specific allowance methodology, which considers the expected re-default rates for the modified loans. A loan modified in a TDR generally remains subject to the asset-specific component of the allowance methodology throughout its remaining life, regardless of whether the loan is performing and has been returned to accrual status and/or the loan has been removed from the impaired loans disclosures (i.e., loans restructured at market rates). Forstatus. Refer to Note 13 for further
discussion of the methodology used to estimate the Firm’s asset-specific allowance.
The Firm has granted various forms of assistance to customers and clients impacted by the COVID-19 pandemic, including payment deferrals and covenant modifications. The majority of the Firm’s COVID-19 related loan modifications have not been considered TDRs because:
•asset-specific allowance, refer to Note 13.they represent short-term or other insignificant modifications, whether under the Firm’s regular loan modification assessments or as permitted by regulatory guidance, or
•the Firm has elected to apply the option to suspend the application of accounting guidance for TDRs as provided by the CARES Act and extended by the Consolidated Appropriations Act.
To the extent that certain modifications do not meet any of the above criteria, the Firm accounts for them as TDRs.
As permitted by regulatory guidance, the Firm does not place loans with deferrals granted due to COVID-19 on nonaccrual status where such loans are not otherwise reportable as nonaccrual. The Firm considers expected losses of principal and accrued interest associated with all COVID-19 related loan modifications in its allowance for credit losses.
Assistance provided in response to the COVID-19 pandemic could delay the recognition of delinquencies, nonaccrual status, and net charge-offs for those customers who would have otherwise moved into past due or nonaccrual status.
Foreclosedproperty
The Firm acquires property from borrowers through loan restructurings, workouts, and foreclosures. Property acquired may include real property (e.g., residential real estate, land, and buildings) and commercial and personal property (e.g., automobiles, aircraft, railcars, and ships).
The Firm recognizes foreclosed property upon receiving assets in satisfaction of a loan (e.g., by taking legal title or physical possession). For loans collateralized by real property, the Firm generally recognizes the asset received at foreclosure sale or upon the execution of a deed in lieu of foreclosure transaction with the borrower. Foreclosed assets are reported in other assets on the Consolidated balance sheets and initially recognized at fair value less estimated costs to sell. Each quarter the fair value of the acquired property is reviewed and adjusted, if necessary, to the lower of cost or fair value. Subsequent adjustments to fair value are charged/credited to noninterest revenue. Operating expense, such as real estate taxes and maintenance, are charged to other expense.
In response to the COVID-19 pandemic, the Firm has temporarily suspended certain foreclosure activities. This could delay recognition of foreclosed properties until the foreclosure moratoriums are lifted.

234JPMorgan Chase & Co./20182020 Form 10-K221
Notes to consolidated financial statements

Loan portfolio
The Firm’s loan portfolio is divided into three3 portfolio segments, which are the same segments used by the Firm to determine the allowance for loan losses: Consumer, excluding credit card; Credit card; and Wholesale. Within each portfolio segment the Firm monitors and assesses the credit risk in the following classes of loans, based on the risk characteristics of each loan class.
In conjunction with the adoption of CECL, the Firm revised its loan classes. Prior-period amounts have been revised to conform with the current presentation:
•The consumer, excluding credit card portfolio segment’s residential mortgage and home equity loans and lending-related commitments have been combined into a residential real estate class.
•Upon adoption of CECL, the Firm elected to discontinue the pool-level accounting for PCI loans and to account for these loans on an individual loan basis. PCI loans are considered PCD loans under CECL and are subject to the Firm’s nonaccrual and charge-off policies. PCD loans are now reported in the consumer, excluding credit card portfolio segment’s residential real estate class.
•Risk-rated business banking and auto dealer loans and lending-related commitments held in CCB were reclassified from the consumer, excluding credit card portfolio segment, to the wholesale portfolio segment, to align with the methodology applied when determining the allowance. The remaining scored auto and business banking loans and lending-related commitments have been combined into an auto and other class.
•The wholesale portfolio segment’s classes, previously based on the borrower’s primary business activity, have been revised to align with the loan classifications as defined by the bank regulatory agencies, based on the loan’s collateral, purpose, and type of borrower.
Consumer, excluding
credit card(a)
Credit card
Wholesale(f)(c)
    • Residential real estate – excluding PCI
• Residential mortgage(b)(a)
• Home equityAuto and other(c)(b)
Other consumer loans
(d)
• Auto
• Consumer & Business Banking(e)
Residential real estate – PCI
• Home equity
• Prime mortgage
• Subprime mortgage
• Option ARMs
• Credit card loans
• Secured by real estate
• Commercial and industrial
• Real estate
• Financial institutions
• Governments & Agencies
• Other(g)(d)
(a)Includes loans held in CCB, prime
(a)Includes scored mortgage and home equity loans held in CCB and AWM, and scored mortgage and home equity loans held in AWM and prime mortgage loans held in Corporate.
(b)Predominantly includes prime (including option ARMs) and subprime loans.
(c)Includes senior and junior lien home equity loans.
(d)Includes certain business banking and auto dealer risk-rated loans that apply the wholesale methodology for determining the allowance for loan losses; these loans are managed by CCB, and therefore, for consistency in presentation, are included with the other consumer loan classes.
(e)Predominantly includes Business Banking loans.
(f)Includes loans held in CIB CB, AWM and Corporate. Excludes prime mortgage and home equity loans held in AWM and prime mortgage loans held in Corporate. Classes are internally defined and may not align with regulatory definitions.
(g)Includes loans to: individuals and individual entities (predominantly consists of Wealth Management clients within AWM and includes exposure to personal investment companies and personal and testamentary trusts), SPEs and Private education and civic organizations. For more information on SPEs, refer to Note 14.
The following tables summarize the Firm’s loan balances by portfolio segment.
(b)Includes scored auto and business banking loans and overdrafts.
December 31, 2018Consumer, excluding credit card
Credit card(a)
WholesaleTotal 
(in millions) 
Retained $373,637
  $156,616
  $439,162
  $969,415
(b) 
Held-for-sale 95
  16
  11,877
  11,988
 
At fair value —
  —
  3,151
  3,151
 
Total $373,732
  $156,632
  $454,190
  $984,554
 
             
December 31, 2017Consumer, excluding credit card 
Credit card(a)
  Wholesale  Total 
(in millions) 
Retained $372,553
  $149,387
  $402,898
  $924,838
(b) 
Held-for-sale 128
  124
  3,099
  3,351
 
At fair value —
  —
  2,508
  2,508
 
Total $372,681
  $149,511
  $408,505
  $930,697
 
(c)Includes loans held in CIB, CB, AWM, Corporate as well as risk-rated business banking and auto dealer loans held in CCB for which the wholesale methodology is applied when determining the allowance for loan losses.
(a)Includes accrued interest and fees net of an allowance for the uncollectible portion of accrued interest and fee income.
(b)Loans (other than PCI loans and those for which the fair value option has been elected) are presented net of unamortized discounts and premiums and net deferred loan fees or costs. These amounts were not material as of December 31, 2018 and 2017.
(d)Includes loans to financial institutions, states and political subdivisions, SPEs, nonprofits, personal investment companies and trusts, as well as loans to individuals and individual entities (predominantly Wealth Management clients within AWM). Refer to Note 14 for more information on SPEs.





















222JPMorgan Chase & Co./20182020 Form 10-K235

Notes to consolidated financial statements

The following tables summarize the Firm’s loan balances by portfolio segment.
December 31, 2020Consumer, excluding credit cardCredit cardWholesale
Total(b)(c)
(in millions)
Retained$302,127 $143,432 $514,947 $960,506 
Held-for-sale1,305 784 5,784 7,873 
At fair value(a)
15,147 0 29,327 44,474 
Total$318,579 $144,216 $550,058 $1,012,853 
December 31, 2019Consumer, excluding credit cardCredit cardWholesale
Total(b)(c)
(in millions)
Retained$294,999 $168,924 $481,678 $945,601 
Held-for-sale3,002 0 4,062 7,064 
At fair value(a)
19,816 0 25,139 44,955 
Total$317,817 $168,924 $510,879 $997,620 
(a)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans. Prior-period amounts have been revised to conform with the current presentation.
(b)Excludes $2.9 billion of accrued interest receivables at both December 31, 2020 and 2019. The Firm wrote off accrued interest receivables of $121 million and $50 million for the years ended December 31, 2020 and 2019, respectively.
(c)Loans (other than those for which the fair value option has been elected) are presented net of unamortized discounts and premiums and net deferred loan     fees or costs. These amounts were not material as of December 31, 2020 and 2019.

The following tables provide information about the carrying value of retained loans purchased, sold and reclassified to held-for-sale during the periods indicated. Reclassifications of loans to held-for sale are non-cash transactions.The Firm manages its exposure to credit risk on an ongoing basis. Selling loans is one way that the Firm reduces its credit exposures. Loans that were reclassified to held-for-sale and sold in a subsequent period are excluded from the sales line of this table.
2020
Year ended December 31,
(in millions)		Consumer, excluding
credit card		Credit cardWholesaleTotal
Purchases$3,474 (b)(c)$0 $1,159 $4,633 
Sales352 0 17,916 18,268 
Retained loans reclassified to held-for-sale(a)
2,084 787 1,580 4,451 
2019
Year ended December 31,
(in millions)		Consumer, excluding
credit card		Credit cardWholesaleTotal
Purchases$1,282 (b)(c)$0 $1,291 $2,573 
Sales30,474 0 23,445 53,919 
Retained loans reclassified to held-for-sale(a)
9,188 0 2,371 11,559 
2018
Year ended December 31,
(in millions)		Consumer, excluding
credit card		Credit cardWholesaleTotal
Purchases$2,543 (b)(c)$0 $2,354 $4,897 
Sales9,984 0 16,741 26,725 
Retained loans reclassified to held-for-sale(a)
36 
0 2,276 2,312 
(a)Reclassifications of loans to held-for-sale are non-cash transactions.
(b)Predominantly includes purchases of residential real estate loans, including the Firm’s voluntary repurchases of certain delinquent loans from loan pools as permitted by Government National Mortgage Association (“Ginnie Mae”) guidelines for the years ended December 31, 2020, 2019 and 2018. The Firm typically elects to repurchase these delinquent loans as it continues to service them and/or manage the foreclosure process in accordance with applicable requirements of Ginnie Mae, FHA, RHS, and/or VA.
   2018
Year ended December 31,
(in millions)		 
Consumer, excluding
credit card
Credit cardWholesaleTotal
Purchases  $2,543
(a)(b) 
 $—
  $2,354
  $4,897
Sales  9,984
  —
  16,741
  26,725
Retained loans reclassified to held-for-sale  36
  —
  2,276
  2,312
(c)Excludes purchases of retained loans sourced through the correspondent origination channel and underwritten in accordance with the Firm’s standards. Such purchases were $15.3 billion, $16.6 billion and $18.6 billion for the years ended December 31, 2020, 2019 and 2018, respectively.
   2017
Year ended December 31,
(in millions)		 
Consumer, excluding
credit card
Credit cardWholesaleTotal
Purchases  $3,461
(a)(b) 
 $—
  $1,799
  $5,260
Sales  3,405
  —
  11,063
  14,468
Retained loans reclassified to held-for-sale  6,340
(c)

 —
  1,229
  7,569
   2016
Year ended December 31,
(in millions)		 
Consumer, excluding
credit card
Credit cardWholesaleTotal
Purchases  $4,116
(a)(b) 
 $—
  $1,448
  $5,564
Sales  6,368
  —
  8,739
  15,107
Retained loans reclassified to held-for-sale  321
  —
  2,381
  2,702
(a)Purchases predominantly represent the Firm’s voluntary repurchase of certain delinquent loans from loan pools as permitted by Government National Mortgage Association (“Ginnie Mae”) guidelines. The Firm typically elects to repurchase these delinquent loans as it continues to service them and/or manage the foreclosure process in accordance with applicable requirements of Ginnie Mae, FHA, RHS, and/or VA.
(b)Excludes purchases of retained loans sourced through the correspondent origination channel and underwritten in accordance with the Firm’s standards. Such purchases were $18.6 billion, $23.5 billion and $30.4 billion for the years ended December 31, 2018, 2017 and 2016, respectively.
(c)Includes the Firm’s student loan portfolio which was sold in 2017.

Gains and losses on sales of loans
Gains and lossesNet gains/(losses) on sales of loans and lending-related commitments (including adjustments to record loans and lending-related commitments held-for-sale at the lower of cost or fair value) recognized in other income were not material to the Firmnoninterest revenue was $(43) million for the yearsyear ended December 31, 2018, 20172020 of which $(36) million was related to loans. Net gains on sales of loans was $394 million for the year ended December 31, 2019. Gains and 2016.losses on sales of loans was 0t material for the year ended December 31, 2018. In addition, the sale of loans may also result in write downs, recoveries or changes in the allowance recognized in the provision for credit losses.


236JPMorgan Chase & Co./20182020 Form 10-K223

Notes to consolidated financial statements

Consumer, excluding credit card loan portfolio
Consumer loans, excluding credit card loans, consist primarily of scored residential mortgages, home equity loans and lines of credit, auto loans and consumer and business banking loans, with a focus on serving the prime consumer credit market. The portfolio also includes home equity loans secured by junior liens, prime mortgage loans with an interest-only payment period, and certain payment-option loans that may result in negative amortization.
The following table provides information about retained consumer loans, excluding credit card, by class. In 2017,
December 31, (in millions)20202019
Residential real estate$225,302 $243,317 
Auto and other(a)
76,825 51,682 
Total retained loans$302,127 $294,999 
(a)At December 31, 2020, included $19.2 billion of loans in Business Banking under the Firm sold its student loan portfolio.
December 31, (in millions)2018
2017
Residential real estate – excluding PCI  
Residential mortgage$231,078
$216,496
Home equity28,340
33,450
Other consumer loans  
Auto63,573
66,242
Consumer & Business Banking26,612
25,789
Residential real estate – PCI  
Home equity8,963
10,799
Prime mortgage4,690
6,479
Subprime mortgage1,945
2,609
Option ARMs8,436
10,689
Total retained loans$373,637
$372,553

PPP.
Delinquency rates are athe primary credit quality indicator for consumer loans. Loans that are more than 30 days past due provide an early warning of borrowers who may be experiencing financial difficulties and/or who may be unable or unwilling to repay the loan. As the loan continues to age, it becomes more clear whether the borrower is likely eitherto be unable or unwilling to pay. In the case of residential real estate loans, late-stage delinquencies (greater than 150 days past due) are a strong indicator of loans that will ultimately result in a foreclosure or similar liquidation transaction. In addition to delinquency rates, other credit quality indicators for consumer loans vary based on the class of loan, as follows:
•For residential real estate loans, the current estimated LTV ratio, or the combined LTV ratio in the case of junior lien loans, is an indicator of the potential loss severity in the event of default. Additionally, LTV or combined LTV ratios can provide insight into a borrower’s continued willingness to pay, as the delinquency rate of high-LTV loans tends to be greater than that for loans where the borrower has equity in the collateral. The geographic distribution of the loan collateral also provides insight as to the credit quality of the portfolio, as factors such as the regional economy, home price changes and specific events such as natural disasters, will affect credit quality. The borrower’s current or “refreshed” FICO score is a secondary credit quality indicator for certain loans, as FICO scores are an indication of the borrower’s credit payment history. Thus, a loan to a borrower with a low FICO score (less than 660) is considered to be of higher risk than a loan to a borrower with a higher FICO score. Further, a loan to a borrower with a high LTV ratio and a low FICO score is at greater risk of default than a loan to a borrower that has both a high LTV ratio and a high FICO score.
•
For residential real estate loans, including both non-PCI and PCI portfolios, the current estimated LTV ratio, or the combined LTV ratio in the case of junior lien loans, is an indicator of the potential loss severity in the event of default. Additionally, LTV or combined LTV ratios can provide insight into a borrower’s continued willingness to pay, as the delinquency rate of high-LTV loans tends to be greater than that for loans where the borrower has equity in the collateral. The geographic distribution of the loan collateral also provides insight as to the credit quality of the portfolio, as factors such as the regional economy, home price changes and specific events such as natural disasters, will affect credit quality. The borrower’s current or “refreshed” FICO score is a secondary credit-quality indicator for certain loans, as FICO scores are an indication of the borrower’s credit payment history. Thus, a loan to a borrower with a low FICO score (less than 660 ) is considered to be of higher risk than a loan to a borrower with a higher FICO score. Further, a loan to a borrower with a high LTV ratio and a low FICO score is at greater risk of default than a loan to a borrower that has both a high LTV ratio and a high FICO score.
For scored auto and scored business banking loans, geographic distribution is an indicator of the credit performance of the portfolio. Similar to residential real estate loans, geographic distribution provides insights into the portfolio performance based on regional economic activity and events.
•
Risk-rated business banking and auto loans are similar to wholesale loans in that the primary credit quality indicators are the risk rating that is assigned to the loan and whether the loans are considered to be criticized and/or nonaccrual. Risk ratings are reviewed on a regular and ongoing basis by Credit Risk Management and are adjusted as necessary for updated information about borrowers’ ability to fulfill their obligations. For further information about risk-rated wholesale loan credit quality indicators, refer to page 236 of this Note.

224JPMorgan Chase & Co./20182020 Form 10-K


Residential real estate — excluding PCI loans
The following table provides information by class for retained residential real estate — excluding PCI loans.
Residential real estate – excluding PCI loans      
December 31,
(in millions, except ratios)
Residential mortgage Home equity Total residential real estate – excluding PCI
20182017
20182017
20182017
Loan delinquency(a)
        
Current$225,899
$208,713
 $27,611
$32,391
 $253,510
$241,104
30–149 days past due2,763
4,234
 453
671
 3,216
4,905
150 or more days past due2,416
3,549
 276
388
 2,692
3,937
Total retained loans$231,078
$216,496
 $28,340
$33,450
 $259,418
$249,946
% of 30+ days past due to total retained loans(b)
0.48%0.77% 2.57%3.17% 0.71%1.09%
90 or more days past due and government guaranteed(c)
$2,541
$4,172
 —
—
 $2,541
$4,172
Nonaccrual loans1,765
2,175
 1,323
1,610
 3,088
3,785
Current estimated LTV ratios(d)(e)
        
Greater than 125% and refreshed FICO scores:        
Equal to or greater than 660$25
$37
 $6
$10
 $31
$47
Less than 66013
19
 1
3
 14
22
101% to 125% and refreshed FICO scores:        
Equal to or greater than 66037
36
 111
296
 148
332
Less than 66053
88
 38
95
 91
183
80% to 100% and refreshed FICO scores:        
Equal to or greater than 6603,977
4,369
 986
1,676
 4,963
6,045
Less than 660281
483
 326
569
 607
1,052
Less than 80% and refreshed FICO scores:        
Equal to or greater than 660212,505
194,758
 22,632
25,262
 235,137
220,020
Less than 6606,457
6,952
 3,355
3,850
 9,812
10,802
No FICO/LTV available813
1,259
 885
1,689
 1,698
2,948
U.S. government-guaranteed6,917
8,495
 —
—
 6,917
8,495
Total retained loans$231,078
$216,496
 $28,340
$33,450
 $259,418
$249,946
Geographic region(f)
        
California$74,759
$68,855
 $5,695
$6,582
 $80,454
$75,437
New York28,847
27,473
 5,769
6,866
 34,616
34,339
Illinois15,249
14,501
 2,131
2,521
 17,380
17,022
Texas13,769
12,508
 1,819
2,021
 15,588
14,529
Florida10,704
9,598
 1,575
1,847
 12,279
11,445
Washington8,304
6,962
 869
1,026
 9,173
7,988
New Jersey7,302
7,142
 1,642
1,957
 8,944
9,099
Colorado8,140
7,335
 521
632
 8,661
7,967
Massachusetts6,574
6,323
 236
295
 6,810
6,618
Arizona4,434
4,109
 1,158
1,439
 5,592
5,548
All other(g)
52,996
51,690
 6,925
8,264
 59,921
59,954
Total retained loans$231,078
$216,496
 $28,340
$33,450
 $259,418
$249,946

(a)Individual delinquency classifications include mortgage loans insured by U.S. government agencies as follows: current included $2.8 billion and $2.4 billion; 30–149 days past due included $2.1 billion and $3.2 billion; and 150 or more days past due included $2.0 billion and $2.9 billion at December 31, 2018 and 2017, respectively.
(b)At December 31, 2018 and 2017, residential mortgage loans excluded mortgage loans insured by U.S. government agencies of $4.1 billion and $6.1 billion, respectively, that are 30 or more days past due. These amounts have been excluded based upon the government guarantee.
(c)These balances, which are 90 days or more past due, were excluded from nonaccrual loans as the loans are guaranteed by U.S government agencies. Typically the principal balance of the loans is insured and interest is guaranteed at a specified reimbursement rate subject to meeting agreed-upon servicing guidelines. At December 31, 2018 and 2017, these balances included $999 million and $1.5 billion, respectively, of loans that are no longer accruing interest based on the agreed-upon servicing guidelines. For the remaining balance, interest is being accrued at the guaranteed reimbursement rate. There were no loans that were not guaranteed by U.S. government agencies that are 90 or more days past due and still accruing interest at December 31, 2018 and 2017.
(d)Represents the aggregate unpaid principal balance of loans divided by the estimated current property value. Current property values are estimated, at a minimum, quarterly, based on home valuation models using nationally recognized home price index valuation estimates incorporating actual data to the extent available and forecasted data where actual data is not available. These property values do not represent actual appraised loan level collateral values; as such, the resulting ratios are necessarily imprecise and should be viewed as estimates. Current estimated combined LTV for junior lien home equity loans considers all available lien positions, as well as unused lines, related to the property.
(e)Refreshed FICO scores represent each borrower’s most recent credit score, which is obtained by the Firm on at least a quarterly basis.
(f)The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at December 31, 2018.
(g)At December 31, 2018 and 2017, included mortgage loans insured by U.S. government agencies of $6.9 billion and $8.5 billion, respectively. These amounts have been excluded from the geographic regions presented based upon the government guarantee.

JPMorgan Chase & Co./2018 Form 10-K225237
Notes to consolidated financial statements

Residential real estate

The following table provides information on delinquency, which is the primary credit quality indicator for retained residential real estate loans.

(in millions, except ratios)December 31, 2020December 31, 2019
Term loans by origination yearRevolving loansTotalTotal
20202019201820172016Prior to 2016Within the revolving periodConverted to term loans
Loan delinquency(a)(b)
Current$55,562 $31,820 $13,900 $20,410 $27,978 $50,232 $7,370 $15,792 $223,064 $239,979 
30–149 days past due9 25 20 22 29 674 21 245 1,045 1,910 
150 or more days past due3 14 10 18 18 844 22 264 1,193 1,428 
Total retained loans$55,574 $31,859 $13,930 $20,450 $28,025 $51,750 $7,413 $16,301 $225,302 $243,317 
% of 30+ days past due to total retained loans(c)
0.02 %0.12 %0.22 %0.20 %0.17 %2.86 %0.58 %3.12 %0.98 %1.35 %
Approximately(a) 37% Individual delinquency classifications include mortgage loans insured by U.S. government agencies as follows: current included $36 million and $17 million; 30–149 days past due included $16 million and $20 million; and 150 or more days past due included $24 million and $26 million at December 31, 2020 and 2019, respectively.
(b)At December 31, 2020, loans under payment deferral programs offered in response to the COVID-19 pandemic which are still within their deferral period and performing according to their modified terms are generally not considered delinquent.
(c)At December 31, 2020 and 2019, residential real estate loans excluded mortgage loans insured by U.S. government agencies of $40 million and $46 million, respectively, that are 30 or more days past due. These amounts have been excluded based upon the government guarantee.

Approximately 35% of the home equity portfoliototal revolving loans are senior lien loans; the remaining balance are junior lien HELOANs or HELOCs.loans. The following table provideslien position the Firm holds is considered in the Firm’s delinquency statisticsallowance for junior lien home equitycredit losses. Revolving loans and lines as ofDecember 31, 2018 and 2017.
  Total loans Total 30+ day delinquency rate
December 31, (in millions except ratios) 20182017 20182017
HELOCs:(a)
      
Within the revolving period(b)
 $5,608
$6,363
 0.25%0.50%
Beyond the revolving period 11,286
13,532
 2.80
3.56
HELOANs 1,030
1,371
 2.82
3.50
Total $17,924
$21,266
 2.00%2.64%
(a) These HELOCs are predominantly revolvingthat have been converted to term loans for a 10-year period, after which time the HELOC converts to a loan with a 20-year amortization period, but also include HELOCs that allow interest-only payments beyond the revolving period.
(b) The Firm manages the risk of HELOCs during their revolving period by closing or reducing the undrawn line to the extent permitted by law when borrowers are experiencing financial difficulty.
HELOCs beyond the revolving period and HELOANs have higher delinquency rates than HELOCsthose that are still within the revolving period. That is primarily because the fully-amortizing payment that is generally required for those products is higher than the minimum payment optionsavailable for HELOCsrevolving loans within the revolving period. The higher delinquency rates associated with amortizing HELOCs and HELOANs are factored into the Firm’s allowance for loan losses.
Impaired loans
The table below provides information about
 the Firm’s residential real estate impaired loans, excluding PCI loans. These loans are considered to be impaired as they have been modified in a TDR. All impaired loans are evaluated for an asset-specific allowance as described in Note 13.
December 31,
(in millions)
Residential mortgage Home equity 
Total residential real estate
– excluding PCI
20182017 20182017 20182017
Impaired loans        
With an allowance$3,381
$4,407
 $1,142
$1,236
 $4,523
$5,643
Without an allowance(a)
1,184
1,213
 870
882
 2,054
2,095
Total impaired loans(b)(c)
$4,565
$5,620
 $2,012
$2,118
 $6,577
$7,738
Allowance for loan losses related to impaired loans$88
$62
 $45
$111
 $133
$173
Unpaid principal balance of impaired loans(d)
6,207
7,741
 3,466
3,701
 9,673
11,442
Impaired loans on nonaccrual status(e)
1,459
1,743
 955
1,032
 2,414
2,775
(a)Represents collateral-dependent residential real estate loans that are charged off to the fair value of the underlying collateral less costs to sell. The Firm reports, in accordance with regulatory guidance, residential real estate loans that have been discharged under Chapter 7 bankruptcy and not reaffirmed by the borrower (“Chapter 7 loans”) as collateral-dependent nonaccrual TDRs, regardless of their delinquency status. At December 31, 2018, Chapter 7 residential real estate loans included approximately 13% of residential mortgages and approximately 9% of home equity that were 30 days or more past due.
(b)At December 31, 2018 and 2017, $4.1 billion and $3.8 billion, respectively, of loans modified subsequent to repurchase from Ginnie Mae in accordance with the standards of the appropriate government agency (i.e., FHA, VA, RHS) are not included in the table above. When such loans perform subsequent to modification in accordance with Ginnie Mae guidelines, they are generally sold back into Ginnie Mae loan pools. Modified loans that do not re-perform become subject to foreclosure.
(c)Predominantly all residential real estate impaired loans, excluding PCI loans, are in the U.S.
(d)Represents the contractual amount of principal owed at December 31, 2018 and 2017. The unpaid principal balance differs from the impaired loan balances due to various factors including charge-offs, net deferred loan fees or costs, and unamortized discounts or premiums on purchased loans.
(e)As of December 31, 2018 and 2017, nonaccrual loans included $2.0 billion and $2.2 billion, respectively, of TDRs for which the borrowers were less than 90 days past due. For additional information about loans modified in a TDR that are on nonaccrual status, refer to the Loan accounting framework on pages 219-221 of this Note.

226238JPMorgan Chase & Co./20182020 Form 10-K


Nonaccrual loans and other credit quality indicators
The following table presents average impairedprovides information on nonaccrual and other credit quality indicators for retained residential real estate loans.
(in millions, except weighted-average data)December 31, 2020December 31, 2019
Nonaccrual loans(a)(b)(c)(d)(e)
$5,313 $2,780 
90 or more days past due and government guaranteed(f)
33 38 
Current estimated LTV ratios(g)(h)
Greater than 125% and refreshed FICO scores:
Equal to or greater than 660$10 $31 
Less than 66018 38 
101% to 125% and refreshed FICO scores:
Equal to or greater than 66072 134 
Less than 66065 132 
80% to 100% and refreshed FICO scores:
Equal to or greater than 6602,365 5,953 
Less than 660435 764 
Less than 80% and refreshed FICO scores:
Equal to or greater than 660208,457 219,469 
Less than 66012,072 14,681 
No FICO/LTV available1,732 2,052 
U.S. government-guaranteed76 63 
Total retained loans$225,302 $243,317 
Weighted average LTV ratio(g)(i)
54 %55 %
Weighted average FICO(h)(i)
763 758 
Geographic region(j)
California$73,444 $82,147 
New York32,287 31,996 
Florida13,981 13,668 
Texas13,773 14,474 
Illinois13,130 15,587 
Colorado8,235 8,447 
Washington7,917 8,990 
New Jersey7,227 7,752 
Massachusetts5,784 6,210 
Connecticut5,024 4,954 
All other(k)
44,500 49,092 
Total retained loans$225,302 $243,317 
(a)Includes collateral-dependent residential real estate loans that are charged down to the lower of amortized cost or the fair value of the underlying collateral less costs to sell. The Firm reports, in accordance with regulatory guidance, residential real estate loans that have been discharged under Chapter 7 bankruptcy and not reaffirmed by the borrower (“Chapter 7 loans”) as collateral-dependent nonaccrual TDRs, regardless of their delinquency status. At December 31, 2020, approximately 7% of Chapter 7 residential real estate loans were 30 days or more past due, respectively.
(b)At December 31, 2020, nonaccrual loans included $1.6 billion of PCD loans. Prior to the adoption of CECL, nonaccrual loans excluded PCI loans as the Firm recognized interest income on each pool of PCI loans as each of the pools was performing.
(c)Generally, all consumer nonaccrual loans have an allowance. In accordance with regulatory guidance, certain nonaccrual loans that are considered collateral-dependent have been charged down to the lower of amortized cost or the fair value of their underlying collateral less costs to sell. If the value of the underlying collateral improves subsequent to the charge down, the related allowance may be negative.
(d)Interest income on nonaccrual loans recognized on a cash basis was $161 million and $166 million for the years ended December 31, 2020 and 2019, respectively.
(e)Generally excludes loans under payment deferral programs offered in response to the COVID-19 pandemic. Includes loans to customers that have exited COVID-19 payment deferral programs and are 90 or more days past due, predominantly all of which were also at least 150 days past due and therefore considered collateral-dependent. Collateral-dependent loans are charged down to the lower of amortized cost or fair value of the underlying collateral less costs to sell.
(f)These balances are excluded from nonaccrual loans as the loans are guaranteed by U.S government agencies. Typically the principal balance of the loans is insured and interest income reportedis guaranteed at a specified reimbursement rate subject to meeting agreed-upon servicing guidelines. At December 31, 2020 and 2019, these balances included $33 million and $34 million, respectively, of loans that are no longer accruing interest based on the agreed-upon servicing guidelines. For the remaining balance, interest is being accrued at the guaranteed reimbursement rate. There were 0 loans that were not guaranteed by U.S. government agencies that are 90 or more days past due and still accruing interest at December 31, 2020 and 2019.
(g)Represents the Firm.aggregate unpaid principal balance of loans divided by the estimated current property value. Current property values are estimated, at a minimum, quarterly, based on home valuation models using nationally recognized home price index valuation estimates incorporating actual data to the extent available and forecasted data where actual data is not available. Current estimated combined LTV for junior lien home equity loans considers all available lien positions, as well as unused lines, related to the property.
(h)Refreshed FICO scores represent each borrower’s most recent credit score, which is obtained by the Firm on at least a quarterly basis.
(i)Excludes loans with no FICO and/or LTV data available.
(j)The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at December 31, 2020.
(k)At December 31, 2020 and 2019, included mortgage loans insured by U.S. government agencies of $76 million and $63 million, respectively. These amounts have been excluded from the geographic regions presented based upon the government guarantee.
Year ended December 31,
(in millions)
Average impaired loans 
Interest income on
impaired loans(a)
 
Interest income on impaired
loans on a cash basis(a)
201820172016 201820172016 201820172016
Residential mortgage$5,082
$5,797
$6,376
 $257
$287
$305
 $75
$75
$77
Home equity2,078
2,189
2,311
 131
127
125
 84
80
80
Total residential real estate – excluding PCI$7,160
$7,986
$8,687
 $388
$414
$430
 $159
$155
$157
(a)JPMorgan Chase & Co./2020 Form 10-KGenerally, interest income on loans modified in TDRs is recognized on a cash basis until the borrower has made a minimum of six payments under the new terms, unless the loan is deemed to be collateral-dependent.239
Notes to consolidated financial statements
Loan modifications
Modifications of residential real estate loans, excluding PCI loans,where the Firm grants concessions to borrowers who are experiencing financial difficulty are generally accounted for and reported as TDRs. Loans with short-term or other insignificant modifications that are not considered concessions are not TDRs nor are loans for which the Firm has elected to apply the option to suspend the application of accounting guidance for TDRs as provided by the CARES Act and extended by the Consolidated Appropriations Act. The carrying value of new TDRs was $819 million, $490 million and $736 million for the years ended December 31, 2020, 2019 and 2018, respectively. There were no additional commitments to lend to borrowers whose residential real estate loans excluding PCI loans, have been modified in TDRs.
The following table presents new TDRs reported by the Firm.
Year ended December 31,
(in millions)		2018
2017
2016
Residential mortgage$401
$373
$254
Home equity286
321
385
Total residential real estate – excluding PCI$687
$694
$639

Nature and extent of modifications
The U.S. Treasury’s Making Home AffordableFirm’s proprietary modification programs as well as the Firm’s proprietary modification government programs, including U.S. GSE programs, generally provide various concessions to financially troubled borrowers including, but not limited to, interest rate reductions, term or payment extensions and deferraldelays of principal and/or interest payments that would otherwise have been required under the terms of the original agreement.
The following table provides information about how residential real estate loans excluding PCI loans, were modified in TDRs under the Firm’s loss mitigation programs described above during the periods presented. This table excludes Chapter 7 loans where the sole concession granted is the discharge of debt.debt, loans with short-term or other insignificant modifications that are not considered concessions, and loans for which the Firm has elected to apply the option to suspend the application of accounting guidance for TDRs as provided by the CARES Act and extended by the Consolidated Appropriations Act.
Year ended December 31,202020192018
Number of loans approved for a trial modification5,522 5,872 7,175 
Number of loans permanently modified6,850 4,918 7,853 
Concession granted:(a)
Interest rate reduction50 %77 %54 %
Term or payment extension49 71 62 
Principal and/or interest deferred14 13 29 
Principal forgiveness2 5 7 
Other(b)
66 63 51 
Year ended December 31,Residential mortgage Home equity 
Total residential real estate
 – excluding PCI
201820172016 201820172016 201820172016
Number of loans approved for a trial modification2,570
1,283
1,945
 2,316
2,321
3,760
 4,886
3,604
5,705
Number of loans permanently modified2,907
2,628
3,338
 4,946
5,624
4,824
 7,853
8,252
8,162
Concession granted:(a)
           
Interest rate reduction40%63%76% 62%59%75% 54%60%76%
Term or payment extension55
72
90
 66
69
83
 62
70
86
Principal and/or interest deferred44
15
16
 20
10
19
 29
12
18
Principal forgiveness8
16
26
 7
13
9
 7
14
16
Other(b)
38
33
25
 58
31
6
 51
32
14
(a)Represents concessions granted in permanent modifications as a percentage of the number of loans permanently modified. The sum of the percentages exceeds 100% because predominantly all of the modifications include more than one type of concession. Concessions offered on trial modifications are generally consistent with those granted on permanent modifications.
(a)Represents concessions granted in permanent modifications as a percentage of the number of loans permanently modified. The sum of the percentages exceeds 100% because predominantly all of the modifications include more than one type of concession. Concessions offered on trial modifications are generally consistent with those granted on permanent modifications.
(b)Includes variable interest rate to fixed interest rate modifications for the years ended December 31, 2018, 2017 and 2016. Also includes forbearances that meet the definition of a TDR for the year ended December 31, 2018. Forbearances suspend or reduce monthly payments for a specific period of time to address a temporary hardship.
(b)Includes variable interest rate to fixed interest rate modifications and payment delays that meet the definition of a TDR for the years ended December 31, 2020, 2019 and 2018.

240JPMorgan Chase & Co./20182020 Form 10-K227
Notes to consolidated financial statements

Financial effects of modifications and redefaults
The following table provides information about the financial effects of the various concessions granted in modifications of residential real estate loans excluding PCI, under the loss mitigation programs described above and about redefaults of certain loans modified in TDRs for the periods presented. The following table presents only the financial effects of permanent modifications and doesdo not include temporary concessions offered through trial modifications. This table also excludes Chapter 7 loans where the sole concession granted is the discharge of debt.debt, loans with short-term or other insignificant modifications that are not considered concessions, and loans for which the Firm has elected to apply the option to suspend the application of accounting guidance for TDRs as provided by the CARES Act and extended by the Consolidated Appropriations Act.
Year ended December 31,
(in millions, except weighted - average data)		202020192018
Weighted-average interest rate of loans with interest rate reductions – before TDR5.09 %5.68 %5.50 %
Weighted-average interest rate of loans with interest rate reductions – after TDR3.28 3.81 3.60 
Weighted-average remaining contractual term (in years) of loans with term or payment extensions – before TDR222021
Weighted-average remaining contractual term (in years) of loans with term or payment extensions – after TDR393938
Charge-offs recognized upon permanent modification$5 $1 $2 
Principal deferred16 19 30 
Principal forgiven5 7 17 
Balance of loans that redefaulted within one year of permanent modification(a)
$199 $166 $161 
(a)Represents loans permanently modified in TDRs that experienced a payment default in the periods presented, and for which the payment default occurred within one year of the modification. The dollar amounts presented represent the balance of such loans at the end of the reporting period in which such loans defaulted. For residential real estate loans modified in TDRs, payment default is deemed to occur when the loan becomes 2 contractual payments past due. In the event that a modified loan redefaults, it will generally be liquidated through foreclosure or another similar type of liquidation transaction. Redefaults of loans modified within the last twelve months may not be representative of ultimate redefault levels.
Year ended
December 31,
(in millions, except weighted-average data)		Residential mortgage Home equity Total residential real estate – excluding PCI
  
201820172016 201820172016 201820172016
Weighted-average interest rate of loans with interest rate reductions – before TDR5.65%5.15%5.59% 5.39%4.94%4.99% 5.50%5.06%5.36%
Weighted-average interest rate of loans with interest rate reductions – after TDR3.80
2.99
2.93
 3.46
2.64
2.34
 3.60
2.83
2.70
Weighted-average remaining contractual term (in years) of loans with term or payment extensions – before TDR24
24
24
 19
21
18
 21
23
22
Weighted-average remaining contractual term (in years) of loans with term or payment extensions – after TDR38
38
38
 39
39
38
 38
38
38
Charge-offs recognized upon permanent modification$1
$2
$4
 $1
$1
$1
 $2
$3
$5
Principal deferred21
12
30
 9
10
23
 30
22
53
Principal forgiven10
20
44
 7
13
7
 17
33
51
Balance of loans that redefaulted within one year of permanent modification(a)
$97
$124
$98
 $64
$56
$40
 $161
$180
$138
(a)Represents loans permanently modified in TDRs that experienced a payment default in the periods presented, and for which the payment default occurred within one year of the modification. The dollar amounts presented represent the balance of such loans at the end of the reporting period in which such loans defaulted. For residential real estate loans modified in TDRs, payment default is deemed to occur when the loan becomes two contractual payments past due. In the event that a modified loan redefaults, it is probable that the loan will ultimately be liquidated through foreclosure or another similar type of liquidation transaction. Redefaults of loans modified within the last 12 months may not be representative of ultimate redefault levels.
At December 31, 2018, 2020, the weighted-average estimated remaining lives of residential real estate loans excluding PCI loans, permanently modified in TDRs were 9 years for residential mortgage and 8 years for home equity. 6 years. The estimated remaining lives of these loans reflect estimated prepayments, both voluntary and involuntary (i.e., foreclosures and other forced liquidations).
Active and suspended foreclosure
At December 31, 20182020 and 2017,2019, the Firm had non-PCI residential real estate loans, excluding those insured by U.S. government agencies, with a carrying value of $653 $846 million and $787 million, $1.2 billion, respectively, that were not included in REO, but were in the process of active or suspended foreclosure.

228JPMorgan Chase & Co./20182020 Form 10-K


Other consumer loans
The table below provides information for other consumer retained loan classes, including auto and business banking loans.
December 31,
(in millions, except ratios)
Auto 
Consumer &
Business Banking
 Total other consumer
20182017 20182017 20182017
Loan delinquency        
Current$62,984
$65,651
 $26,249
$25,454
 $89,233
$91,105
30–119 days past due589
584
 252
213
 841
797
120 or more days past due—
7
 111
122
 111
129
Total retained loans$63,573
$66,242
 $26,612
$25,789
 $90,185
$92,031
% of 30+ days past due to total retained loans0.93%0.89% 1.36%1.30% 1.06%1.01%
Nonaccrual loans(a)
128
141
 245
283
 373
424
Geographic region(b)
   
California$8,330
$8,445
 $5,520
$5,032
 $13,850
$13,477
Texas6,531
7,013
 2,993
2,916
 9,524
9,929
New York3,863
4,023
 4,381
4,195
 8,244
8,218
Illinois3,716
3,916
 2,046
2,017
 5,762
5,933
Florida3,256
3,350
 1,502
1,424
 4,758
4,774
Arizona2,084
2,221
 1,491
1,383
 3,575
3,604
Ohio1,973
2,105
 1,305
1,380
 3,278
3,485
New Jersey1,981
2,044
 723
721
 2,704
2,765
Michigan1,357
1,418
 1,329
1,357
 2,686
2,775
Louisiana1,587
1,656
 860
849
 2,447
2,505
All other28,895
30,051
 4,462
4,515
 33,357
34,566
Total retained loans$63,573
$66,242
 $26,612
$25,789
 $90,185
$92,031
Loans by risk ratings(c)
        
Noncriticized$15,749
$15,604
 $18,743
$17,938
 $34,492
$33,542
Criticized performing273
93
 751
791
 1,024
884
Criticized nonaccrual—
9
 191
213
 191
222
(a)There were no loans that were 90 or more days past due and still accruing interest at December 31, 2018 and December 31, 2017.
(b)The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at December 31, 2018.
(c)For risk-rated business banking and auto loans, the primary credit quality indicator is the risk rating of the loan, including whether the loans are considered to be criticized and/or nonaccrual.

JPMorgan Chase & Co./2018 Form 10-K229241
Notes to consolidated financial statements

Auto and other
Other consumer impaired loans and loan modifications
The following table provides information abouton delinquency, which is the Firm’s primary credit quality indicator for retained auto and other consumer impairedloans.
December 31, 2020December 31, 2019

(in millions, except ratios)		Term Loans by origination yearRevolving loans
20202019201820172016Prior to 2016Within the revolving periodConverted to term loansTotalTotal
Loan delinquency(a)
Current$46,169 (b)$12,829 $7,367 $4,521 $2,058 $742 $2,517 $158 $76,361 $51,005 
30–119 days past due97 107 77 53 42 23 30 17 446 667 
120 or more days past due0 0 0 1 0 1 8 8 18 10 
Total retained loans$46,266 $12,936 $7,444 $4,575 $2,100 $766 $2,555 $183 $76,825 $51,682 
% of 30+ days past due to total retained loans0.21 %0.83 %1.03 %1.18 %2.00 %3.13 %1.49 %13.66 %0.60 %1.31 %
(a)At December 31, 2020, loans including risk-rated business bankingunder payment deferral programs offered in response to the COVID-19 pandemic which are still within their deferral period and performing according to their modified terms are generally not considered delinquent.
(b)At December 31, 2020, included $19.2 billion of loans in Business Banking under the PPP. PPP loans are guaranteed by the SBA. Other than in certain limited circumstances, the Firm typically does not recognize charge-offs, classify as nonaccrual nor record an allowance for loan losses on these loans.

Nonaccrual and other credit quality indicators
The following table provides information on nonaccrual and other credit quality indicators for retained auto and other consumer loans.
(in millions, except ratios)Total Auto and other
December 31, 2020December 31, 2019
Nonaccrual loans(a)(b)(c)
151 146 
Geographic region(d)
California$12,302 $7,795 
New York8,824��3,706 
Texas8,235 5,457 
Florida4,668 3,025 
Illinois3,768 2,443 
New Jersey2,646 1,798 
Arizona2,465 1,347 
Ohio2,163 1,490 
Pennsylvania1,924 1,721 
Colorado1,910 1,247 
All other27,920 21,653 
Total retained loans$76,825 $51,682 
(a)There were 0 loans that were 90 or more days past due and still accruing interest at December 31, 2020 and 2019.
(b)All nonaccrual auto and other consumer loans generally have an allowance. Certain nonaccrual loans that are considered collateral-dependent have been placedcharged down to the lower of amortized cost or the fair value of their underlying collateral less costs to sell. If the value of the underlying collateral improves subsequent to the charge down, the related allowance may be negative.
(c)Interest income on nonaccrual status,loans recognized on a cash basis was not material for the years ended December 31, 2020 and loans that have been modified in TDRs.
December 31, (in millions)2018
2017
Impaired loans  
With an allowance$222
$272
Without an allowance(a)
29
26
Total impaired loans(b)(c)
$251
$298
Allowance for loan losses related to impaired loans$63
$73
Unpaid principal balance of impaired loans(d)
355
402
Impaired loans on nonaccrual status229
268
(a)When discounted cash flows, collateral value or market price equals or exceeds the recorded investment in the loan, the loan does not require an allowance. This typically occurs when the impaired loans have been partially charged off and/or there have been interest payments received and applied to the loan balance.
(b)Predominantly all other consumer impaired loans are in the U.S.
(c)Other consumer average impaired loans were $275 million, $427 million and $635 million for the years ended December 31, 2018, 2017 and 2016, respectively. The related interest income on impaired loans, including those on a cash basis, was not material for the years ended December 31, 2018, 2017 and 2016.
(d)Represents the contractual amount of principal owed at December 31, 2018 and 2017. The unpaid principal balance differs from the impaired loan balances due to various factors, including charge-offs, interest payments received and applied to the principal balance, net deferred loan fees or costs and unamortized discounts or premiums on purchased loans.
Loan modifications2019.
(d)The geographic regions presented in this table are ordered based on the magnitude of the corresponding loan balances at December 31, 2020.
Loan modifications
Certain other consumer loan modifications are considered to be TDRs as they provide various concessions to borrowers who are experiencing financial difficulty. All of these TDRsLoans with short-term or other insignificant modifications that are reported as impaired loans.At December 31, 2018 and 2017, other consumer loans modified in TDRs were $79 million and $102 million, respectively. not considered concessions are not TDRs.
The impact of these modifications, as well as new TDRs, were not material to the Firm for the years ended December 31, 2018, 20172020, 2019 and 2016. 2018. Additional commitments to lend to borrowers whose loans have been modified in TDRs as of December 31, 20182020 and 2017 2019 were not material. TDRs on nonaccrual status were
$57 million and $72 million at December 31, 2018 and 2017, respectively.




230242JPMorgan Chase & Co./20182020 Form 10-K


Purchased credit-impaired loans
PCI loans are initially recorded at fair value at acquisition. PCI loans acquired in the same fiscal quarter may be aggregated 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. All of the Firm’s residential real estate PCI loans were acquired in the same fiscal quarter and aggregated into pools of loans with common risk characteristics.
On a quarterly basis, the Firm estimates the total cash flows (both principal and interest) expected to be collected over the remaining life of each pool. These estimates incorporate assumptions regarding default rates, loss severities, the amounts and timing of prepayments and other factors that reflect then-current market conditions. Probable decreases in expected cash flows (i.e., increased credit losses) trigger the recognition of impairment, which is then measured as the present value of the expected principal loss plus any related forgone interest cash flows, discounted at the pool’s effective interest rate. Impairments are recognized through the provision for credit losses and an increase in the allowance for loan losses. Probable and significant increases in expected cash flows (e.g., decreased credit losses, the net benefit of modifications) would first reverse any previously recorded allowance for loan losses with any remaining increases recognized prospectively as a yield adjustment over the remaining estimated lives of the underlying loans. The impacts of (i) prepayments, (ii) changes in variable interest rates, and (iii) any other changes in the timing of expected cash flows are generally recognized prospectively as adjustments to interest income.
The Firm continues to modify certain PCI loans. The impact of these modifications is incorporated into the Firm’s quarterly assessment of whether a probable and significant change in expected cash flows has occurred, and the loans continue to be accounted for and reported as PCI loans. In evaluating the effect of modifications on expected cash flows, the Firm incorporates the effect of any forgone interest and also considers the potential for redefault. The Firm develops product-specific probability of default estimates, which are used to compute expected credit losses. In developing these probabilities of default, the Firm considers the relationship between the credit quality characteristics of the underlying loans and certain assumptions about home prices and unemployment based upon industry-wide data. The Firm also considers its own historical loss experience to-date based on actual redefaulted modified PCI loans.
The excess of cash flows expected to be collected over the carrying value of the underlying loans is referred to as the accretable yield. 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 remaining estimated lives of the underlying pools of loans.
Since the timing and amounts of expected cash flows for the Firm’s PCI consumer loan pools are reasonably estimable, interest is being accreted and the loan pools are being reported as performing loans.No interest would be accreted and the PCI loan pools would be reported as nonaccrual loans if the timing and/or amounts of expected cash flows on the loan pools were determined not to be reasonably estimable.
The liquidation of PCI loans, which may include sales of loans, receipt of payment in full from the borrower, or foreclosure, results in removal of the loans from the underlying PCI pool. When the amount of the liquidation proceeds (e.g., cash, real estate), if any, is less than the unpaid principal balance of the loan, the difference is first applied against the PCI pool’s nonaccretable difference for principal losses (i.e., the lifetime credit loss estimate established as a purchase accounting adjustment at the acquisition date). When the nonaccretable difference for a particular loan pool has been fully depleted, any excess of the unpaid principal balance of the loan over the liquidation proceeds is written off against the PCI pool’s allowance for loan losses. Write-offs of PCI loans also include other adjustments, primarily related to principal forgiveness modifications. Because the Firm’s PCI loans are accounted for at a pool level, the Firm does not recognize charge-offs of PCI loans when they reach specified stages of delinquency (i.e., unlike non-PCI consumer loans, these loans are not charged off based on FFIEC standards).
The PCI portfolio affects the Firm’s results of operations primarily through: (i) contribution to net interest margin; (ii) expense related to defaults and servicing resulting from the liquidation of the loans; and (iii) any provision for loan losses. The Firm’s residential real estate PCI loans were funded based on the interest rate characteristics of the loans. For example, variable-rate loans were funded with variable-rate liabilities and fixed-rate loans were funded with fixed-rate liabilities with a similar maturity profile. A net spread will be earned on the declining balance of the portfolio, which is estimated as of December 31, 2018, to have a remaining weighted-average life of 7 years.

JPMorgan Chase & Co./2018 Form 10-K231
Notes to consolidated financial statements

Residential real estate – PCI loans
The table below provides information about the Firm’s consumer, excluding credit card, PCI loans.
December 31,
(in millions, except ratios)
Home equity Prime mortgage Subprime mortgage Option ARMs Total PCI
20182017
20182017
20182017
20182017
20182017
Carrying value(a)
$8,963
$10,799
 $4,690
$6,479
 $1,945
$2,609
 $8,436
$10,689
 $24,034
$30,576
Loan delinquency (based on unpaid principal balance)             
Current$8,624
$10,272
 $4,226
$5,839
 $2,033
$2,640
 $7,592
$9,662
 $22,475
$28,413
30–149 days past due278
356
 259
336
 286
381
 398
547
 1,221
1,620
150 or more days past due242
392
 223
327
 123
176
 457
689
 1,045
1,584
Total loans$9,144
$11,020
 $4,708
$6,502
 $2,442
$3,197
 $8,447
$10,898
 $24,741
$31,617
% of 30+ days past due to total loans5.69%6.79% 10.24%10.20% 16.75%17.42% 10.12%11.34% 9.16%10.13%
Current estimated LTV ratios (based on unpaid principal balance)(b)(c)
            
Greater than 125% and refreshed FICO scores:              
Equal to or greater than 660$17
$33
 $1
$4
 $—
$2
 $3
$6
 $21
$45
Less than 66013
21
 7
16
 9
20
 7
9
 36
66
101% to 125% and refreshed FICO scores:              
Equal to or greater than 660135
274
 6
16
 4
20
 17
43
 162
353
Less than 66065
132
 22
42
 35
75
 33
71
 155
320
80% to 100% and refreshed FICO scores:              
Equal to or greater than 660805
1,195
 75
221
 54
119
 119
316
 1,053
1,851
Less than 660388
559
 112
230
 161
309
 190
371
 851
1,469
Lower than 80% and refreshed FICO scores:              
Equal to or greater than 6605,548
6,134
 2,689
3,551
 739
895
 5,111
6,113
 14,087
16,693
Less than 6601,908
2,095
 1,568
2,103
 1,327
1,608
 2,622
3,499
 7,425
9,305
No FICO/LTV available265
577
 228
319
 113
149
 345
470
 951
1,515
Total unpaid principal balance$9,144
$11,020
 $4,708
$6,502
 $2,442
$3,197
 $8,447
$10,898
 $24,741
$31,617
Geographic region (based on unpaid principal balance)(d)
             
California$5,420
$6,555
 $2,578
$3,716
 $593
$797
 $4,798
$6,225
 $13,389
$17,293
Florida976
1,137
 332
428
 234
296
 713
878
 2,255
2,739
New York525
607
 365
457
 268
330
 502
628
 1,660
2,022
Washington419
532
 98
135
 44
61
 177
238
 738
966
Illinois233
273
 154
200
 123
161
 199
249
 709
883
New Jersey210
242
 134
178
 88
110
 258
336
 690
866
Massachusetts65
79
 113
149
 73
98
 240
307
 491
633
Maryland48
57
 95
129
 96
132
 178
232
 417
550
Virginia54
66
 91
123
 37
51
 211
280
 393
520
Arizona165
203
 69
106
 43
60
 112
156
 389
525
All other1,029
1,269
 679
881
 843
1,101
 1,059
1,369
 3,610
4,620
Total unpaid principal balance$9,144
$11,020
 $4,708
$6,502
 $2,442
$3,197
 $8,447
$10,898
 $24,741
$31,617
(a)Carrying value includes the effect of fair value adjustments that were applied to the consumer PCI portfolio at the date of acquisition.
(b)Represents the aggregate unpaid principal balance of loans divided by the estimated current property value. Current property values are estimated, at a minimum, quarterly, based on home valuation models using nationally recognized home price index valuation estimates incorporating actual data to the extent available and forecasted data where actual data is not available. These property values do not represent actual appraised loan level collateral values; as such, the resulting ratios are necessarily imprecise and should be viewed as estimates. Current estimated combined LTV for junior lien home equity loans considers all available lien positions, as well as unused lines, related to the property.
(c)Refreshed FICO scores represent each borrower’s most recent credit score, which is obtained by the Firm on at least a quarterly basis.
(d)The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at December 31, 2018.

232JPMorgan Chase & Co./2018 Form 10-K


Approximately 26% of the PCI home equity portfolio are senior lien loans; the remaining balance are junior lien HELOANs or HELOCs. The following table provides delinquency statistics for PCI junior lien home equity loans and lines of credit based on the unpaid principal balance as of December 31, 2018 and 2017.
December 31,
(in millions, except ratios)
 Total loans Total 30+ day delinquency rate
 20182017 20182017
HELOCs:(a)(b)
 $6,531
$7,926
 4.00%4.62%
HELOANs 280
360
 3.57
5.28
Total $6,811
$8,286
 3.98%4.65%
(a)In general, these HELOCs are revolving loans for a 10-year period, after which time the HELOC converts to an interest-only loan with a balloon payment at the end of the loan’s term. Substantially all HELOCs are beyond the revolving period.
(b)Includes loans modified into fixed rate amortizing loans.
The table below presents the accretable yield activity for the Firm’s PCI consumer loans for the years endedDecember 31, 2018, 2017 and 2016, and represents the Firm’s estimate of gross interest income expected to be earned over the remaining life of the PCI loan portfolios. The table excludes the cost to fund the PCI portfolios, and therefore the accretable yield does not represent net interest income expected to be earned on these portfolios.
Year ended December 31,
(in millions, except ratios)		Total PCI
2018
 2017
 2016
Beginning balance$11,159
 $11,768
 $13,491
Accretion into interest income(1,249) (1,396) (1,555)
Changes in interest rates on variable-rate loans(109) 503
 260
Other changes in expected cash flows(a)
(1,379) 284
 (428)
Balance at December 31$8,422
 $11,159
 $11,768
Accretable yield percentage4.92% 4.53% 4.35%
(a)Other changes in expected cash flows may vary from period to period as the Firm continues to refine its cash flow model, for example cash flows expected to be collected due to the impact of modifications and changes in prepayment assumptions.

Active and suspended foreclosure
At December 31, 2018 and 2017, the Firm had PCI residential real estate loans with an unpaid principal balance of $964 million and $1.3 billion, respectively, that were not included in REO, but were in the process of active or suspended foreclosure.


JPMorgan Chase & Co./2018 Form 10-K233
Notes to consolidated financial statements

Credit card loan portfolio
The credit card portfolio segment includes credit card loans originated and purchased by the Firm. Delinquency rates are the primary credit quality indicator for credit card loans as they provide an early warning that borrowers may be experiencing difficulties (30 days past due); information on those borrowers that have been delinquent for a longer period of time (90 days past due) is also considered. In addition to delinquency rates, the geographic distribution of the loans provides insight as to the credit quality of the portfolio based on the regional economy.
While the borrower’s credit score is another general indicator of credit quality, the Firm does not view credit scores as a primary indicator of credit quality because the borrower’s credit score tends to be a lagging indicator. The
distribution of such scores provides a general indicator of credit quality trends within the portfolio; however, the score does not capture all factors that would be predictive of future credit performance. Refreshed FICO score information, which is obtained at least quarterly, for a statistically significant random sample of the credit card portfolio is indicated in the following table. FICO is considered to be the industry benchmark for credit scores.
The Firm generally originates new card accounts to prime consumer borrowers. However, certain cardholders’ FICO scores may decrease over time, depending on the performance of the cardholder and changes in the credit score calculation.
The following table below provides information abouton delinquency, which is the Firm’s primary credit quality indicator for retained credit card loans.
As of or for the year ended December 31,
(in millions, except ratios)
20182017
Net charge-offs$4,518
$4,123
% of net charge-offs to retained loans3.10%2.95%
Loan delinquency  
Current and less than 30 days past due
and still accruing		$153,746
$146,704
30–89 days past due and still accruing1,426
1,305
90 or more days past due and still accruing1,444
1,378
Total retained credit card loans$156,616
$149,387
Loan delinquency ratios  
% of 30+ days past due to total retained loans1.83%1.80%
% of 90+ days past due to total retained loans0.92
0.92
Credit card loans by geographic region(a)
  
California$23,757
$22,245
Texas15,085
14,200
New York13,601
13,021
Florida9,770
9,138
Illinois8,938
8,585
New Jersey6,739
6,506
Ohio5,094
4,997
Pennsylvania4,996
4,883
Colorado4,309
4,006
Michigan3,912
3,826
All other60,415
57,980
Total retained credit card loans$156,616
$149,387
Percentage of portfolio based on carrying value with estimated refreshed FICO scores  
Equal to or greater than 66084.2%84.0%
Less than 66015.0
14.6
No FICO available0.8
1.4

a)The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at December 31, 2018.


(in millions, except ratios)
December 31, 2020December 31, 2019
Within the revolving period
Converted to term loans(b)
TotalTotal
Loan delinquency(a)
Current and less than 30 days past due
and still accruing		$139,783 $1,239 $141,022 $165,767 
30–89 days past due and still accruing997 94 1,091 1,550 
90 or more days past due and still accruing1,277 42 1,319 1,607 
Total retained loans$142,057 $1,375 $143,432 $168,924 
Loan delinquency ratios
% of 30+ days past due to total retained loans1.60 %9.89 %1.68 %1.87 %
% of 90+ days past due to total retained loans0.90 3.05 0.92 0.95 

(a)At December 31, 2020, loans under payment deferral programs offered in response to the COVID-19 pandemic which are still within their deferral period and performing according to their modified terms are generally not considered delinquent.

(b)Represents TDRs.
Other credit quality indicators
The following table provides information on other credit quality indicators for retained credit card loans.
(in millions, except ratios)December 31, 2020December 31, 2019
Geographic region(a)
California$20,921 $25,783 
Texas14,544 16,728 
New York11,919 14,544 
Florida9,562 10,830 
Illinois8,006 9,579 
New Jersey5,927 7,165 
Ohio4,673 5,406 
Pennsylvania4,476 5,245 
Colorado4,092 4,763 
Michigan3,553 4,164 
All other55,759 64,717 
Total retained loans$143,432 $168,924 
Percentage of portfolio based on carrying value with estimated refreshed FICO scores
Equal to or greater than 66085.9 %84.0 %
Less than 66013.9 15.4 
No FICO available0.2 0.6 
(a)The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at December 31, 2020.
234JPMorgan Chase & Co./20182020 Form 10-K243

Notes to consolidated financial statements

Credit card impaired loans and loanLoan modifications
The table below provides information about the Firm’s impaired credit card loans. All of these loans are considered to be impaired as they have been modified in TDRs.
December 31, (in millions)2018
2017
Impaired credit card loans with an allowance(a)(b)(c)
$1,319
$1,215
Allowance for loan losses related to impaired credit card loans440
383
(a)The carrying value and the unpaid principal balance are the same for credit card impaired loans.
(b)There were no impaired loans without an allowance.
(c)Predominantly all impaired credit card loans are in the U.S.
The following table presents average balances of impaired credit card loans and interest income recognized on those loans.
Year ended December 31,
(in millions)
2018
2017
2016
Average impaired credit card loans$1,260
$1,214
$1,325
Interest income on
  impaired credit card loans
65
59
63

Loan modifications
The Firm may offer one of a number of loan modification programs granting concessions to credit card borrowers who are experiencing financial difficulty. MostThe Firm grants concessions for most of the credit card loans have been modified under long-term programs for borrowers who are experiencing financial difficulties.programs. These modifications involve placing the customer on a fixed payment plan, generally for 60 months,, and typically include reducing the interest rate on the credit card.Substantially all modifications under the Firm’s long-term programs are considered to be TDRs.
Loans with short-term or other insignificant modifications that are not considered concessions are not TDRs.
If the cardholder does not comply with the modified payment terms, then the credit card loan continues to age and will ultimately be charged-off in accordance with the Firm’s standard charge-off policy. In most cases, the Firm does not reinstate the borrower’s line of credit.
New enrollments in these loan modification programs for the years ended December 31, 2018, 2017 and 2016, were $866 million, $756 million and $636 million, respectively. For all periods disclosed, new enrollments were less than 1% of total retained credit card loans.
Financial effects of modifications and redefaults
The following table provides information about the financial effects of the concessions granted on credit card loans modified in TDRs and redefaults for the periods presented. For all periods disclosed, new enrollments were less than 1% of total retained credit card loans.
Year ended December 31,
(in millions, except
weighted-average data)		202020192018
Balance of new TDRs(a)
$818 $961 $866 
Weighted-average interest rate of loans – before TDR18.04 %19.07 %17.98 %
Weighted-average interest rate of loans – after TDR4.64 4.70 5.16 
Balance of loans that redefaulted within one year of modification(b)
$110 $148 $116 
Year ended December 31,
(in millions, except
weighted-average data)
 201820172016
Weighted-average interest rate of loans – before TDR 17.98%16.58%15.56%
Weighted-average interest rate of loans – after TDR 5.16
4.88
4.76
Loans that redefaulted within one year of modification(a)(b)
 $116
$93
$74
(a)Represents the outstanding balance prior to modification.
(a)Represents loans modified in TDRs that experienced a payment default in the periods presented, and for which the payment default occurred within one year of the modification. The amounts presented represent the balance of such loans as of the end of the quarter in which they defaulted.
(b)The prior period amounts have been revised to conform with the current period presentation.
(b)Represents loans modified in TDRs that experienced a payment default in the periods presented, and for which the payment default occurred within one year of the modification. The amounts presented represent the balance of such loans as of the end of the quarter in which they defaulted.
For credit card loans modified in TDRs, payment default is deemed to have occurred when the borrower misses two2 consecutive contractual payments. A substantial portion of these loans are expected to be charged-off in accordance with the Firm’s standard charge-off policy. Based on historical experience, the estimated weighted-average default rate forDefaulted modified credit card loans was expectedremain in the modification program and continue to be 33.38%, 31.54% and 28.87% as ofDecember 31, 2018, 2017 and 2016, respectively. charged off in accordance with the Firm’s standard charge-off policy.

244JPMorgan Chase & Co./20182020 Form 10-K235

Notes to consolidated financial statements

Wholesale loan portfolio
Wholesale loans include loans made to a variety of clients, ranging from large corporate and institutional clients to high-net-worth individuals.
The primary credit quality indicator for wholesale loans is the internal risk rating assigned to each loan. Risk ratings are used to identify the credit quality of loans and differentiate risk within the portfolio. Risk ratings on loans consider the PD and the LGD. The PD is the likelihood that a loan will default. The LGD is the estimated loss on the loan that would be realized upon the default of the borrower and takes into consideration collateral and structural support for each credit facility.
Management considers several factors to determine an appropriate internal risk rating, including the obligor’s debt capacity and financial flexibility, the level of the obligor’s earnings, the amount and sources for repayment, the level and nature of contingencies, management strength, and the industry and geography in which the obligor operates. The Firm’s definition of criticized alignsinternal risk ratings generally align with the banking regulatory definition of criticized exposures, which consist of special mention, substandardqualitative characteristics (e.g., borrower capacity to meet financial commitments and doubtful categories. Risk ratings generally represent ratings profiles similarvulnerability to thosechanges in the economic environment) defined by S&P and Moody’s. Investment-gradeMoody’s, however the quantitative characteristics (e.g., PD and LGD) may differ as they reflect internal historical experiences and assumptions. The Firm generally considers internal ratings range from “AAA/Aaa”with qualitative characteristics equivalent to “BBB-BBB-/Baa3.” Baa3 or higher as investment grade, and these ratings have a lower PD and/or lower LGD than non-investment grade ratings.
Noninvestment-grade ratings are further classified as noncriticized (“BB+/Ba1 and B-/B3”) and criticized, (“CCC+”/“Caa1 and below”), and the criticized portion is further subdivided into performing and nonaccrual loans, representing management’s assessment of the collectibility of principal and interest. Criticized loans have a higher probability of defaultPD than noncriticized loans. The Firm’s definition of criticized aligns with the U.S. banking regulatory definition of criticized exposures, which consist of special mention, substandard and doubtful categories.
Risk ratings are reviewed on a regular and ongoing basis by Credit Risk Management and are adjusted as necessary for updated information affecting the obligor’s ability to fulfill its obligations.
As noted above, the risk rating of a loan considers the industry in which the obligor conducts its operations. As part of the overall credit risk management framework, the Firm focuses on the management and diversification of its industry and client exposures, with particular attention paid to industries with actual or potential credit concern. Refer to Note 4 for further detail on industry concentrations.

236JPMorgan Chase & Co./20182020 Form 10-K


The table below provides information by class of receivable for the retained loans in the Wholesale portfolio segment. For additional information on industry concentrations, refer to Note 4.
As of or for the year ended December 31,
(in millions, except ratios)
Commercial
and industrial
 Real estate Financial
institutions		 Governments & Agencies 
Other(d)
 Total
retained loans
20182017 20182017 20182017 20182017 20182017 20182017
Loans by risk ratings                 
Investment-grade$73,497
$68,071
 $100,107
$98,467
 $32,178
$26,791
 $13,984
$15,140
 $119,963
$103,212
 $339,729
$311,681
Noninvestment-
  grade:
                 
Noncriticized51,720
46,558
 14,876
14,335
 15,316
13,071
 201
369
 11,478
9,988
 93,591
84,321
Criticized performing3,738
3,983
 620
710
 150
210
 2
—
 182
259
 4,692
5,162
Criticized nonaccrual851
1,357
 134
136
 4
2
 —
—
 161
239
 1,150
1,734
Total
noninvestment- grade
56,309
51,898
 15,630
15,181
 15,470
13,283
 203
369
 11,821
10,486
 99,433
91,217
Total retained loans$129,806
$119,969
 $115,737
$113,648
 $47,648
$40,074
 $14,187
$15,509
 $131,784
$113,698
 $439,162
$402,898
% of total criticized exposure to total retained loans3.54%4.45% 0.65 %0.74% 0.32%0.53% 0.01%—
 0.26%0.44% 1.33%1.71%
% of criticized nonaccrual to total retained loans0.66
1.13
 0.12
0.12
 0.01
—
 —
—
 0.12
0.21
 0.26
0.43
Loans by geographic distribution(a)
                 
Total non-U.S.$29,572
$28,470
 $2,967
$3,101
 $18,524
$16,790
 $3,150
$2,906
 $48,433
$44,112
 $102,646
$95,379
Total U.S.100,234
91,499
 112,770
110,547
 29,124
23,284
 11,037
12,603
 83,351
69,586
 336,516
307,519
Total retained loans$129,806
$119,969
 $115,737
$113,648
 $47,648
$40,074
 $14,187
$15,509
 $131,784
$113,698
 $439,162
$402,898
                  
Net charge-offs/(recoveries)$165
$117
 $(20)$(4) $—
$6
 $—
$5
 $10
$(5) $155
$119
% of net
charge-offs/(recoveries) to end-of-period retained loans
0.13%0.10% (0.02)%—% —%0.01% —%0.03% 0.01%—
 0.04%0.03%
                  
Loan
delinquency(b)
                 
Current and less than 30 days past due and still accruing$128,678
$118,288
 $115,533
$113,258
 $47,622
$40,042
 $14,165
$15,493
 $130,918
$112,559
 $436,916
$399,640
30–89 days past due and still accruing109
216
 67
242
 12
15
 18
12
 702
898
 908
1,383
90 or more days past due and still accruing(c)
168
108
 3
12
 10
15
 4
4
 3
2
 188
141
Criticized nonaccrual851
1,357
 134
136
 4
2
 —
—
 161
239
 1,150
1,734
Total retained loans$129,806
$119,969
 $115,737
$113,648
 $47,648
$40,074
 $14,187
$15,509
 $131,784
$113,698
 $439,162
$402,898
(a)The U.S. and non-U.S. distribution is determined based predominantly on the domicile of the borrower.
(b)The credit quality of wholesale loans is assessed primarily through ongoing review and monitoring of an obligor’s ability to meet contractual obligations rather than relying on the past due status, which is generally a lagging indicator of credit quality.
(c)Represents loans that are considered well-collateralized and therefore still accruing interest.
(d)Other includes individuals and individual entities (predominantly consists of Wealth Management clients within AWM and includes exposure to personal investment companies and personal and testamentary trusts), SPEs and Private education and civic organizations. For more information on SPEs, refer to Note 14.


JPMorgan Chase & Co./2018 Form 10-K237245
Notes to consolidated financial statements

The following tables provide information on internal risk rating, which is the primary credit quality indicator for retained wholesale loans.
December 31,
(in millions, except ratios)		Secured by real estateCommercial and industrial
Other(b)
Total retained loans
20202019202020192020201920202019
Loans by risk ratings
Investment-grade$90,147 $96,611 $71,917 (a)$80,489 $217,209 $186,344 $379,273 (a)$363,444 
Noninvestment- grade:
Noncriticized26,129 22,493 57,870 60,437 33,053 27,591 117,052 110,521 
Criticized performing3,234 1,131 10,991 4,399 1,079 1,126 15,304 6,656 
Criticized nonaccrual483 183 1,931 844 904 30 3,318 1,057 
Total noninvestment- grade29,846 23,807 70,792 65,680 35,036 28,747 135,674 118,234 
Total retained loans$119,993 $120,418 $142,709 $146,169 $252,245 $215,091 $514,947 $481,678 
% of investment-grade to total retained loans75.13 %80.23 %50.39 %55.07 %86.11 %86.63 %73.65 %75.45 %
% of total criticized to total retained loans3.10 1.09 9.05 3.59 0.79 0.54 3.62 1.60 
% of criticized nonaccrual to total retained loans0.40 0.15 1.35 0.58 0.36 0.01 0.64 0.22 
Secured by real estate

(in millions)		December 31, 2020December 31, 2019
Term loans by origination yearRevolving loans
20202019201820172016Prior to 2016Within the revolving periodConverted to term loansTotalTotal
Loans by risk ratings
Investment-grade$16,560 $19,575 $12,192 $11,017 $13,439 $16,266 $1,098 $0 $90,147 $96,611 
Noninvestment-grade3,327 4,339 4,205 2,916 2,575 11,994 489 1 29,846 23,807 
Total retained loans$19,887 $23,914 $16,397 $13,933 $16,014 $28,260 $1,587 $1 $119,993 $120,418 
Commercial and industrial

(in millions)		December 31, 2020December 31, 2019
Term loans by origination yearRevolving loans
20202019201820172016Prior to 2016Within the revolving periodConverted to term loansTotalTotal
Loans by risk ratings
Investment-grade$21,211 (a)$7,304 $2,934 $1,748 $1,032 $1,263 $36,424 $1 $71,917 $80,489 
Noninvestment-grade15,060 8,636 5,131 2,104 497 2,439 36,852 73 70,792 65,680 
Total retained loans$36,271 $15,940 $8,065 $3,852 $1,529 $3,702 $73,276 $74 $142,709 $146,169 
Other(b)

(in millions)		December 31, 2020December 31, 2019
Term loans by origination yearRevolving loans
20202019201820172016Prior to 2016Within the revolving periodConverted to term loansTotalTotal
Loans by risk ratings
Investment-grade$31,389 $10,169 $6,994 $6,206 $3,553 $12,595 $145,524 $779 $217,209 $186,344 
Noninvestment-grade5,009 2,220 1,641 550 146 636 24,710 124 35,036 28,747 
Total retained loans$36,398 $12,389 $8,635 $6,756 $3,699 $13,231 $170,234 $903 $252,245 $215,091 
(a)At December 31, 2020, included $8.0 billion of loans under the PPP, of which $7.4 billion is included in commercial and industrial. PPP loans are guaranteed by the SBA and considered investment-grade. Other than in certain limited circumstances, the Firm typically does not recognize charge-offs, classify as nonaccrual nor record an allowance for loan losses on these loans.
(b)Includes loans to financial institutions, states and political subdivisions, SPEs, nonprofits, personal investment companies and trusts, as well as loans to individuals and individual entities (predominantly Wealth Management clients within AWM). Refer to Note 14 for more information on SPEs.

246JPMorgan Chase & Co./2020 Form 10-K

The following table presents additional information on theretained loans secured by real estate class of loans within the Wholesale portfolio, for the periods indicated. Exposurewhich consists primarily of loans secured commercial loans, of which multifamily is the largest segment.wholly or substantially by a lien or liens on real property at origination. Multifamily lending financesincludes financing for acquisition, leasing and construction of apartment buildings, and includes exposure to real estate investment trusts (“REITs”).buildings. Other commercial lending largely includes financing for acquisition, leasing and construction, largely for office, retail and industrial real estate, and includes exposure to REITs.estate. Included in secured by real estate loans is $10.5 $6.4 billion and $10.8$6.3 billion as of December 31, 20182020 and 2017, 2019, respectively, of construction and development exposure consistingloans made to finance land development and on-site construction of loans originally purposed for construction and development, general purpose loans for builders, as well as loans for land subdivision and pre-development.commercial, industrial, residential, or farm buildings.
December 31,
(in millions, except ratios)
Multifamily Other Commercial Total real estate loans
20182017 20182017 20182017
Real estate retained loans$79,184
$77,597
 $36,553
$36,051
 $115,737
$113,648
Criticized exposure388
491
 366
355
 754
846
% of total criticized exposure to total real estate retained loans0.49%0.63% 1.00%0.98% 0.65%0.74%
Criticized nonaccrual$57
$44
 $77
$92
 $134
$136
% of criticized nonaccrual loans to total real estate retained loans0.07%0.06% 0.21%0.26% 0.12%0.12%

December 31,
(in millions, except ratios)		MultifamilyOther CommercialTotal retained loans secured by real estate
202020192020201920202019
Retained loans secured by real estate$73,078 $73,840 $46,915 $46,578 $119,993 $120,418 
Criticized1,144 340 2,573 974 3,717 1,314 
% of total criticized to total retained loans secured by real estate1.57 %0.46 %5.48 %2.09 %3.10 %1.09 %
Criticized nonaccrual$56 $28 $427 $155 $483 $183 
% of criticized nonaccrual loans to total retained loans secured by real estate0.08 %0.04 %0.91 %0.33 %0.40 %0.15 %

Wholesale impaired retained loans and loan modifications
Wholesale impaired retained loans consist of loans that have been placed on nonaccrual status and/or that have been modified in a TDR. All impaired loans are evaluated for an asset-specific allowance as described in Note 13.
The table below sets forth information about the Firm’s wholesale impaired retained loans.
December 31,
(in millions)
Commercial
and industrial
 Real estate 
Financial
institutions
 
Governments &
 Agencies
 Other 
Total
retained loans
 
20182017 20182017 20182017 20182017 20182017 2018 2017 
Impaired loans                   
With an allowance$807
$1,170
 $107
$78
 $4
$93
 $—
$—
 $152
$168
 $1,070
 $1,509
 
Without an allowance(a)
140
228
 27
60
 —
—
 —
—
 13
70
 180
 358
 
Total impaired loans
$947
$1,398
 $134
$138
 $4
$93
 $—
$—
 $165
$238
 $1,250
(c) 
$1,867
(c) 
Allowance for loan losses related to impaired loans$252
$404
 $25
$11
 $1
$4
 $—
$—
 $19
$42
 $297
 $461
 
Unpaid principal balance of impaired loans(b)
1,043
1,604
 203
201
 4
94
 —
—
 473
255
 1,723
 2,154
 
(a)When the discounted cash flows, collateral value or market price equals or exceeds the recorded investment in the loan, the loan does not require an allowance. This typically occurs when the impaired loans have been partially charged-off and/or there have been interest payments received and applied to the loan balance.
(b)Represents the contractual amount of principal owed at December 31, 2018 and 2017. The unpaid principal balance differs from the impaired loan balances due to various factors, including charge-offs; interest payments received and applied to the carrying value; net deferred loan fees or costs; and unamortized discount or premiums on purchased loans.
(c)Based upon the domicile of the borrower, largely consists of loans in the U.S.

The following table presentsprovides additional information about retained wholesale loans, including geographic distribution, delinquency and net charge-offs.
Secured by real estateCommercial
and industrial		OtherTotal
retained loans
December 31,
(in millions)		20202019202020192020201920202019
Loans by geographic distribution(a)
Total U.S.$116,990 $117,836 $109,273 $111,954 $180,583 $150,512 $406,846 $380,302 
Total non-U.S.3,003 2,582 33,436 34,215 71,662 64,579 108,101 101,376 
Total retained loans$119,993 $120,418 $142,709 $146,169 $252,245 $215,091 

$514,947 $481,678 
Loan delinquency(b)
Current and less than 30 days past due and still accruing$118,894 $120,119 $140,100 $144,839 $249,713 $214,641 

$508,707 $479,599 
30–89 days past due and still accruing601 115 658 449 1,606 415 2,865 979 
90 or more days past due and still accruing(c)
15 1 20 37 22 5 57 43 
Criticized nonaccrual483 183 1,931 844 904 30 3,318 1,057 
Total retained loans$119,993 $120,418 $142,709 $146,169 $252,245 $215,091 

$514,947 $481,678 
Net charge-offs/(recoveries)$10 $44 $737 $335 $52 $36 $799 $415 
% of net charge-offs/(recoveries) to end-of-period retained loans0.01 %0.04 %0.52 %0.23 %0.02 %0.02 %0.16 %0.09 %
(a)The U.S. and non-U.S. distribution is determined based predominantly on the domicile of the borrower.
(b)The credit quality of wholesale loans is assessed primarily through ongoing review and monitoring of an obligor’s ability to meet contractual obligations rather than relying on the past due status, which is generally a lagging indicator of credit quality. Generally excludes loans under payment deferral programs offered in response to the COVID-19 pandemic.
(c)Represents loans that are considered well-collateralized and therefore still accruing interest.
Nonaccrual loans
The following table provides information on retained wholesale nonaccrual loans.
December 31,
(in millions)		Secured by real estateCommercial
and industrial		OtherTotal
retained loans
20202019202020192020201920202019
Nonaccrual loans(a)
With an allowance$351 $169 $1,667 $688 $800 $28 $2,818 $885 
Without an allowance(b)
132 14 264 156 104 2 500 172 
Total nonaccrual loans(c)
$483 $183 $1,931 $844 $904 $30 $3,318 $1,057 
(a)Loans that were modified in response to the COVID-19 pandemic continue to be risk-rated in accordance with the Firm’s overall credit risk management framework. As of December 31, 2020, predominantly all of these loans were considered performing.
(b)average impaired retainedWhen the discounted cash flows, collateral value or market price equals or exceeds the amortized cost of the loan, the loan does not require an allowance. This typically occurs when the loans have been partially charged off and/or there have been interest payments received and applied to the loan balance.
(c)Interest income on nonaccrual loans recognized on a cash basis were not material for the years ended2018, 2017 December 31, 2020 and 2016.2019.
Loan modifications
Year ended December 31, (in millions)2018
2017(b)
2016
Commercial and industrial$1,027
$1,256
$1,480
Real estate133
165
217
Financial institutions57
48
13
Governments & Agencies—
—
—
Other199
241
213
Total(a)
$1,416
$1,710
$1,923
(a)The related interest income on accruing impaired loans and interest income recognized on a cash basis were not material for the years ended December 31, 2018, 2017 and 2016.
(b)The prior period amounts have been revised to conform with the current period presentation.
Certain loan modifications are considered to be TDRs as they provide various concessions to borrowers who are experiencing financial difficulty. AllLoans with short-term or other insignificant modifications that are not considered concessions are not TDRs nor are reportedloans for which the Firm has elected to apply the option to suspend the application of accounting guidance for TDRs as impaired loans inprovided by the tables above.CARES Act and extended by the Consolidated Appropriations Act. The carrying value of TDRs were $576was $954 million and $614$501 million as of December 31, 2020 and 2019, respectively. The carrying value of new TDRs was $734 million, $407 million and $718 million for the years ended December 31, 2020, 2019 and 2018, and 2017, respectively. The impact of these modifications, as well as new TDRs, were not material to the Firm for the years ended December 31, 2018, 20172020, 2019 and 2016.

2018.
238JPMorgan Chase & Co./20182020 Form 10-K247
Notes to consolidated financial statements


Note 13 – Allowance for credit losses
Effective January 1, 2020, the Firm adopted the CECL accounting guidance. The adoption of this guidance established a single allowance framework for all financial assets measured at amortized cost and certain off-balance sheet credit exposures. This framework requires that management’s estimate reflects credit losses over the instrument’s remaining expected life and considers expected future changes in macroeconomic conditions. Refer to Note 1 for further information.
JPMorgan Chase’s allowance for credit losses comprises:
•the allowance for loan losses, represents management’s estimate of probable credit losses inherent inwhich covers the Firm’s retained loan portfolio, which consists ofportfolios (scored and risk-rated) and is presented separately on the two consumer portfolio segments (primarily scored) and Consolidated balance sheets,
•the wholesale portfolio segment (risk-rated). The allowance for loan losses includes a formula-based component, an asset-specific component, and a component related to PCI loans, as described below. Management also estimates an allowance for wholesale and certain consumer lending-related commitments, using methodologies similar to those used to estimate the allowancewhich is presented on the underlying loans.Consolidated balance sheets in accounts payable and other liabilities, and
The Firm’s •policies used to determine itsthe allowance for credit losses are describedon investment securities, which covers the Firm’s HTM and AFS securities and is recognized within Investment Securities on the Consolidated balance sheets.
The income statement effect of all changes in the following paragraphs. allowance for credit losses is recognized in the provision for credit losses.
Determining the appropriateness of the allowance for credit losses is complex and requires significant judgment by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the loan portfolio, in light of the factors then prevailing, may result in significant changes in the allowances for loan losses and lending-related commitments in future periods. At least quarterly, the allowance for credit losses is reviewed by the CRO, the CFO and the Controller of the Firm. AsSubsequent evaluations of December 31, 2018, JPMorgan Chase deemedcredit exposures, considering the macroeconomic conditions, forecasts and other factors then prevailing, may result in significant changes in the allowance for credit losses in future periods.
The Firm’s policies used to be appropriatedetermine its allowance for loan losses and sufficient to absorb probable credit losses inherentits allowance for lending-related commitments are described in the portfolio.
Formula-based component
The formula-based component is based on a statistical calculation to provide for incurred credit losses in all consumer loans and performing risk-rated loans. All loans restructured in TDRs as well as any impaired risk-rated loans have an allowance assessed as part of the asset-specific component, while PCI loans have an allowance assessed as part of the PCI component.following paragraphs. Refer to Note 12 10 for more informationa description of the policies used to determine the allowance for credit losses on TDRs, Impairedinvestment securities.
Methodology for allowances for loan losses and lending-related commitments
The allowance for loan losses and allowance for lending-related commitments represents expected credit losses over the remaining expected life of retained loans and PCI loans.lending-related commitments that are not unconditionally cancellable. The Firm does not record an allowance for future draws on unconditionally cancellable lending-related commitments (e.g., credit cards). Expected losses related to accrued interest on credit card loans and certain performing, modified loans to borrowers impacted by COVID-19 are considered in the Firm’s allowance for loan losses. However, the Firm does not record an allowance on other accrued interest receivables, due to its policy to write these receivables off no later than 90 days past due by reversing interest income.
The expected life of each instrument is determined by considering its contractual term, expected prepayments, cancellation features, and certain extension and call options.
The expected life of funded credit card loans is generally estimated by considering expected future payments on the credit card account, and determining how much of those amounts should be allocated to repayments of the funded loan balance (as of the balance sheet date) versus other account activity. This allocation is made using an approach that incorporates the payment application requirements of the Credit Card Accountability Responsibility and Disclosure Act of 2009, generally paying down the highest interest rate balances first.
The estimate of expected credit losses includes expected recoveries of amounts previously charged off or expected to be charged off, even if such recoveries result in a negative allowance.
Collective and Individual Assessments
When calculating the allowance for loan losses and the allowance for lending-related commitments, the Firm assesses whether exposures share similar risk characteristics. If similar risk characteristics exist, the Firm estimates expected credit losses collectively, considering the risk associated with a particular pool and the probability that the exposures within the pool will deteriorate or default. The assessment of risk characteristics is subject to significant management judgment. Emphasizing one characteristic over another or considering additional characteristics could affect the allowance.
•Relevant risk characteristics for the consumer portfolio include product type, delinquency status, current FICO scores, geographic distribution, and, for collateralized loans, current LTV ratios.
Formula-based•Relevant risk characteristics for the wholesale portfolio include LOB, geography, risk rating, delinquency status, level and type of collateral, industry, credit enhancement, product type, facility purpose, tenor, and payment terms.
The majority of the Firm’s credit exposures share risk characteristics with other similar exposures, and as a result are collectively assessed for impairment (“portfolio-based component”). The portfolio-based component - Consumercovers consumer loans, performing risk-rated loans and certain lending-related commitmentscommitments.
If an exposure does not share risk characteristics with other exposures, the Firm generally estimates expected credit losses on an individual basis, considering expected repayment and conditions impacting that individual exposure (“asset-specific component”). The asset-specific component covers modified PCD loans, loans modified or reasonably expected to be modified in a TDR, collateral-dependent loans, as well as, risk-rated loans that have been placed on nonaccrual status.
Portfolio-based component
The formula-based allowance forportfolio-based component begins with a quantitative calculation that considers the likelihood of the borrower changing delinquency status or moving from one risk rating to another. The quantitative calculation covers expected credit losses for the consumer portfolio segmentsover an instrument’s expected life and is calculatedestimated by applying statistical credit loss factors (estimated PD and loss severities) to the recorded investment balances or loan-equivalent amountsFirm’s
248JPMorgan Chase & Co./2020 Form 10-K

estimated exposure at default. The credit loss factors incorporate the probability of poolsborrower default as well as loss severity in the event of loan exposures with similar risk characteristicsdefault. They are derived using a weighted average of five internally developed macroeconomic scenarios over an eight-quarter forecast period, followed by a loss emergence periodsingle year straight-line interpolation to arrive at an estimaterevert to long run historical information for periods beyond the eight-quarter forecast period. The five
macroeconomic scenarios consist of incurreda central, relative adverse, extreme adverse, relative upside and extreme upside scenario, and are updated by the Firm’s central forecasting team. The scenarios take into consideration the Firm’s overarching economic outlook, internal perspectives from subject matter experts across the Firm, and market consensus and involve a governed process that incorporates feedback from senior management across LOBs, Corporate Finance and Risk Management.
The COVID-19 pandemic has stressed many MEVs to degrees not experienced in recent history, which has created additional challenges in the use of modeled credit losses. Estimated loss emergence periods may vary by product and may change over time; management applies judgment in estimating loss emergence periods, using available credit information and trends. In addition, management applies judgment to the statistical loss estimates for each loan portfolio category, using delinquency trends and other risk characteristicsincreased the reliance on management judgment. In periods where certain MEVs are outside the range of historical experience on which the Firm’s models have been trained, the Firm makes adjustments to estimateappropriately address these economic circumstances. The Firm also considers the total incurred credit losses in the portfolio. Management uses additional statistical methods and considers actual portfolio performance, including actual losses recognized on defaulted loans and collateral valuation trends, to review the appropriateness of the primary statistical loss estimate. The economic impact of
other events, such as government unemployment benefits or other stimulus programs, when determining whether adjustments are necessary.
potential modifications of residential real estate loans is not included in the statistical calculation because of the uncertainty regarding the type and results of such modifications.
The statisticalquantitative calculation is then adjusted to take into consideration model imprecision, externalemerging risk assessments, trends and other subjective factors and current economic events that have occurred but that are not yet reflected in the factors used to derive the statistical calculation; thesecalculation. These adjustments are accomplished in part by analyzing the historical loss experience, including during stressed periods, for each major product segment. However, it is difficult to predict whether historical loss experience is indicative of future loss levels.or model. Management applies judgment in making this adjustment, including taking into account uncertainties associated with current macroeconomicthe economic and political conditions, quality of underwriting standards, borrower behavior, andcredit concentrations or deterioration within an industry, product or portfolio, as well as other relevant internal and external factors affecting the credit quality of the portfolio. In certain instances, the interrelationships between these factors create further uncertainties.
Throughout 2020, the Firm made adjustments to its quantitative calculation which placed significant weighting on its adverse scenarios, as a result of continued uncertainty related to the COVID-19 pandemic.
The application of different inputs into the statisticalquantitative calculation, and the assumptions used by management to adjust the statisticalquantitative calculation, are subject to significant management judgment, and emphasizing one input or assumption over another, or considering other inputs or assumptions, could affect the estimate of the allowance for credit losses for the consumer credit portfolio.
Overall, the allowance for credit losses for consumer portfolios is sensitive to changes in the economic environment (e.g., unemployment rates), delinquency rates, the realizable value of collateral (e.g., housing prices), FICO scores, borrower behavior and other risk factors. While all of these factors are important determinants of overall allowance levels, changes in the various factors may not occur at the same time or at the same rate, or changes may be directionally inconsistent such that improvement in one factor may offset deterioration in another. In addition, changes in these factors would not necessarily be consistent across all geographies or product types. Finally, it is difficult to predict the extent to which changes in these factors would ultimately affect the frequency of losses, the severity of losses or both.

JPMorgan Chase & Co./2018 Form 10-K239
Notes to consolidated financial statements

Formula-based component - Wholesale loans and lending-related commitments
The Firm’s methodology for determining the allowance for loan losses and the allowance for lending-related commitments involves the early identification of credits that are deteriorating. The formula-based component of the allowance for wholesale loans and lending-related commitments is calculated by applying statistical credit loss factors (estimated PD and LGD) to the recorded investment balances or loan-equivalent over a loss emergence period to arrive at an estimate of incurred credit losses in the portfolio. Estimated loss emergence periods may vary by the funded versus unfunded status of the instrument and may change over time.commitments.
The Firm assesses the credit quality of a borrower or counterparty and assigns a risk rating. Risk ratings are assigned at origination or acquisition, and if necessary, adjusted for changes in credit quality over the life of the exposure. In assessing the risk rating of a particular loan or lending-related commitment, among the factors considered are the obligor’s debt capacity and financial flexibility, the level of the obligor’s earnings, the amount and sources for repayment, the level and nature of contingencies, management strength, and the industry and geography in which the obligor operates. These factors are based on an evaluation of historical and current information and involve subjective assessment and interpretation. Determining risk ratings involves significant judgment; emphasizing one factor over another or considering additional factors could affect the risk rating assigned by the Firm.
A PD estimate is determined based on the Firm’s history of defaults over more than one credit cycle.
LGD estimate is a judgment-based estimate assigned to each loan or lending-related commitment. The estimate represents the amount of economic loss if the obligor were to default. The type of obligor, quality of collateral, and the seniority of the Firm’s lending exposure in the obligor’s capital structure affect LGD.
The Firm applies judgment in estimating PD, LGD, loss emergence period and loan-equivalent used in calculating the allowance for credit losses.Estimates of PD, LGD, loss emergence period and loan-equivalent used are subject to periodic refinement based on any changes to underlying external or Firm-specific historical data. Changes to the time period used for PD and LGD estimates could also affect the allowance for credit losses. The use of different inputs, estimates or methodologies could change the amount of the allowance for credit losses determined appropriate by the Firm.
In addition to the statistical credit loss estimates applied to the wholesale portfolio, management applies its judgment to adjust the statistical estimates for wholesale loans and lending-related commitments, taking into consideration model imprecision, external factors and economic events that have occurred but are not yet reflected in the loss factors. Historical experience of both LGD and PD are
considered when estimating these adjustments. Factors related to concentrated and deteriorating industries also are incorporated where relevant. These estimates are based on management’s view of uncertainties that relate to current macroeconomic conditions, quality of underwriting standards and other relevant internal and external factors affecting the credit quality of the current portfolio.
Asset-specific component
The asset-specific component of the allowance relates to loans considered to be impaired, which includes loans that have been modified in TDRs as well as risk-rated loans that have been placed on nonaccrual status. To determine the asset-specific component of the allowance, collateral-dependent loans (including those loans for which foreclosure is probable) and larger, nonaccrual risk-rated loans (primarily loans in the wholesale portfolio segment)segment are generally evaluated individually, while smaller loans (both risk-ratedscored and scored)risk-rated) are evaluated as poolsaggregated for evaluation using historical loss experiencefactors relevant for the respective class of assets.
The Firm generally measures the asset-specific allowance as the difference between the recorded investment inamortized cost of the loan and the present value of the cash flows expected to be collected, discounted at the loan’s original effective interest rate. Subsequent changes in impairment are reportedgenerally recognized as an adjustment to the allowance for loan losses. In certain cases, the asset-specific allowance is determined using an observable market price, and the allowance is measured as the difference between the recorded investment in the loan and the loan’s fair value. Collateral-dependentFor collateral-dependent loans, are charged down to the fair value of collateral less estimated costs to sell. For anysell is used to determine the charge-off amount for declines in value (to reduce the amortized cost of these impaired loans,the loan to the fair value of collateral) or the amount of the asset-specificnegative allowance required tothat should be recorded, if any, is dependent upon the recorded investmentrecognized (for recoveries of prior charge-offs associated with improvements in the loan (including prior charge-offs), and either the expected cash flows or fair value of collateral. Refer to Note 12 for more information about charge-offs and collateral-dependent loans.collateral).
The asset-specific component of the allowance for impairedloan losses for loans that have been or are expected to be modified in TDRs (including forgone interest, principal forgiveness, as well as other concessions) incorporates the effect of the modification on the loan’s expected cash flows which considers(including forgone interest, principal forgiveness, as well as other concessions), and also the potential for redefault. For residential real estate loans modified in or expected to be modified in TDRs, the Firm develops product-specific probability of default estimates, which are applied at a loan level to compute expected losses. In developing these probabilities of default, the Firm considers the relationship between the credit quality characteristics of the underlying loans and certain assumptions about homehousing prices and unemployment, based upon industry-wide data. The Firm also considers its own historical loss experience to-date based on actual redefaulted modified loans. For credit card loans modified in or expected to be modified in TDRs, expected losses incorporate projected redefaultsdelinquencies and charge-offs based on the Firm’s historical experience by type of modification program. For wholesale loans modified or expected to be modified in TDRs, expected losses incorporate management’s expectation of the borrower’s ability to repay under the modified terms.

240JPMorgan Chase & Co./2018 Form 10-K


Estimating the timing and amounts of future cash flows is highly judgmental as these cash flow projections rely upon estimates such as loss severities, asset valuations, default rates (including redefault rates on modified loans), the amounts and timing of interest or principal payments (including any expected prepayments) or other factors that are reflective of current and expected market conditions. These estimates are, in turn, dependent on factors such as the duration of current overall economic conditions, industry-, portfolio-, or borrower-specific factors, the expected outcome of insolvency proceedings as well as, in certain circumstances, other economic factors, including the level of future home prices.factors. All of these estimates and assumptions require significant management judgment and certain assumptions are highly subjective.
PCI loans
In connection with the acquisition of certain PCI loans, which are accounted for as described in Note 12, the allowance for loan losses for the PCI portfolio is based on quarterly estimates of the amount of principal and interest cash flows expected to be collected over the estimated remaining lives of the loans.
These cash flow projections are based on estimates regarding default rates (including redefault rates on modified loans), loss severities, the amounts and timing of prepayments and other factors that are reflective of current and expected future market conditions. These estimates are dependent on assumptions regarding the level of future home prices, and the duration of current overall economic conditions, among other factors. These estimates and assumptions require significant management judgment and certain assumptions are highly subjective.

JPMorgan Chase & Co./20182020 Form 10-K241249
Notes to consolidated financial statements

Allowance for credit losses and related information
The table below summarizes information about the allowances for loan losses and lending-relatinglending-related commitments, and includes a breakdown of loans and lending-related commitments by impairment methodology. Refer to Note 10 for further information on the allowance for credit losses on investment securities.
The adoption of the CECL accounting guidance resulted in a change in the accounting for PCI loans, which are considered PCD loans. In conjunction with the adoption of CECL, the Firm reclassified risk-rated loans and lending-related commitments from the consumer, excluding credit card portfolio segment to the wholesale portfolio segment, to align with the methodology applied when determining the allowance. Prior-period amounts have been revised to conform with the current presentation. Refer to Note 1 for further information.
(Table continued on next page)        
 2018 
Year ended December 31,
(in millions)
Consumer,
excluding
credit card
 Credit card Wholesale Total 
Allowance for loan losses        
Beginning balance at January 1,$4,579
 $4,884
 $4,141
 $13,604
 
Gross charge-offs1,025

5,011
 313
 6,349
 
Gross recoveries(842) (493) (158) (1,493) 
Net charge-offs183

4,518
 155
 4,856
 
Write-offs of PCI loans(a)
187
 —
 —
 187
 
Provision for loan losses(63) 4,818
 130
 4,885
 
Other—

—
 (1) (1) 
Ending balance at December 31,$4,146
 $5,184
 $4,115
 $13,445
 
         
Allowance for loan losses by impairment methodology        
Asset-specific(b)
$196
 $440
(c) 
$297
 $933
 
Formula-based2,162
 4,744
 3,818
 10,724
 
PCI1,788
 —
 —
 1,788
 
Total allowance for loan losses$4,146
 $5,184
 $4,115
 $13,445
 
         
Loans by impairment methodology        
Asset-specific$6,828
 $1,319
 $1,250
 $9,397
 
Formula-based342,775
 155,297
 437,909
 935,981
 
PCI24,034
 —
 3
 24,037
 
Total retained loans$373,637
 $156,616
 $439,162
 $969,415
 
         
Impaired collateral-dependent loans        
Net charge-offs$24

$—
 $21
 $45
 
Loans measured at fair value of collateral less cost to sell2,080
 —
 202
 2,282
 
         
Allowance for lending-related commitments        
Beginning balance at January 1,$33
 $—
 $1,035
 $1,068
 
Provision for lending-related commitments—
 —
 (14) (14) 
Other—
 —
 1
 1
 
Ending balance at December 31,$33
 $—
 $1,022
 $1,055
 
         
Allowance for lending-related commitments by impairment methodology        
Asset-specific$—
 $—
 $99
 $99
 
Formula-based33
 —
 923
 956
 
Total allowance for lending-related commitments$33
 $—
 $1,022
 $1,055
 
         
Lending-related commitments by impairment methodology        
Asset-specific$—
 $—
 $469
 $469
 
Formula-based46,066
 605,379
 387,344
 1,038,789
 
Total lending-related commitments$46,066
 $605,379
 $387,813
 $1,039,258
 
(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.
(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.





(Table continued on next page)
2020(e)
Year ended December 31,
(in millions)		Consumer,
excluding
credit card		Credit cardWholesaleTotal
Allowance for loan losses
Beginning balance at January 1,$2,538 $5,683 $4,902 $13,123 
Cumulative effect of a change in accounting principle297 5,517 (1,642)4,172 
Gross charge-offs805 

5,077 954 6,836 
Gross recoveries collected(631)(791)(155)(1,577)
Net charge-offs174 

4,286 799 5,259 
Write-offs of PCI loans(a)
NANANANA
Provision for loan losses974 10,886 4,431 16,291 
Other1 

0 0 1 
Ending balance at December 31,$3,636 $17,800 $6,892 $28,328 
Allowance for lending-related commitments
Beginning balance at January 1,$12 $0 $1,179 $1,191 
Cumulative effect of a change in accounting principle133 0 (35)98 
Provision for lending-related commitments42 0 1,079 1,121 
Other0 0 (1)(1)
Ending balance at December 31,$187 $0 $2,222 $2,409 
Total allowance for credit losses$3,823 $17,800 $9,114 $30,737 
Allowance for loan losses by impairment methodology
Asset-specific(b)
$(7)$633 $682 $1,308 
Portfolio-based3,643 17,167 6,210 27,020 
PCINANANANA
Total allowance for loan losses$3,636 $17,800 $6,892 $28,328 
Loans by impairment methodology
Asset-specific(b)
$16,648 $1,375 $3,606 $21,629 
Portfolio-based285,479 142,057 511,341 938,877 
PCINANANANA
Total retained loans$302,127 $143,432 $514,947 $960,506 
Collateral-dependent loans
Net charge-offs$133 

$0 $76 $209 
Loans measured at fair value of collateral less cost to sell4,956 0 188 5,144 
Allowance for lending-related commitments by impairment methodology
Asset-specific$0 $0 $114 $114 
Portfolio-based187 0 2,108 2,295 
Total allowance for lending-related commitments(c)
$187 $0 $2,222 $2,409 
Lending-related commitments by impairment methodology
Asset-specific$0 $0 $577 $577 
Portfolio-based(d)
37,783 0 426,871 464,654 
Total lending-related commitments$37,783 $0 $427,448 $465,231 
242250JPMorgan Chase & Co./20182020 Form 10-K






(table continued from previous page)           
2017 2016 
Consumer,
excluding
credit card
 Credit card Wholesale Total 
Consumer,
excluding
credit card
 Credit card Wholesale Total 
                
$5,198
 $4,034
 $4,544
 $13,776
 $5,806
 $3,434
 $4,315
 $13,555
 
1,779
 4,521
 212
 6,512
 1,500
 3,799
 398
 5,697
 
(634) (398) (93) (1,125) (591) (357) (57) (1,005) 
1,145
 4,123
 119
 5,387
 909
 3,442
 341
 4,692
 
86
 —
 —
 86
 156
 —
 —
 156
 
613
 4,973
 (286) 5,300
 467
 4,042
 571
 5,080
 
(1) —
 2
 1
 (10) —
 (1) (11) 
$4,579
 $4,884
 $4,141
 $13,604
 $5,198
 $4,034
 $4,544
 $13,776
 
                
                
$246
 $383
(c) 
$461
 $1,090
 $308
 $358
(c) 
$342
 $1,008
 
2,108
 4,501
 3,680
 10,289
 2,579
 3,676
 4,202
 10,457
 
2,225
 —
 —
 2,225
 2,311
 —
 —
 2,311
 
$4,579
 $4,884
 $4,141
 $13,604
 $5,198
 $4,034
 $4,544
 $13,776
 
                
                
$8,036
 $1,215
 $1,867
 $11,118
 $8,940
 $1,240
 $2,017
 $12,197
 
333,941
 148,172
 401,028
 883,141
 319,787
 140,471
 381,770
 842,028
 
30,576
 —
 3
 30,579
 35,679
 —
 3
 35,682
 
$372,553
 $149,387
 $402,898
 $924,838
 $364,406
 $141,711
 $383,790
 $889,907
 
                
                
$64
 $—
 $31
 $95
 $98
 $—
 $7
 $105
 
2,133
 —
 233
 2,366
 2,391
 —
 300
 2,691
 
                
                
$26
 $—
 $1,052
 $1,078
 $14
 $—
 $772
 $786
 
7
 —
 (17) (10) —
 —
 281
 281
 
—
 —
 —
 —
 12
 —
 (1) 11
 
$33
 $—
 $1,035
 $1,068
 $26
 $—
 $1,052
 $1,078
 
                
                
$—
 $—
 $187
 $187
 $—
 $—
 $169
 $169
 
33
 —
 848
 881
 26
 —
 883
 909
 
$33
 $—
 $1,035
 $1,068
 $26
 $—
 $1,052
 $1,078
 
                
                
$—
 $—
 $731
 $731
 $—
 $—
 $506
 $506
 
48,553
 572,831
 369,367
 990,751
 53,247
 553,891
 367,508
 974,646
 
$48,553
 $572,831
 $370,098
 $991,482
 $53,247
 $553,891
 $368,014
 $975,152
 

(a)Prior to the adoption of CECL, write-offs of PCI loans were recorded against the allowance for loan losses when actual losses for a pool exceeded estimated losses that were recorded as purchase accounting adjustments at the time of acquisition. A write-off of a PCI loan was recognized when the underlying loan was removed from a pool.
(b)Includes modified PCD loans and loans that have been modified or are reasonably expected to be modified in a TDR. Also includes risk-rated loans that have been placed on nonaccrual status for the wholesale portfolio segment. The asset-specific credit card allowance for loans modified, or reasonably expected to be modified, in a TDR is calculated based on the loans’ original contractual interest rates and does not consider any incremental penalty rates.
(c)The allowance for lending-related commitments is reported in accounts payable and other liabilities on the Consolidated balance sheets.
(d)At December 31, 2020, 2019 and 2018, lending-related commitments excluded $19.5 billion, $9.8 billion and $8.7 billion, respectively, for the consumer, excluding credit card portfolio segment; $658.5 billion, $650.7 billion and $605.4 billion, respectively, for the credit card portfolio segment; and $22.4 billion, $24.1 billion and $24.8 billion, respectively, for the wholesale portfolio segment, which were not subject to the allowance for lending-related commitments.
(e)Excludes HTM securities, which had an allowance for credit losses of $78 million and a provision for credit losses of $68 million as of and for the year ended December 31, 2020.
(table continued from previous page)
20192018
Consumer,
excluding
credit card		Credit cardWholesaleTotalConsumer,
excluding
credit card		Credit cardWholesaleTotal
$3,434 $5,184 $4,827 $13,445 $3,892 $4,884 $4,828 $13,604 
NANANANANANANANA
902 5,436 472 6,810 977 5,011 361 6,349 
(536)(588)(57)(1,181)(827)(493)(173)(1,493)
366 4,848 415 5,629 150 4,518 188 4,856 
151 0 0 151 187 0 0 187 
(378)5,348 479 5,449 (121)4,818 188 4,885 
(1)(1)11 9 0 0 (1)(1)
$2,538 $5,683 $4,902 $13,123 $3,434 $5,184 $4,827 $13,445 
$12 $0 $1,043 $1,055 $12 $0 $1,056 $1,068 
NANANANANANANANA
0 0 136 136 0 0 (14)(14)
0 0 0 0 0 0 1 1 
$12 $0 $1,179 $1,191 $12 $0 $1,043 $1,055 
$2,550 $5,683 $6,081 $14,314 $3,446 $5,184 $5,870 $14,500 
$75 $477 $295 $847 $143 $440 $350 $933 
1,476 5,206 4,607 11,289 1,503 4,744 4,477 10,724 
987 0 0 987 1,788 0 0 1,788 
$2,538 $5,683 $4,902 $13,123 $3,434 $5,184 $4,827 $13,445 
$5,961 $1,452 $1,123 $8,536 $6,665 $1,319 $1,459 $9,443 
268,675 167,472 480,555 916,702 305,077 155,297 475,561 935,935 
20,363 0 0 20,363 24,034 0 3 24,037 
$294,999 $168,924 $481,678 $945,601 $335,776 $156,616 $477,023 $969,415 
$46 $0 $36 $82 $16 $0 $29 $45 
2,053 0 87 2,140 2,076 0 206 2,282 
$0 $0 $102 $102 $0 $0 $99 $99 
12 0 1,077 1,089 12 0 944 956 
$12 $0 $1,179 $1,191 $12 $0 $1,043 $1,055 
$0 $0 $474 $474 $0 $0 $469 $469 
30,417 0 392,967 423,384 26,502 0 374,996 401,498 
$30,417 $0 $393,441 $423,858 $26,502 $0 $375,465 $401,967 


JPMorgan Chase & Co./20182020 Form 10-K243251
Notes to consolidated financial statements
Discussion of changes in the allowance during 2020
The increase in the allowance for loan losses and lending-related commitments was primarily driven by an increase in the provision for credit losses, reflecting the deterioration in and uncertainty around the future macroeconomic environment as a result of the impact of the COVID-19 pandemic.
As of December 31, 2020, the Firm’s central case reflected U.S. unemployment rates of approximately 7% through the second quarter of 2021 and remaining above 5% until the second half of 2022. This compared with relatively low levels of unemployment of approximately 4% throughout 2020 and 2021 in the Firm’s January 1, 2020 central case.
Further, while the Firm’s January 1, 2020 central case U.S. GDP forecast reflected a 1.7% expansion in 2020, actual U.S. GDP contracted approximately 2.5% in 2020. As of December 31, 2020, the Firm’s central case assumptions reflect a return to pre-pandemic GDP levels in the fourth quarter of 2021.
Due to elevated uncertainty in the near term outlook, driven by the potential for increased infection rates and related lock downs resulting from the pandemic, as well as the prospect that government and other consumer relief measures set to expire may not be extended, the Firm has placed significant weighting on its adverse scenarios. These scenarios incorporate more punitive macroeconomic factors than the central case assumptions, resulting in weighted average U.S. unemployment rates remaining elevated throughout 2021 and 2022, ending the fourth quarter of 2022 at approximately 6%, and in U.S. GDP ending 2022 approximately 0.9% higher than fourth quarter 2019 actual pre-pandemic levels.

The Firm’s central case assumptions reflected U.S. unemployment rates and U.S. real GDP as follows:
Assumptions at January 1, 2020
2Q20
4Q20(b)
2Q21
U.S. unemployment rate(a)
3.7%3.8%4.0%
Cumulative change in U.S. real GDP from 12/31/20190.9%1.7%2.4%
Assumptions at December 31, 2020
2Q214Q212Q22
U.S. unemployment rate(a)
6.8%5.7%5.1%
Cumulative change in U.S. real GDP from 12/31/2019(1.9)%0.6%2.0%
(a)Reflects quarterly average of forecasted U.S. unemployment rate.
(b)4Q20 actual U.S. unemployment rate (quarterly average) was 6.8%. 4Q20 actual cumulative change in U.S. real GDP from 4Q19 was (2.5%).
Subsequent changes to this forecast and related estimates
will be reflected in the provision for credit losses in future
periods.
252JPMorgan Chase & Co./2020 Form 10-K

Note 14 – Variable interest entities
ForRefer to Note 1 on page 167 for a further description of JPMorgan Chase’s accounting policies regarding consolidation of VIEs, refer to Note 1. Page 198VIEs.
The following table summarizes the most significant types of Firm-sponsored Firm-sponsored VIEs by business segment. The Firm considers a “sponsored” VIE to include any entity where: (1) JPMorgan Chase is the primary beneficiary of the structure; (2) the VIE is used by JPMorgan Chase to securitize Firm assets; (3) the VIE issues financial instruments with the JPMorgan Chase name; or (4) the entity is a JPMorgan Chase–Chase–administered asset-backed commercial paper conduit.
Line of BusinessTransaction TypeActivity
20182020 Form 10-K

page references
CCBCredit card securitization trustsSecuritization of originated credit card receivables244-245253-254
Mortgage securitization trustsServicing and securitization of both originated and purchased residential mortgages245-247254-256
CIBMortgage and other securitization trustsSecuritization of both originated and purchased residential and commercial mortgages, and other consumer loans245-247254-256
Multi-seller conduitsAssist clients in accessing the financial markets in a cost-efficient manner and structures transactions to meet investor needs247256
Municipal bond vehiclesFinancing of municipal bond investments247-248256-257

The Firm’s other business segments are also involved with VIEs (both third-party and Firm-sponsored) Firm-sponsored), but to a lesser extent, as follows:
•
Asset & Wealth Management: AWM sponsors and manages certain funds that are deemed VIEs. As asset manager of the funds, AWM earns a fee based on assets managed; the fee varies with each fund’s investment objective and is competitively priced. For fund entities that qualify as VIEs, AWM’s interests are, in certain cases, considered to be significant variable interests that result in consolidation of the financial results of these entities.
•
•Commercial Banking: CB provides financing and lending-related services to a wide spectrum of clients, including certain third-party-sponsored entities that may meet the definition of a VIE. CB does not control the activities of these entities and does not consolidate these entities. CB’s maximum loss exposure, regardless of whether the entity is a VIE, is generally limited to loans and lending-related commitments which are reported and disclosed in the same manner as any other third-party transaction.
•provides financing and lending-related services to a wide spectrum of clients, including certain third-party-sponsored entities that may meet the definition of a VIE. CB does not control the activities of these entities and does not consolidate these entities. CB’s maximum loss exposure, regardless of whether the entity is a VIE, is generally limited to loans and lending-related commitments which are reported and disclosed in the same manner as any other third-party transaction.
•
Corporate: Corporate is involved with entities that may meet the definition of VIEs; however these entities are generally subject to specialized investment company accounting, which does not require the consolidation of investments, including VIEs. In addition, Treasury and CIO invest in securities generally issued by third parties which may meet the definition of VIEs (e.g., issuers of asset-backed securities). In general, the Firm does not have the power to direct the significant activities of these entities and therefore does not consolidate these entities. Refer to Note 10 for further information on the Firm’s investment securities portfolio.
In addition, Treasury and CIO invest in securities generally issued by third parties which may meet the definition of VIEs (e.g., issuers of asset-backed securities). In general, the Firm does not have the power to direct the significant activities of these entities and therefore does not consolidate these entities. Refer to Note 10 for further information on the Firm’s investment securities portfolio.
In addition, CIB also invests in and provides financing and other services to VIEs sponsored by third parties. Refer to page 249 258 of this Notefor more information on the VIEs sponsored by third parties.
Significant Firm-sponsored variable interest entities
Credit card securitizations
CCB’s Card business securitizesmay securitize originated credit card loans, primarily through the Chase Issuance Trust (the “Trust”). The Firm’s continuing involvement in credit card securitizations includes servicing the receivables, retaining an undivided seller’s interest in the receivables, retaining certain senior and subordinated securities and maintaining escrow accounts.
The Firm consolidates the assets and liabilities of its sponsored credit card trusts as it is considered to be the primary beneficiary of these Firm-sponsored credit card securitization trusts based on the Firm’s ability to direct the activities of these VIEs through its servicing responsibilities and other duties, including making decisions as to the receivables that are transferred into those trusts and as to any related modifications and workouts. Additionally, the nature and extent of the Firm’s other continuing involvement with the trusts, as indicated above, obligates the Firm to absorb
losses and gives the Firm the right to receive certain benefits from these VIEs that could potentially be significant.
The underlying securitized credit card receivables and other assets of the securitization trusts are available only for payment of the beneficial interests issued by the securitization trusts; they are not available to pay the Firm’s other obligations or the claims of the Firm’s creditors.
The agreements with the credit card securitization trusts require the Firm to maintain a minimum undivided interest in the credit card trusts (generally 5%). As of December 31, 20182020 and 2017,2019, the Firm held undivided interests in Firm-sponsored credit card securitization trusts of $15.1$5.4 billion and $15.8$5.3 billion, respectively. The Firm maintained an average undivided interest in principal receivables owned by those trusts of approximately 37%39% and 26%50% for the years ended December 31, 20182020 and 2017. The Firm did

244JPMorgan Chase & Co./20182020 Form 10-K253

Notes to consolidated financial statements

not2019. The Firm did 0t retain any senior securities and retained $3.0$1.5 billion and $4.5$3.0 billion of subordinated securities in certain of its credit card securitization trusts as of December 31, 20182020 and 2017,2019, respectively. The Firm’s undivided interests in the credit card trusts and securities retained are eliminated in consolidation.


Firm-sponsored mortgage and other securitization trusts
The Firm securitizes (or has securitized) originated and purchased residential mortgages, commercial mortgages and other consumer loans primarily in its CCB and CIB businesses. Depending on the particular transaction, as well asthe respective business involved, the Firm may act as the servicer of the loans and/or retain certain beneficial interests in the securitization trusts.

The following table presents the total unpaid principal amount of assets held in Firm-sponsored Firm-sponsored private-label securitization entities, including those in which the Firm has continuing involvement, and those that are consolidated by the Firm. Continuing involvement includes servicing the loans, holding senior interests or subordinated interests (including amounts required to be held pursuant to credit risk retention rules), recourse or guarantee arrangements, and derivative contracts. In certain instances, the Firm’s only continuing involvement is servicing the loans. The Firm’s maximum loss exposure from retained and purchased interests is the carrying value of these interests. Refer to Securitization activity on page 250 259 of this Note for further information regarding the Firm’s cash flows associated with and interests retained in nonconsolidated VIEs, and pages 250-251 259-260 of this Note for information on the Firm’s loan sales and securitization activity related to U.S. GSEs and government agencies.
Principal amount outstanding
JPMorgan Chase interest in securitized assets in nonconsolidated VIEs(c)(d)(e)
December 31, 2020
(in millions)		Total assets held by securitization VIEsAssets
held in consolidated securitization VIEs		Assets held in nonconsolidated securitization VIEs with continuing involvementTrading assets Investment securitiesOther financial assetsTotal interests held by JPMorgan Chase
Securitization-related(a)
Residential mortgage:
Prime/Alt-A and option ARMs$49,644 $1,693 $41,265 $574 $724 $0 $1,298 
Subprime12,896 46 12,154 9 0 0 9 
Commercial and other(b)
119,732 0 92,351 955 1,549 262 2,766 
Total$182,272 $1,739 $145,770 $1,538 $2,273 $262 $4,073 
Principal amount outstanding
JPMorgan Chase interest in securitized assets in nonconsolidated VIEs(c)(d)(e)
December 31, 2019
(in millions)		Total assets held by securitization VIEsAssets
held in consolidated securitization VIEs		Assets held in nonconsolidated securitization VIEs with continuing involvementTrading assets Investment securitiesOther financial assetsTotal interests held by JPMorgan Chase
Securitization-related(a)
Residential mortgage:
Prime/Alt-A and option ARMs$60,348 $2,796 $48,734 $535 $625 $0 $1,160 
Subprime14,661 0 13,490 7 0 0 7 
Commercial and other(b)
111,903 0 80,878 785 773 241 1,799 
Total$186,912 $2,796 $143,102 $1,327 $1,398 $241 $2,966 
(a)Excludes U.S. GSEs and government agency securitizations and re-securitizations, which are not Firm-sponsored. Refer to pages 259-260 of this Note for information on the Firm’s loan sales and securitization activity related to U.S. GSEs and government agencies.
(b)Consists of securities backed by commercial real estate loans and non-mortgage-related consumer receivables purchased from third parties.
 Principal amount outstanding 
JPMorgan Chase interest in securitized assets in nonconsolidated VIEs(c)(d)(e)
December 31, 2018 (in millions)
Total assets held by securitization VIEs
Assets
held in consolidated securitization VIEs
Assets held in nonconsolidated securitization VIEs with continuing involvement Trading assets Investment securitiesOther financial assetsTotal interests held by JPMorgan Chase
Securitization-related(a)
        
Residential mortgage:        
Prime/Alt-A and option ARMs$63,350
$3,237
$50,679
 $623
$647
$—
$1,270
Subprime16,729
32
15,434
 53
—
—
53
Commercial and other(b)
102,961
—
79,387
 783
801
210
1,794
Total$183,040
$3,269
$145,500
 $1,459
$1,448
$210
$3,117
(c)Excludes the following: retained servicing (refer to Note 15 for a discussion of MSRs); securities retained from loan sales and securitization activity related to U.S. GSEs and government agencies; interest rate and foreign exchange derivatives primarily used to manage interest rate and foreign exchange risks of securitization entities (refer to Note 5 for further information on derivatives); senior and subordinated securities of $105 million and $40 million, respectively, at December 31, 2020, and $106 million and $94 million, respectively, at December 31, 2019, which the Firm purchased in connection with CIB’s secondary market-making activities.

(d)Includes interests held in re-securitization transactions.
(e)As of December 31, 2020 and 2019, 73% and 63%, respectively, of the Firm’s retained securitization interests, which are predominantly carried at fair value and include amounts required to be held pursuant to credit risk retention rules, were risk-rated “A” or better, on an S&P-equivalent basis. The retained interests in prime residential mortgages consisted of $1.3 billion and $1.1 billion of investment-grade retained interests, and $41 million and $72 million of noninvestment-grade retained interests at December 31, 2020 and 2019, respectively. The retained interests in commercial and other securitization trusts consisted of $2.0 billion and $1.2 billion of investment-grade retained interests, and $753 million and $575 million of noninvestment-grade retained interests at December 31, 2020 and 2019, respectively.    
 Principal amount outstanding 
JPMorgan Chase interest in securitized assets in nonconsolidated VIEs(c)(d)(e)
December 31, 2017(in millions)Total assets held by securitization VIEs
Assets
held in consolidated securitization VIEs
Assets held in nonconsolidated securitization VIEs with continuing involvement Trading assets Investment securitiesOther financial assetsTotal interests held by JPMorgan Chase
Securitization-related(a)
        
Residential mortgage:        
Prime/Alt-A and option ARMs$68,874
$3,615
$52,280
 $410
$943
$—
$1,353
Subprime18,984
7
17,612
 93
—
—
93
Commercial and other(b)
94,905
63
63,411
 745
1,133
157
2,035
Total$182,763
$3,685
$133,303
 $1,248
$2,076
$157
$3,481
(a)Excludes U.S. government agency securitizations and re-securitizations, which are not Firm-sponsored. Refer to pages 250-251 of this Note for information on the Firm’s loan sales to U.S. government agencies.
(b)Consists of securities backed by commercial loans (predominantly real estate) and non-mortgage-related consumer receivables purchased from third parties.
(c)
Excludes the following: retained servicing (refer to Note 15 for a discussion of MSRs); securities retained from loan sales to U.S. government agencies; interest rate and foreign exchange derivatives primarily used to manage interest rate and foreign exchange risks of securitization entities (refer to Note 5 for further information on derivatives); senior and subordinated securities of $87 million and $28 million, respectively, at December 31, 2018, and $88 million and $48 million, respectively, at December 31, 2017, which the Firm purchased in connection with CIB’s secondary market-making activities.
(d)Includes interests held in re-securitization transactions.
(e)
As of December 31, 2018 and 2017, 60% and 61%, respectively, of the Firm’s retained securitization interests, which are predominantly carried at fair value and include amounts required to be held pursuant to credit risk retention rules, were risk-rated “A” or better, on an S&P-equivalent basis. The retained interests in prime residential mortgages consisted of $1.3 billion of investment-grade for both periods, and $16 million and $48 million of noninvestment-grade at December 31, 2018 and 2017, respectively. The retained interests in commercial and other securitizations trusts consisted of $1.2 billion and $1.6 billion of investment-grade and $623 million and $412 million of noninvestment-grade retained interests at December 31, 2018 and 2017, respectively.    

254JPMorgan Chase & Co./20182020 Form 10-K245
Notes to consolidated financial statements

Residential mortgage
The Firm securitizes residential mortgage loans originated by CCB, as well as residential mortgage loans purchased from third parties by either CCB or CIB. CCB generally retains servicing for all residential mortgage loans it originated or purchased,, and for certain mortgage loans purchased by CIB. For securitizations of loans serviced by CCB, the Firm has the power to direct the significant activities of the VIE because it is responsible for decisions related to loan modifications and workouts. CCB may also retain an interest upon securitization.
In addition, CIB engages in underwriting and trading activities involving securities issued by Firm-sponsored Firm-sponsored securitization trusts. As a result, CIB at times retains senior and/or subordinated interests (including residual interests and amounts required to be held pursuant to credit risk retention rules) in residential mortgage securitizations at the time of securitization, and/or reacquires positions in the secondary market in the normal course of business. In certain instances, as a result of the positions retained or reacquired by CIB or held by Treasury and CIO or CCB, when considered together with the servicing arrangements entered into by CCB, the Firm is deemed to be the primary beneficiary of certain securitization trusts. Refer to the table on page 248 257 of this Note for more information on consolidated residential mortgage securitizations.
The Firm does not consolidate a residential mortgage securitization (Firm-sponsoredsecuritizations (Firm-sponsored or third-party-sponsored) when it is not the servicer (and therefore does not have the power to direct the most significant activities of the trust) or does not hold a beneficial interest in the trust that could potentially be significant to the trust.Refer to the table on page 248 257 of this Note for more information on the consolidated residential mortgage securitizations, and the table on the previous page of this Note for further information on interests held in nonconsolidated residential mortgage securitizations.
Commercial mortgages and other consumer securitizations
CIB originates and securitizes commercial mortgage loans, and engages in underwriting and trading activities involving the securities issued by securitization trusts. CIB may retain unsold senior and/or subordinated interests (including amounts required to be held pursuant to credit risk retention rules) in commercial mortgage securitizations at the time of securitization but, generally, the Firm does not service commercial loan securitizations. Treasury and CIO may choose to invest in these securitizations as well. For commercial mortgage securitizations the power to direct the significant activities of the VIE generally is held by the servicer or investors in a specified class of securities (“controlling class”). The Firm generally does not retain an interest in the controlling class in its sponsored commercial mortgage securitization transactions. Refer to the table on page 248 257 of this Note for more information on the consolidated commercial mortgage securitizations,and the table on the previous page of this Note for further
information on interests held in nonconsolidated securitizations.
Re-securitizations
The Firm engages in certain re-securitization transactions in which debt securities are transferred to a VIE in exchange for new beneficial interests. These transfers occur in connection with both agency (Federal National Mortgage Association (“Fannie Mae”), Federal Home Loan Mortgage Corporation (“Freddie Mac”)U.S. GSEs and Government National Mortgage Association (“Ginnie Mae”)) and nonagency (private-label)government agency sponsored VIEs, which may beare backed by either residential or commercial mortgages. The Firm’s consolidation analysis is largely dependent on the Firm’s role and interest in the re-securitization trusts.
The following table presents the principal amount of securities transferred to re-securitization VIEs.
Year ended December 31,
(in millions)		2018 2017 2016
Transfers of securities to VIEs     
Firm-sponsored private-label$—
 $—
 $647
Agency15,532
 12,617
 11,241

Year ended December 31,
(in millions)		202020192018
Transfers of securities to VIEs
U.S. GSEs and government agencies$46,123 $25,852 $15,532 
Most re-securitizations with which the Firm is involved are client-driven transactions in which a specific client or group of clients is seeking a specific return or risk profile. For these transactions, the Firm has concluded that the decision-making power of the entity is shared between the Firm and its clients, considering the joint effort and decisions in establishing the re-securitization trust and its assets, as well as the significant economic interest the client holds in the re-securitization trust; therefore the Firm does not consolidate the re-securitization VIE.
In more limited circumstances, theThe Firm creates a nonagencydid 0t transfer any private label securities to re-securitization trust independentlyVIEs during 2020, 2019 and not2018, respectively, and retained interests in conjunction with specific clients. In these circumstances, the Firm is deemed to have the unilateral ability to direct the most significant activitiesany such Firm-sponsored VIEs as of the re-securitization trust because of the decisions made during the establishmentDecember 31, 2020 and design of the trust; therefore, the Firm consolidates the re-securitization VIE if the Firm holds an interest that could potentially be significant.2019 were immaterial.
Additionally, the Firm may invest in beneficial interests of third-party-sponsored re-securitizations and generally purchases these interests in the secondary market. In these circumstances, the Firm does not have the unilateral ability to direct the most significant activities of the re-securitization trust, either because it was not involved in the initial design of the trust, or the Firm is involved with an independent third-party sponsor and demonstrates shared power over the creation of the trust; therefore, the Firm does not consolidate the re-securitization VIE.

246JPMorgan Chase & Co./20182020 Form 10-K255

Notes to consolidated financial statements

The following table presents information on the Firm's interests in nonconsolidated re-securitization VIEs.
Nonconsolidated
re-securitization VIEs
December 31,
(in millions)		20202019
U.S. GSEs and government agencies
Interest in VIEs$2,631 $2,928 
 
Nonconsolidated
re-securitization VIEs
December 31,
(in millions)
2018 2017
Firm-sponsored private-label   
Assets held in VIEs with continuing involvement(a)
$118
 $783
Interest in VIEs10
 29
Agency   
Interest in VIEs3,058
 2,250
(a)Represents the principal amount and includes the notional amount of interest-only securities.
As of December 31, 20182020 and 2017,2019, the Firm did not consolidate any U.S. GSE and government agency re-securitization VIEs or any Firm-sponsored private-label re-securitization VIEs.
Multi-seller conduits
Multi-seller conduit entities are separate bankruptcy remote entities that provide secured financing, collateralized by pools of receivables and other financial assets, to customers of the Firm. The conduits fund their financing facilities through the issuance of highly rated commercial paper. The primary source of repayment of the commercial paper is the cash flows from the pools of assets. In most instances, the assets are structured with deal-specific credit enhancements provided to the conduits by the customers (i.e., sellers) or other third parties. Deal-specific credit enhancements are generally structured to cover a multiple of historical losses expected on the pool of assets, and are typically in the form of overcollateralization provided by the seller. The deal-specific credit enhancements mitigate the Firm’s potential losses on its agreements with the conduits.
To ensure timely repayment of the commercial paper, and to provide the conduits with funding to provide financing to customers in the event that the conduits do not obtain funding in the commercial paper market, each asset pool financed by the conduits has a minimum 100% deal-specific liquidity facility associated with it provided by JPMorgan Chase Bank, N.A. JPMorgan Chase Bank, N.A. also provides the multi-seller conduit vehicles with uncommitted program-wide liquidity facilities and program-wide credit enhancement in the form of standby letters of credit. The amount of program-wide credit enhancement required is based upon commercial paper issuance and approximates 10% of the outstanding balance of commercial paper.
The Firm consolidates its Firm-administered Firm-administered multi-seller conduits, as the Firm has both the power to direct the significant activities of the conduits and a potentially significant economic interest in the conduits. As administrative agent and in its role in structuring transactions, the Firm makes decisions regarding asset types and credit quality, and manages the commercial paper funding needs of the conduits. The Firm’s interests that could potentially be significant to the VIEs include the fees received as administrative agent and liquidity and
program-wide credit enhancement provider, as well as the potential exposure created by the liquidity and credit enhancement facilities provided to the conduits. Refer to page 248 257 of this Note for further information on consolidated VIE assets and liabilities.
In the normal course of business, JPMorgan Chase makes markets in and invests in commercial paper issued by the Firm-administeredFirm-administered multi-seller conduits. The Firm held $20.1 $13.5 billion and $20.4$16.3 billion of the commercial paper issued by the Firm-administeredFirm-administered multi-seller conduits at December 31, 20182020 and 2017, 2019, respectively, which have been eliminated in consolidation. The Firm’s investments reflect the Firm’s funding needs and capacity and were not driven by market illiquidity.Other than the amounts required to be held pursuant to credit risk retention rules, the Firm is not obligated under any agreement to purchase the commercial paper issued by the Firm-administeredFirm-administered multi-seller conduits.
Deal-specific liquidity facilities, program-wide liquidity and credit enhancement provided by the Firm have been eliminated in consolidation. The Firm or the Firm-administered multi-seller conduits provide lending-related commitments to certain clients of the Firm-administered multi-seller conduits. The unfunded commitments were $8.0 $12.2 billion and $8.8$8.9 billion at December 31, 20182020 and 2017, 2019, respectively, and are reported as off-balance sheet lending-related commitments. Forcommitments in other unfunded commitments to extend credit. Refer to Note 28 for more information on off-balance sheet lending-related commitments, refer to Note 27.commitments.
Municipal bond vehicles
Municipal bond vehicles or tender option bond (“TOB”) trusts allow institutions to finance their municipal bond investments at short-term rates. In a typical TOB transaction, the trust purchases highly rated municipal bond(s) of a single issuer and funds the purchase by issuing two types of securities: (1) puttable floating-rate certificates (“floaters”) and (2) inverse floating-rate residual interests (“residuals”). The floaters are typically purchased by money market funds or other short-term investors and may be tendered, with requisite notice, to the TOB trust. The residuals are retained by the investor seeking to finance its municipal bond investment. TOB transactions where the residual is held by a third-party investor are typically known as customer TOB trusts, and non-customer TOB trusts are transactions where the Residual is retained by the Firm. Customer TOB trusts are sponsored by a third party; refer to page 249 on 258 of this Note for further information. The Firm serves as sponsor for all non-customer TOB transactions. The Firm may provide various services to a TOB trust, including remarketing agent, liquidity or tender option provider, and/or sponsor.
J.P. Morgan Securities LLC may serve as a remarketing agent on the floaters for TOB trusts. The remarketing agent is responsible for establishing the periodic variable rate on the floaters, conducting the initial placement and remarketing tendered floaters. The remarketing agent may,

JPMorgan Chase & Co./2018 Form 10-K247
Notes to consolidated financial statements

but is not obligated to, make markets in floaters. Floaters held by the Firm were not material during 2018 2020 and 2017. 2019.
JPMorgan Chase Bank, N.A. or J.P. Morgan Securities LLC often serves as the sole liquidity or tender option provider for the TOB trusts. The liquidity provider’s obligation to
256JPMorgan Chase & Co./2020 Form 10-K

perform is conditional and is limited by certain events (“Termination Events”), which include bankruptcy or failure to pay by the municipal bond issuer or credit enhancement provider, an event of taxability on the municipal bonds or the immediate downgrade of the municipal bond to below investment grade. In addition, the liquidity provider’s exposure is typically further limited by the high credit quality of the underlying municipal bonds, the excess collateralization in the vehicle, or, in certain transactions, the reimbursement agreements with the Residual holders.
Holders of the floaters may “put,” or tender, their floaters to the TOB trust. If the remarketing agent cannot successfully remarket the floaters to another investor, the liquidity provider either provides a loan to the TOB trust for the TOB trust’s purchase of the floaters, or it directly purchases the tendered floaters.
TOB trusts are considered to be variable interest entities. The Firm consolidates Non-Customernon-customer TOB trusts because as the Residual holder, the Firm has the right to make decisions that significantly impact the economic performance of the municipal bond vehicle, and it has the right to receive benefits and bear losses that could potentially be significant to the municipal bond vehicle.



Consolidated VIE assets and liabilities
The following table presents information on assets and liabilities related to VIEs consolidated by the Firm as of December 31, 20182020 and 2017.2019.
AssetsLiabilities
December 31, 2020
(in millions)		Trading assetsLoans
Other(b)
 Total
assets(c)
Beneficial interests in
VIE assets(d)
Other(e)
Total
liabilities
VIE program type
Firm-sponsored credit card trusts$0 $11,962 $148 $12,110 $4,943 $3 $4,946 
Firm-administered multi-seller conduits2 23,787 188 23,977 10,523 33 10,556 
Municipal bond vehicles1,930 0 2 1,932 1,902 0 1,902 
Mortgage securitization entities(a)
0 1,694 94 1,788 210 108 318 
Other2 176 249 427 0 89 89 
Total$1,934 $37,619 $681 $40,234 $17,578 $233 $17,811 
AssetsLiabilities
December 31, 2019
(in millions)		Trading assetsLoans
Other(b)
 Total
assets(c)
Beneficial interests in
VIE assets(d)
Other(e)
Total
liabilities
VIE program type
Firm-sponsored credit card trusts$0 $14,986 $266 $15,252 $6,461 $6 $6,467 
Firm-administered multi-seller conduits1 25,183 355 25,539 9,223 36 9,259 
Municipal bond vehicles1,903 0 4 1,907 1,881 3 1,884 
Mortgage securitization entities(a)
66 2,762 64 2,892 276 130 406 
Other663 0 192 855 0 272 272 
Total$2,633 $42,931 $881 $46,445 $17,841 $447 $18,288 
(a)Includes residential and commercial mortgage securitizations.
(b)Includes assets classified as cash and other assets on the Consolidated balance sheets.
(c)The assets of the consolidated VIEs included in the program types above are used to settle the liabilities of those entities. The assets and liabilities include third-party assets and liabilities of consolidated VIEs and exclude intercompany balances that eliminate in consolidation.
(d)The interest-bearing beneficial interest liabilities issued by consolidated VIEs are classified in the line item on the Consolidated balance sheets titled, “Beneficial interests issued by consolidated variable interest entities.” The holders of these beneficial interests generally do not have recourse to the general credit of JPMorgan Chase. Included in beneficial interests in VIE assets are long-term beneficial interests of $5.2 billion and $6.7 billion at December 31, 2020 and 2019, respectively. Refer to Note 20 for additional information on interest-bearing long-term beneficial interests.
(e)Includes liabilities classified as accounts payable and other liabilities on the Consolidated balance sheets.
 Assets Liabilities
December 31, 2018 (in millions)Trading assetsLoans
Other(b) 
 Total
assets(c)
 
Beneficial interests in
VIE assets(d)
Other(e)
Total
liabilities
VIE program type        
Firm-sponsored credit card trusts$—
$31,760
$491
$32,251
 $13,404
$12
$13,416
Firm-administered multi-seller conduits—
24,411
300
24,711
 4,842
33
4,875
Municipal bond vehicles1,779
—
4
1,783
 1,685
3
1,688
Mortgage securitization entities(a)
53
3,285
40
3,378
 308
161
469
Other134
—
178
312
 2
103
105
Total$1,966
$59,456
$1,013
$62,435
 $20,241
$312
$20,553
         
 Assets Liabilities
December 31, 2017 (in millions)Trading assetsLoans
Other(b) 
 Total
assets(c)
 
Beneficial interests in
VIE assets(d)
Other(e)
Total
liabilities
VIE program type        
Firm-sponsored credit card trusts$—
$41,923
$652
$42,575
 $21,278
$16
$21,294
Firm-administered multi-seller conduits—
23,411
48
23,459
 3,045
28
3,073
Municipal bond vehicles1,278
—
3
1,281
 1,265
2
1,267
Mortgage securitization entities(a)
66
3,661
55
3,782
 359
199
558
Other105
—
1,916
2,021
 134
104
238
Total$1,449
$68,995
$2,674
$73,118
 $26,081
$349
$26,430
(a)Includes residential and commercial mortgage securitizations.
(b)Includes assets classified as cash and other assets on the Consolidated balance sheets.
(c)
The assets of the consolidated VIEs included in the program types above are used to settle the liabilities of those entities. The assets and liabilities include third-party assets and liabilities of consolidated VIEs and exclude intercompany balances that eliminate in consolidation.
(d)The interest-bearing beneficial interest liabilities issued by consolidated VIEs are classified in the line item on the Consolidated balance sheets titled, “Beneficial interests issued by consolidated variable interest entities.” The holders of these beneficial interests generally do not have recourse to the general credit of JPMorgan Chase. Included in beneficial interests in VIE assets are long-term beneficial interests of $13.7 billion and $21.8 billion at December 31, 2018 and 2017, respectively. For additional information on interest-bearing long-term beneficial interests, refer to Note 19.
(e)Includes liabilities classified as accounts payable and other liabilities on the Consolidated balance sheets.

248JPMorgan Chase & Co./20182020 Form 10-K257

Notes to consolidated financial statements

VIEs sponsored by third parties
The Firm enters into transactions with VIEs structured by other parties. These include, for example, acting as a derivative counterparty, liquidity provider, investor, underwriter, placement agent, remarketing agent, trustee or custodian. These transactions are conducted at arm’s-length, and individual credit decisions are based on the analysis of the specific VIE, taking into consideration the quality of the underlying assets. Where the Firm does not have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, or a variable interest that could potentially be significant, the Firm generally does not consolidate the VIE, but it records and reports these positions on its Consolidated balance sheets in the same manner it would record and report positions in respect of any other third-party transaction.
Tax credit vehicles
The Firm holds investments in unconsolidated tax credit vehicles, which are limited partnerships and similar entities that construct, own and operate affordable housing, alternative energy, and other projects. These entities are primarily considered VIEs. A third party is typically the general partner or managing member and has control over the significant activities of the tax credit vehicles, and accordingly the Firm does not consolidate tax credit vehicles. The Firm generally invests in these partnerships as a limited partner and earns a return primarily through the receipt of tax credits allocated to the projects. The maximum loss exposure, represented by equity investments and funding commitments, was $16.5 $24.9 billion and $13.4$19.1 billion, of which $4.0 $8.7 billion and $3.2$5.5 billion was unfunded at December 31, 20182020 and 2017,2019, respectively. In order to reduce the risk of loss, the Firm assesses each project and withholds varying amounts of its capital investment until the project qualifies for tax credits. Refer to Note 24 25 for further information on affordable housing tax credits.For Refer to Note 28 for more information on off-balance sheet lending-related commitments, refer to Note 27.commitments.
Customer municipal bond vehicles (TOB trusts)
The Firm may provide various services to Customercustomer TOB trusts, including remarketing agent, liquidity or tender option provider. In certain Customercustomer TOB transactions, the Firm, as liquidity provider, has entered into a reimbursement agreement with the Residual holder. In those transactions, upon the termination of the vehicle, the Firm has recourse to the third-party Residual holders for any shortfall. The Firm does not have any intent to protect Residual holders from potential losses on any of the underlying municipal bonds. The Firm does not consolidate Customercustomer TOB trusts, since the Firm does not have the power to make decisions that significantly impact the economic performance of the municipal bond vehicle. The Firm’s maximum exposure as a liquidity provider to Customercustomer TOB trusts at December 31, 20182020 and 2017,2019, was $4.8$6.7 billion and $5.3$5.5 billion, respectively. The fair value of assets held by such VIEs at December 31, 20182020 and 20172019 was $7.7$10.5 billion and $9.2$8.6 billion, respectively. For Refer to Note 28 for more
information on off-balance sheet lending-related commitments, refer to Note 27.commitments.
Loan securitizations
The Firm has securitized and sold a variety of loans, including residential mortgage, credit card, and commercial mortgage. The purposes of these securitization transactions were to satisfy investor demand and to generate liquidity for the Firm.
For loan securitizations in which the Firm is not required to consolidate the trust, the Firm records the transfer of the loan receivable to the trust as a sale when all of the following accounting criteria for a sale are met: (1) the transferred financial assets are legally isolated from the Firm’s creditors; (2) the transferee or beneficial interest holder can pledge or exchange the transferred financial assets; and (3) the Firm does not maintain effective control over the transferred financial assets (e.g., the Firm cannot repurchase the transferred assets before their maturity and it does not have the ability to unilaterally cause the holder to return the transferred assets).
For loan securitizations accounted for as a sale, the Firm recognizes a gain or loss based on the difference between the value of proceeds received (including cash, beneficial interests, or servicing assets received) and the carrying value of the assets sold. Gains and losses on securitizations are reported in noninterest revenue.

258JPMorgan Chase & Co./20182020 Form 10-K249
Notes to consolidated financial statements

Securitization activity
The following table provides information related to the Firm’s securitization activities for the years ended December 31, 2020, 2019 and 2018, 2017 and 2016, related to assets held in Firm-sponsored Firm-sponsored securitization entities that were not consolidated by the Firm, and where sale accounting was achieved at the time of the securitization.
2018 2017 2016202020192018
Year ended December 31,
(in millions)
Residential mortgage(f)
Commercial and other(g)
 
Residential mortgage(f)
Commercial and other(g)
 
Residential mortgage(f)
Commercial and other(g)
Year ended December 31,
(in millions)
Residential mortgage(d)
Commercial and other(e)
Residential mortgage(d)
Commercial and other(e)
Residential mortgage(d)
Commercial and other(e)
Principal securitized$6,431
$10,159
 $5,532
$10,252
 $1,817
$8,964
Principal securitized$7,103 $6,624 $9,957 $9,390 $6,431 $10,159 
All cash flows during the period:(a)
     
All cash flows during the period:(a)
Proceeds received from loan sales as financial instruments(b)(c)
$6,449
$10,218
 $5,661
$10,340
 $1,831
$9,094
Proceeds received from loan sales as financial instruments(b)(c)
$7,321 $6,865 $10,238 $9,544 $6,449 $10,218 
Servicing fees collected(d)
319
2
 338
3
 477
3
Purchases of previously transferred financial assets (or the underlying collateral)(e)
—
—
 1
—
 37
—
Servicing fees collectedServicing fees collected211 1 287 2 319 2 
Cash flows received on interests411
301
 463
918
 482
1,441
Cash flows received on interests801 239 507 237 411 301 
(a)Excludes re-securitization transactions.
(b)Predominantly includes Level 2 assets.
(c)The carrying value of the loans accounted for at fair value approximated the proceeds received upon loan sale.
(d)The prior period amounts have been revised to conform with the current period presentation.
(e)Includes cash paid by the Firm to reacquire assets from nonconsolidated entities – for example, loan repurchases due to representation and warranties and servicer “clean-up” calls.
(f)Includes prime mortgages only. Excludes certain loan securitization transactions entered into with Ginnie Mae, Fannie Mae and Freddie Mac.
(g)Includes commercial mortgage and other consumer loans.
(a)Excludes re-securitization transactions.
(b)Predominantly includes Level 2 assets.
(c)The carrying value of the loans accounted for at fair value approximated the proceeds received upon loan sale.
(d)Represents prime mortgages. Excludes loan securitization activity related to U.S. GSEs and government agencies.
(e)Includes commercial mortgage and other consumer loans.
Key assumptions used to value retained interests originated during the year are shown in the table below.
Year ended December 31, 2018 2017 2016
Residential mortgage retained interest:
Weighted-average life (in years) 7.6
 4.8
 4.5
Weighted-average discount rate 3.6% 2.9% 4.2%
Commercial mortgage retained interest:  
Weighted-average life (in years) 5.3
 7.1
 6.2
Weighted-average discount rate 4.0% 4.4% 5.8%

Year ended December 31,202020192018
Residential mortgage retained interest:
Weighted-average life (in years)4.74.87.6
Weighted-average discount rate8.2 %7.4 %3.6 %
Commercial mortgage retained interest:
Weighted-average life (in years)6.96.45.3
Weighted-average discount rate3.0 %4.1 %4.0 %
Loans and excess MSRs sold to U.S. government-sponsored enterprises and loans in securitization transactions pursuant to Ginnie Mae guidelines and other third-party-sponsored securitization entities
In addition to the amounts reported in the securitization activity tables above, the Firm, in the normal course of business, sells originated and purchased mortgage loans and certain originated excess MSRs on a nonrecourse basis, predominantly to U.S. government-sponsored enterprises (“U.S. GSEs”).GSEs. These loans and excess MSRs are sold primarily for the purpose of securitization by the U.S. GSEs, who provide certain guarantee provisions (e.g., credit enhancement of the loans). The Firm also sells loans into securitization transactions pursuant to Ginnie Mae guidelines; these loans are typically insured or guaranteed by another U.S. government agency. The Firm does not consolidate the securitization vehicles underlying these transactions as it is not the primary beneficiary. For a limited number of loan sales, the Firm is obligated to share a portion of the credit risk associated with the sold loans with the purchaser. Refer to Note 27 28 for additional information about the Firm’s loan salessales- and securitization-related indemnifications.Refer to Note 15 for additional information about the impact of the Firm’s sale of certain excess MSRs.

250JPMorgan Chase & Co./20182020 Form 10-K259

Notes to consolidated financial statements

The following table summarizes the activities related to loans sold to the U.S. GSEs, and loans in securitization transactions pursuant to Ginnie Mae guidelines,guidelines.
Year ended December 31,
(in millions)		202020192018
Carrying value of loans sold$81,153 $92,349 $44,609 
Proceeds received from loan sales as cash$45 $73 $9 
Proceeds from loan sales as securities(a)(b)
80,186 91,422 43,671 
Total proceeds received from loan sales(c)
$80,231 $91,495 $43,680 
Gains/(losses) on loan sales(d)(e)
$6 $499 $(93)
(a)Includes securities from U.S. GSEs and other third-party-sponsored securitization entities.Ginnie Mae that are generally sold shortly after receipt or retained as part of the Firm’s investment securities portfolio.
(b)Included in level 2 assets.
Year ended December 31,
(in millions)		201820172016
Carrying value of loans sold$44,609
$64,542
$52,869
Proceeds received from loan sales as cash$9
$117
$592
Proceeds from loans sales as securities(a)
43,671
63,542
51,852
Total proceeds received from loan sales(b)
$43,680
$63,659
$52,444
Gains/(losses) on loan sales(c)(d)
$(93)$163
$222
(c)Excludes the value of MSRs retained upon the sale of loans.
(a)Predominantly includes securities from U.S. GSEs and Ginnie Mae that are generally sold shortly after receipt.
(b)Excludes the value of MSRs retained upon the sale of loans.
(c)Gains/(losses) on loan sales include the value of MSRs.
(d)The carrying value of the loans accounted for at fair value approximated the proceeds received upon loan sale.
(d)Gains/(losses) on loan sales include the value of MSRs.
(e)The carrying value of the loans accounted for at fair value approximated the proceeds received upon loan sale.
Options to repurchase delinquent loans
In addition to the Firm’s obligation to repurchase certain loans due to material breaches of representations and warranties as discussed in Note 27, 28, the Firm also has the option to repurchase delinquent loans that it services for Ginnie Mae loan pools, as well as for other U.S. government agencies under certain arrangements. The Firm typically elects to repurchase delinquent loans from Ginnie Mae loan
pools as it continues to service them and/or manage th
ethe foreclosure process in accordance with the applicable requirements, and such loans continue to be insured or guaranteed. When the Firm’s repurchase option becomes exercisable, such loans must be reported on the Consolidated balance sheets as a loan with a corresponding liability. ForRefer to Note 12 for additional information, refer to Note 12.information.
The following table presents loans the Firm repurchased or had an option to repurchase, real estate owned, and foreclosed government-guaranteed residential mortgage loans recognized on the Firm’s Consolidated balance sheets as of December 31, 20182020 and 2017. 2019. Substantially all of these loans and real estate are insured or guaranteed by U.S. government agencies.
December 31,
(in millions)		20202019
Loans repurchased or option to repurchase(a)
$1,413 $2,941 
Real estate owned9 41 
Foreclosed government-guaranteed residential mortgage loans(b)
64 198 
(a)Predominantly all of these amounts relate to loans that have been repurchased from Ginnie Mae loan pools.
(b)Relates to voluntary repurchases of loans, which are included in accrued interest and accounts receivable.
December 31,
(in millions)
2018
2017
Loans repurchased or option to repurchase(a)
$7,021
$8,629
Real estate owned75
95
Foreclosed government-guaranteed residential mortgage loans(b)
361
527
(a)Predominantly all of these amounts relate to loans that have been repurchased from Ginnie Mae loan pools.
(b)Relates to voluntary repurchases of loans, which are included in accrued interest and accounts receivable.





Loan delinquencies and liquidation losses
The table below includes information about components of and delinquencies related to nonconsolidated securitized financial assets held in Firm-sponsored Firm-sponsored private-label securitization entities, in which the Firm has continuing involvement and delinquencies as of December 31, 20182020 and 2017.2019.
Securitized assets90 days past dueNet liquidation losses
As of or for the year ended December 31, (in millions)202020192020201920202019
Securitized loans
Residential mortgage:
Prime/ Alt-A & option ARMs$41,265 $48,734 $4,988 $2,449 $212 $579 
Subprime12,154 13,490 2,406 1,813 179 532 
Commercial and other92,351 80,878 5,958 187 30 445 
Total loans securitized$145,770 $143,102 $13,352 $4,449 $421 $1,556 
 Securitized assets 90 days past due 
Net liquidation losses(a)
As of or for the year ended December 31, (in millions)20182017 20182017 20182017
Securitized loans        
Residential mortgage:        
Prime/ Alt-A & option ARMs$50,679
$52,280
 $3,354
$4,870
 $610
$790
Subprime15,434
17,612
 2,478
3,276
 (169)719
Commercial and other79,387
63,411
 225
957
 280
114
Total loans securitized$145,500
$133,303
 $6,057
$9,103
 $721
$1,623
(a)Includes liquidation gains as a result of private label mortgage settlement payments during the first quarter of 2018, which were reflected as asset recoveries by trustees.


260JPMorgan Chase & Co./20182020 Form 10-K251

Notes to consolidated financial statements

Note 15 – Goodwill and Mortgage servicing rights
Goodwill
Goodwill is recorded upon completion of a business combination as the difference between the purchase price and the fair value of the net assets acquired.acquired, and can be adjusted up to one year from the acquisition date as more information is obtained about the fair value of assets acquired and liabilities assumed. Subsequent to initial recognition, goodwill is not amortized but is tested for impairment during the fourth quarter of each fiscal year, or more often if events or circumstances, such as adverse changes in the business climate, indicate that there may be an impairment.
The goodwill associated with each business combination is allocated to the related reporting units, which are determined based on how the Firm’s businesses are managed and how they are reviewed by the Firm’s Operating Committee.reviewed. The following table presents goodwill attributed to the business segments.
December 31, (in millions)202020192018
Consumer & Community Banking(a)
$31,311 $30,133 $30,084 
Corporate & Investment Bank(a)
7,913 7,901 7,721 
Commercial Banking2,985 2,982 2,860 
Asset & Wealth Management(a)
7,039 6,807 6,806 
Total goodwill$49,248 $47,823 $47,471 
December 31, (in millions)201820172016
Consumer & Community Banking$30,984
$31,013
$30,797
Corporate & Investment Bank6,770
6,776
6,772
Commercial Banking2,860
2,860
2,861
Asset & Wealth Management6,857
6,858
6,858
Total goodwill$47,471
$47,507
$47,288

(a)In 2020, goodwill of $959 million was transferred from CCB to CIB and $51 million from AWM to CCB related to business realignments. Prior-period amounts have been revised to conform with the current presentation. Refer to Note 32 for additional information on these realignments.
The following table presents changes in the carrying amount of goodwill.
Year ended December 31, (in millions)202020192018
Balance at beginning of period$47,823 $47,471 $47,507 
Changes during the period from:
Business combinations(a)
1,412 349 0 
Other(b)
13 3 (36)
Balance at December 31,$49,248 $47,823 $47,471 
Year ended December 31, (in millions)2018 2017 2016
Balance at beginning of period$47,507
 $47,288
 $47,325
Changes during the period from:     
Business combinations(a)
—
 199
 —
Dispositions(b)
—
 —
 (72)
Other(c)
(36) 20
 35
Balance at December 31,$47,471
 $47,507
 $47,288
(a)For 2017, represents CCB goodwill in connection with an acquisition.
(b)For 2016, represents AWM goodwill, which was disposed of as part of a sale.
(c)Includes foreign currency remeasurement and other adjustments.

(a)For 2020, represents estimated goodwill associated with the acquisitions of cxLoyalty in CCB and 55ip in AWM. For 2019, represents goodwill associated with the acquisition of InstaMed. This goodwill was allocated to CIB, CB and CCB.
(b)Primarily relates to foreign currency adjustments.

Goodwill impairment testing
The Firm’s goodwill was not impaired at December 31, 2018, 2017,2020, 2019 and 2016.2018.
Effective January 1, 2020, the Firm adopted new accounting guidance related to goodwill impairment testing. The adoption of the guidance requires recognition of an impairment loss when the estimated fair value of a reporting unit falls below its carrying value. It eliminated the requirement that an impairment loss be recognized only if the estimated implied fair value of the goodwill is below its carrying value.
The goodwill impairment test is performed in two steps. In the first step,by comparing the current fair value of each reporting unit is compared with its
carrying value. If the fair value is in excess of the carrying value, then the reporting unit’s goodwill is considered not to be impaired. If the fair value is less than the carrying value, then a second step is performed. In the second step, the implied current fair value of the reporting unit’s goodwill is determined by comparing the fair value of the reporting unit (as determined in step one) to the fair value of the net assets of the reporting unit, as if the reporting unit were being acquired in a business combination. The resulting implied current fair value of goodwill is then compared with the carrying value of the reporting unit’s goodwill.If the carrying value of the goodwill exceeds its implied current fair value, then an impairment charge is recognized for the excess. Ifamount by which the reporting unit’s carrying value exceeds its fair value, up to the amount of goodwill is less than its implied current fair value, then no goodwill impairment is recognized.allocated to that reporting unit.
The Firm uses the reporting units’ allocated capital plus goodwill and other intangible assets capital as a proxy for the carrying values of equity for the reporting units in the goodwill impairment testing. Reporting unit equity is determined on a similar basis as the allocation of capital to the Firm’s lines of business andLOBs which takes into consideration a variety of factors including capital levellevels of similarly-ratedsimilarly rated peers and applicable regulatory capital requirements. Proposed line of business equityLOB capital levels are incorporated into the Firm’s annual budget process, which is reviewed by the Firm’s Board of Directors. Allocated capital is further reviewed on a periodic basisperiodically and updated as needed.

252JPMorgan Chase & Co./2018 Form 10-K


The primary method the Firm uses to estimate the fair value of its reporting units is the income approach. This approach projects cash flows for the forecast period and uses the perpetuity growth method to calculate terminal values. These cash flows and terminal values are then discounted using an appropriate discount rate. Projections of cash flows are based on the reporting units’ earnings forecasts which are reviewed with senior management of the Firm. The discount rate used for each reporting unit represents an estimate of the cost of equity for that reporting unit and is determined considering the Firm’s overall estimated cost of equity (estimated using the Capital Asset Pricing Model), as adjusted for the risk characteristics specific to each reporting unit (for example, for higher levels of risk or uncertainty associated with the business or management’s forecasts and assumptions). To assess the reasonableness of the discount rates used for each reporting unit, management compares the discount rate to the estimated cost of equity for publicly traded institutions with similar businesses and risk characteristics. In addition, the weighted average cost of equity (aggregating the various reporting units) is compared with the Firms’Firm’s overall estimated cost of equity to ensure reasonableness.
The valuations derived from the discounted cash flow analysis are then compared with market-based trading and transaction multiples for relevant competitors. Trading and transaction comparables are used as general indicators to assess the generaloverall reasonableness of the estimated fair values, although precise conclusions generally cannot be drawn due to the differences that naturally exist between the Firm’s businesses and competitor institutions.
Management also takes into consideration a comparison between the aggregate fair values of the Firm’s reporting units and JPMorgan Chase’s market capitalization. In evaluating this comparison, management considers several factors, including (i) a control premium that would exist in a market transaction, (ii) factors related to the level of
JPMorgan Chase & Co./2020 Form 10-K261
Notes to consolidated financial statements
execution risk that would exist at the firmwideFirmwide level that do not exist at the reporting unit level and (iii) short-term market volatility and other factors that do not directly affect the value of individual reporting units.
DeclinesUnanticipated declines in business performance, increases in credit losses, increases in capital requirements, as well as deterioration in economic or market conditions, adverse regulatory or legislative changes or increases in the estimated market cost of equity, could cause the estimated fair values of the Firm’s reporting units or their associated goodwill to decline in the future, which could result in a material impairment charge to earnings in a future period related to some portion of the associated goodwill.
Mortgage servicing rights
MSRs represent the fair value of expected future cash flows for performing servicing activities for others. The fair value considers estimated future servicing fees and ancillary revenue, offset by estimated costs to service the loans, and generally declines over time as net servicing cash flows are received, effectively amortizing the MSR asset against contractual servicing and ancillary fee income. MSRs are either purchased from third parties or recognized upon sale or securitization of mortgage loans if servicing is retained.
As permitted by U.S. GAAP, the Firm has elected to account for its MSRs at fair value. The Firm treats its MSRs as a single class of servicing assets based on the availability of market inputs used to measure the fair value of its MSR asset and its treatment of MSRs as one aggregate pool for risk management purposes. The Firm estimates the fair value of MSRs using an option-adjusted spread (“OAS”) model, which projects MSR cash flows over multiple interest rate scenarios in conjunction with the Firm’s prepayment model, and then discounts these cash flows at risk-adjusted rates. The model considers portfolio characteristics, contractually specified servicing fees, prepayment assumptions, delinquency rates, costs to service, late charges and other ancillary revenue, and other economic factors. The Firm compares fair value estimates and assumptions to observable market data where available, and also considers recent market activity and actual portfolio experience.

262JPMorgan Chase & Co./20182020 Form 10-K253
Notes to consolidated financial statements

The fair value of MSRs is sensitive to changes in interest rates, including their effect on prepayment speeds. MSRs typically decrease in value when interest rates decline because declining interest rates tend to increase prepayments and therefore reduce the expected life of the net servicing cash flows that comprise the MSR asset. Conversely, securities (e.g., mortgage-backed securities), principal-only certificates and certain derivatives (i.e.(e.g.,
those for which the Firm
receives fixed-rate interest payments) increase in value when interest rates decline. JPMorgan Chase uses combinations of derivatives and securities to manage the risk of changes in the fair value of MSRs. The intent is to offset any interest-rate related changes in the fair value of MSRs with changes in the fair value of the related risk management instruments.

The following table summarizes MSR activity for the years endedDecember 31, 20182020, 2019 and 2018.
As of or for the year ended December 31, (in millions, except where otherwise noted)202020192018
Fair value at beginning of period$4,699 $6,130 $6,030 
MSR activity:
Originations of MSRs944 1,384 931 
Purchase of MSRs248 105 315 
Disposition of MSRs(a)
(176)(789)(636)
Net additions/(Dispositions)1,016 700 610 
Changes due to collection/realization of expected cash flows(899)(951)(740)
Changes in valuation due to inputs and assumptions:
Changes due to market interest rates and other(b)
(1,568)(893)300 
Changes in valuation due to other inputs and assumptions:
Projected cash flows (e.g., cost to service)(54)(333)(e)15 
Discount rates199 153 24 
Prepayment model changes and other(c)
(117)(107)(109)
Total changes in valuation due to other inputs and assumptions28 (287)(70)
Total changes in valuation due to inputs and assumptions(1,540)(1,180)230 
Fair value at December 31,$3,276 $4,699 $6,130 
Change in unrealized gains/(losses) included in income related to MSRs held at December 31,$(1,540)$(1,180)$230 
Contractual service fees, late fees and other ancillary fees included in income1,325 1,639 1,778 
Third-party mortgage loans serviced at December 31, (in billions)448.0 522.0 521.0 
Servicer advances, net of an allowance for uncollectible amounts, at December 31, (in billions)(d)
1.8 2.0 3.0 
(a)Includes excess MSRs transferred to agency-sponsored trusts in exchange for stripped mortgage backed securities (“SMBS”). In each transaction, a portion of the SMBS was acquired by third parties at the transaction date; the Firm acquired the remaining balance of those SMBS as trading securities.
(b)Represents both the impact of changes in estimated future prepayments due to changes in market interest rates, and the difference between actual and expected prepayments.
(c)Represents changes in prepayments other than those attributable to changes in market interest rates.
(d)Represents amounts the Firm pays as the servicer (e.g., scheduled principal and interest, taxes and insurance), which will generally be reimbursed within a short period of time after the advance from future cash flows from the trust or the underlying loans. The Firm’s credit risk associated with these servicer advances is minimal because reimbursement of the advances is typically senior to all cash payments to investors. In addition, the Firm maintains the right to stop payment to investors if the collateral is insufficient to cover the advance. However, certain of these servicer advances may not be recoverable if they were not made in accordance with applicable rules and agreements.
(e)2017The decrease in projected cash flows was largely related to default servicing assumption updates. and 2016.
As of or for the year ended December 31, (in millions, except where otherwise noted)2018
 2017
 2016
 
Fair value at beginning of period$6,030
 $6,096
 $6,608
 
MSR activity:      
Originations of MSRs931
 1,103
 679
 
Purchase of MSRs315
 —
 —
 
Disposition of MSRs(a)
(636) (140) (109) 
Net additions610
 963
 570
 
       
Changes due to collection/realization of expected cash flows(740) (797) (919) 
       
Changes in valuation due to inputs and assumptions:      
Changes due to market interest rates and other(b)
300
 (202) (72) 
Changes in valuation due to other inputs and assumptions:      
Projected cash flows (e.g., cost to service)15
 (102) (35) 
Discount rates24
 (19) 7
 
Prepayment model changes and other(c)
(109) 91
 (63) 
Total changes in valuation due to other inputs and assumptions(70) (30) (91) 
Total changes in valuation due to inputs and assumptions230
 (232) (163) 
Fair value at December 31,$6,130
 $6,030
 $6,096
 
Change in unrealized gains/(losses) included in income related to MSRs held at December 31,$230
 $(232) $(163) 
Contractual service fees, late fees and other ancillary fees included in income1,778
 1,886
 2,124
 
Third-party mortgage loans serviced at December 31, (in billions)521.0
 555.0
 593.3
 
Servicer advances, net of an allowance for uncollectible amounts, at December 31, (in billions)(d)
3.0
 4.0
 4.7
 
(a)Includes excess MSRs transferred to agency-sponsored trusts in exchange for stripped mortgage backed securities (“SMBS”). In each transaction, a portion of the SMBS was acquired by third parties at the transaction date; the Firm acquired the remaining balance of those SMBS as trading securities.
(b)Represents both the impact of changes in estimated future prepayments due to changes in market interest rates, and the difference between actual and expected prepayments.
(c)Represents changes in prepayments other than those attributable to changes in market interest rates.
(d)Represents amounts the Firm pays as the servicer (e.g., scheduled principal and interest, taxes and insurance), which will generally be reimbursed within a short period of time after the advance from future cash flows from the trust or the underlying loans. The Firm’s credit risk associated with these servicer advances is minimal because reimbursement of the advances is typically senior to all cash payments to investors. In addition, the Firm maintains the right to stop payment to investors if the collateral is insufficient to cover the advance. However, certain of these servicer advances may not be recoverable if they were not made in accordance with applicable rules and agreements.

254JPMorgan Chase & Co./20182020 Form 10-K263

Notes to consolidated financial statements

The following table presents the components of mortgage fees and related income (including the impact of MSR risk management activities) for the years ended December 31, 2018, 20172020, 2019 and 2016.2018.
Year ended December 31,
(in millions)		202020192018
CCB mortgage fees and related income
Net production revenue$2,629 $1,618 $268 
Net mortgage servicing revenue: 
Operating revenue: 
Loan servicing revenue1,367 1,533 1,835 
Changes in MSR asset fair value due to collection/realization of expected cash flows(899)(951)(740)
Total operating revenue468 582 1,095 
Risk management: 
Changes in MSR asset fair value due to market interest rates and other(a)
(1,568)(893)300 
Other changes in MSR asset fair value due to other inputs and assumptions in model(b)
28 (287)(70)
Change in derivative fair value and other1,522 1,015 (341)
Total risk management(18)(165)(111)
Total net mortgage servicing revenue450 417 984 
Total CCB mortgage fees and related income3,079 2,035 1,252 
All other12 1 2 
Mortgage fees and related income$3,091 $2,036 $1,254 
(a)Represents both the impact of changes in estimated future prepayments due to changes in market interest rates, and the difference between actual and expected prepayments.
(b)Represents the aggregate impact of changes in model inputs and assumptions such as projected cash flows (e.g., cost to service), discount rates and changes in prepayments other than those attributable to changes in market interest rates (e.g., changes in prepayments due to changes in home prices).
Year ended December 31,
(in millions)		2018 2017 2016
CCB mortgage fees and related income     
Net production revenue$268
 $636
 $853
      
Net mortgage servicing revenue:     
Operating revenue:     
Loan servicing revenue1,835
 2,014
 2,336
Changes in MSR asset fair value due to collection/realization of expected cash flows(740) (795) (916)
Total operating revenue1,095
 1,219
 1,420
Risk management:     
Changes in MSR asset fair value
due to market interest rates and other(a)
300
 (202) (72)
Other changes in MSR asset fair value due to other inputs and assumptions in model(b)
(70) (30) (91)
Change in derivative fair value and other(341) (10) 380
Total risk management(111) (242) 217
Total net mortgage servicing revenue984
 977
 1,637
      
Total CCB mortgage fees and related income1,252
 1,613
 2,490
      
All other2
 3
 1
Mortgage fees and related income$1,254
 $1,616
 $2,491
(a)Represents both the impact of changes in estimated future prepayments due to changes in market interest rates, and the difference between actual and expected prepayments.
(b)Represents the aggregate impact of changes in model inputs and assumptions such as projected cash flows (e.g., cost to service), discount rates and changes in prepayments other than those attributable to changes in market interest rates (e.g., changes in prepayments due to changes in home prices).
The table below outlines the key economic assumptions used to determine the fair value of the Firm’s MSRs at December 31, 20182020 and 2017, 2019, and outlines the sensitivities of those fair values to immediate adverse changes in those assumptions, as defined below.
December 31,
(in millions, except rates)		20202019
Weighted-average prepayment speed assumption (constant prepayment rate)14.90 %11.67 %
Impact on fair value of 10% adverse change$(206)$(200)
Impact on fair value of 20% adverse change(392)(384)
Weighted-average option adjusted spread(a)
7.19 %7.93 %
Impact on fair value of 100 basis points adverse change$(134)$(169)
Impact on fair value of 200 basis points adverse change(258)(326)
December 31,
(in millions, except rates)
2018 2017
Weighted-average prepayment speed assumption (“CPR”)8.78% 9.35%
Impact on fair value of 10% adverse change$(205) $(221)
Impact on fair value of 20% adverse change(397) (427)
Weighted-average option adjusted spread8.70% 9.04%
Impact on fair value of 100 basis points adverse change$(235) $(250)
Impact on fair value of 200 basis points adverse change(452) (481)
CPR: Constant prepayment rate.(a)Includes the impact of operational risk and regulatory capital.
Changes in fair value based on variations in assumptions generally cannot be easily extrapolated, because the relationship of the change in the assumptions to the change in fair value are often highly interrelated and may not be linear. In this table, the effect that a change in a particular assumption may have on the fair value is calculated without changing any other assumption. In reality, changes in one factor may result in changes in another, which would either magnify or counteract the impact of the initial change.

264JPMorgan Chase & Co./20182020 Form 10-K255

Notes to consolidated financial statements

Note 16 – Premises and equipment
Premises and equipment, including leasehold improvements, are carried at cost less accumulated depreciation and amortization. JPMorgan Chase computes depreciation using the straight-line method over the estimated useful life of an asset. For leasehold improvements, the Firm uses the straight-line method computed over the lesser of the remaining termremainder of the leased facilitylease term, or the estimated useful life of the leased asset.improvements.
JPMorgan Chase capitalizes certain costs associated with the acquisition or development of internal-use software. Once the software is ready for its intended use, these costs are amortized on a straight-line basis over the software’s expected useful life and reviewed for impairment on an ongoing basis.

Note 17 – Deposits
At December 31, 20182020 and 2017, 2019, noninterest-bearing and interest-bearing deposits were as follows.
December 31, (in millions)20202019
U.S. offices
Noninterest-bearing (included $9,873 and $22,637 at fair value)(a)
$572,711 $395,667 
Interest-bearing (included $2,567 and $2,534 at fair value)(a)
1,197,032 876,156 
Total deposits in U.S. offices1,769,743 1,271,823 
Non-U.S. offices
Noninterest-bearing (included $1,486 and $1,980 at fair value)(a)
23,435 20,087 
Interest-bearing (included $558 and $1,438 at fair value)(a)
351,079 270,521 
Total deposits in non-U.S. offices374,514 290,608 
Total deposits$2,144,257 $1,562,431 
(a)Includes structured notes classified as deposits for which the fair value option has been elected. Refer to Note 3 for further discussion.
December 31, (in millions)2018

2017
 
U.S. offices    
Noninterest-bearing$369,505
 $393,645
 
Interest-bearing (included $19,691, and $14,947 at fair value)(a) 
831,085
 793,618
 
Total deposits in U.S. offices1,200,590
 1,187,263
 
Non-U.S. offices    
Noninterest-bearing19,092
 15,576
 
Interest-bearing (included $3,526 and $6,374 at fair value)(a)
250,984
 241,143
 
Total deposits in non-U.S. offices270,076
 256,719
 
Total deposits$1,470,666
 $1,443,982
 
(a)Includes structured notes classified as deposits for which the fair value option has been elected. For further discussion, refer to Note 3.
At December 31, 20182020 and 2017, 2019, time deposits in denominations of $250,000 or more were as follows.
December 31, (in millions)
2018

2017
U.S. offices
$25,119

$30,671
Non-U.S. offices
41,661

29,049
Total
$66,780

$59,720

December 31, (in millions)20202019
U.S. offices$33,812 $44,127 
Non-U.S. offices50,523 50,840 
Total$84,335 $94,967 
At December 31, 2018, 2020, the maturities of interest-bearing time deposits were as follows.
December 31, 2020
(in millions)		   
U.S.Non-U.S.Total
2021$44,785 $48,142 $92,927 
20221,451 175 1,626 
2023259 7 266 
2024210 36 246 
2025197 633 830 
After 5 years451 298 749 
Total$47,353 $49,291 $96,644 
December 31, 2018
(in millions)
  
  
  
 U.S. Non-U.S.
 Total
2019 $31,757
 $40,259
 $72,016
2020 6,309
 229
 6,538
2021 5,235
 19
 5,254
2022 2,884
 173
 3,057
2023 1,719
 372
 2,091
After 5 years 3,515
 2,023
 5,538
Total $51,419
 $43,075
 $94,494


JPMorgan Chase & Co./2020 Form 10-K265
Notes to consolidated financial statements
Note 18 - Leases
Firm as lessee
At December 31, 2020, JPMorgan Chase and its subsidiaries were obligated under a number of noncancelable leases, predominantly operating leases for premises and equipment used primarily for business purposes. These leases generally have terms of 20 years or less, determined based on the contractual maturity of the lease, and include periods covered by options to extend or terminate the lease when the Firm is reasonably certain that it will exercise those options. All leases with lease terms greater than twelve months are reported as a lease liability with a corresponding right-of-use (“ROU”) asset. None of these lease agreements impose restrictions on the Firm’s ability to pay dividends, engage in debt or equity financing transactions or enter into further lease agreements. Certain of these leases contain escalation clauses that will increase rental payments based on maintenance, utility and tax increases, which are non-lease components. The Firm elected not to separate lease and non-lease components of a contract for its real estate leases. As such, real estate lease payments represent payments on both lease and non-lease components.
Operating lease liabilities and ROU assets are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term. The future lease payments are discounted at a rate that represents the Firm’s collateralized borrowing rate for financing instruments of a similar term and are included in accounts payable and other liabilities. The operating lease ROU asset, included in premises and equipment, also includes any lease prepayments made, plus initial direct costs incurred, less any lease incentives received. Rental expense associated with operating leases is recognized on a straight-line basis over the lease term, and generally included in occupancy expense in the Consolidated statements of income.
The following tables provide information related to the Firm’s operating leases:
December 31,
(in millions, except where otherwise noted)
20202019
Right-of-use assets$8,006 $8,190 
Lease liabilities8,508 8,505 
Weighted average remaining lease term (in years)8.78.8
Weighted average discount rate3.48 %3.68 %
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities - operating cash flows$1,626 $1,572 
Supplemental non-cash information
Right-of-use assets obtained in exchange for operating lease obligations$1,350 $1,413 
Year ended December 31,
(in millions)		20202019
Rental expense
Gross rental expense$2,094 $2,057 
Sublease rental income(166)(184)
Net rental expense$1,928 $1,873 
The following table presents future payments under operating leases as of December 31, 2020:
Year ended December 31, (in millions)
2021$1,606 
20221,435 
20231,270 
20241,123 
2025947 
After 20253,602 
Total future minimum lease payments9,983 
Less: Imputed interest(1,475)
Total$8,508 
In addition to the table above, as of December 31, 2020, the Firm had additional future operating lease commitments of $1.2 billion that were signed but had not yet commenced. These operating leases will commence between 2021 and 2023 with lease terms up to 25 years.

266JPMorgan Chase & Co./2020 Form 10-K
Notes to consolidated financial statements
Firm as lessor
The Firm provides auto and equipment lease financing to its customers through lease arrangements with lease terms that may contain renewal, termination and/or purchase options. Generally, the Firm’s lease financings are operating leases. These assets subject to operating leases are recognized in other assets on the Firm’s Consolidated balance sheets and are depreciated on a straight-line basis over the lease term to reduce the asset to its estimated residual value. Depreciation expense is included in technology, communications and equipment expense in the Consolidated statements of income. The Firm’s lease income is generally recognized on a straight-line basis over the lease term and is included in other income in the Consolidated statements of income.
On a periodic basis, the Firm assesses leased assets for impairment, and if the carrying amount of the leased asset exceeds the undiscounted cash flows from the lease payments and the estimated residual value upon disposition of the leased asset, an impairment loss is recognized.
The risk of loss on auto and equipment leased assets relating to the residual value of the leased assets is monitored through projections of the asset residual values at lease origination and periodic review of residual values, and is mitigated through arrangements with certain manufacturers or lessees. 
The following table presents the carrying value of assets subject to leases reported on the Consolidated balance sheets:
December 31,
(in millions)		20202019
Carrying value of assets subject to operating leases, net of accumulated depreciation$21,155 $23,587 
Accumulated depreciation6,388 6,121 
The following table presents the Firm’s operating lease income and the related depreciation expense on the Consolidated statements of income:

Year ended December 31, (in millions)		202020192018
Operating lease income$5,539 $5,455 $4,540 
Depreciation expense4,257 4,157 3,522 
The following table presents future receipts under operating leases as of December 31, 2020:
Year ended December 31, (in millions)
2021$3,686 
20222,084 
2023613 
202452 
202524 
After 202534 
Total future minimum lease receipts$6,493 

JPMorgan Chase & Co./2020 Form 10-K267
Notes to consolidated financial statements
Note 19 – Accounts payable and other liabilities
Accounts payable and other liabilities consist of brokerage payables, which includesinclude payables to customers dealers and clearing organizations, and payables fromrelated to security purchases that did not settle;settle, as well as other accrued expenses, includingsuch as income tax payables, andoperating lease liabilities, credit card rewards liability; and all other liabilities, including obligations to return securities received as collateralliability, and litigation reserves.
The following table details the components of accounts payable and other liabilities.
December 31, (in millions)20202019
Brokerage payables$140,291 $118,375 
Other payables and liabilities(a)
92,308 92,032 
Total accounts payable and other liabilities$232,599 $210,407 
(a)    Includes credit card rewards liability of $7.7 billion and $6.4 billion at December 31, 2020 and 2019, respectively.
December 31, (in millions) 2018
 2017
Brokerage payables $114,794
 $102,727
Other payables and liabilities(a)
 81,916
 86,656
Total accounts payable and other liabilities $196,710
 $189,383
(a)Includes credit card rewards liability of $5.8 billion and $4.9 billion at December 31, 2018 and 2017, respectively.

256268JPMorgan Chase & Co./20182020 Form 10-K



Note 1920 – Long-term debt
JPMorgan Chase issues long-term debt denominated in various currencies, predominantly U.S. dollars, with both fixed and variable interest rates. Included in senior and subordinated debt below are various equity-linked or other indexed instruments, which the Firm has elected to measure at fair value. Changes in fair value are recorded in principal transactions revenue in the Consolidated statements of income, except for unrealized gains/(losses) due to DVA which are recorded in OCI. The following table is a summary of long-term debt carrying values (including unamortized premiums and discounts, issuance costs, valuation adjustments and fair value adjustments, where applicable) by remaining contractual maturity as of December 31, 2018.2020.
By remaining maturity at
December 31,
(in millions, except rates)		20202019
Under 1 year1-5 yearsAfter 5 yearsTotalTotal
Parent company
Senior debt:Fixed rate$9,225 $49,987 $114,296 $173,508 $161,198 
Variable rate1,580 8,644 8,353 18,577 18,615 
Interest rates(a)
1.33-4.63%0.50-4.50%0.17-6.40%0.17-6.40%0.15-6.40%
Subordinated debt:Fixed rate$0 $5,678 $13,577 $19,255 $15,155 
Variable rate0 0 9 9 9 
Interest rates(a)
0%3.38-7.75%2.96-8.00%2.96-8.00%3.38-8.00%
Subtotal$10,805 $64,309 $136,235 $211,349 $194,977 
Subsidiaries
Federal Home Loan Banks advances:Fixed rate$7 $45 $71 $123 $135 
Variable rate3,000 11,000 0 14,000 28,500 
Interest rates(a)
0.57-0.60%0.19-0.24%4.66-7.73%0.19-7.73%1.67-8.31%(h)
Senior debt:Fixed rate$1,067 $3,157 $11,534 $15,758 $19,597 
Variable rate12,055 18,448 7,608 38,111 45,861 
Interest rates(a)
0%7.28%1.00-1.30%1.00-7.28%1.00-9.43%
Subordinated debt:Fixed rate$0 $309 $0 $309 $305 
Variable rate0 0 0 0 0 
Interest rates(a)
0 %8.25 %0 %8.25 %8.25 %
Subtotal$16,129 $32,959 $19,213 $68,301 $94,398 
Junior subordinated debt:Fixed rate$0 $0 $738 $738 $693 
Variable rate0 0 1,297 1,297 1,430 
Interest rates(a)
0%0%0.71-8.75%0.71-8.75%2.41-8.75%
Subtotal$0 $0 $2,035 $2,035 $2,123 
Total long-term debt(b)(c)(d)
$26,934 $97,268 $157,483 $281,685 (f)(g)$291,498 
Long-term beneficial interests:
Fixed rate$625 $1,744 $0 $2,369 $2,990 
Variable rate1,924 650 210 2,784 3,748 
Interest rates0.36-2.77%0.00-2.39%0.00-3.75%0.00-3.75%0.00-4.06%
Total long-term beneficial interests(e)
$2,549 $2,394 $210 $5,153 $6,738 
(a)The interest rates shown are the range of contractual rates in effect at December 31, 2020 and 2019, respectively, including non-U.S. dollar fixed- and variable-rate issuances, which excludes the effects of the associated derivative instruments used in hedge accounting relationships, if applicable. The use of these derivative instruments modifies the Firm’s exposure to the contractual interest rates disclosed in the table above. Including the effects of the hedge accounting derivatives, the range of modified rates in effect at December 31, 2020, for total long-term debt was (0.40)% to 7.28%, versus the contractual range of 0.17% to 8.75% presented in the table above. The interest rate ranges shown exclude structured notes accounted for at fair value.
(b)Included long-term debt of $17.2 billion and $32.0 billion secured by assets totaling $166.4 billion and $186.1 billion at December 31, 2020 and 2019, respectively. The amount of long-term debt secured by assets does not include amounts related to hybrid instruments.
(c)Included $76.8 billion and $75.7 billion of long-term debt accounted for at fair value at December 31, 2020 and 2019, respectively.
(d)Included $16.1 billion and $14.0 billion of outstanding zero-coupon notes at December 31, 2020 and 2019, respectively. The aggregate principal amount of these notes at their respective maturities is $45.3 billion and $39.7 billion, respectively. The aggregate principal amount reflects the contractual principal payment at maturity, which may exceed the contractual principal payment at the Firm’s next call date, if applicable.
(e)Included on the Consolidated balance sheets in beneficial interests issued by consolidated VIEs. Also included $41 million and $36 million accounted for at fair value at December 31, 2020 and 2019, respectively. Excluded short-term commercial paper and other short-term beneficial interests of $12.4 billion and $11.1 billion at December 31, 2020 and 2019, respectively.
(f)At December 31, 2020, long-term debt in the aggregate of $151.3 billion was redeemable at the option of JPMorgan Chase, in whole or in part, prior to maturity, based on the terms specified in the respective instruments.
(g)The aggregate carrying values of debt that matures in each of the five years subsequent to 2020 is $26.9 billion in 2021, $18.4 billion in 2022, $32.2 billion in 2023, $29.6 billion in 2024 and $17.1 billion in 2025.
(h)Prior-period amounts have been revised to conform with the current presentation.
By remaining maturity at
December 31,
(in millions, except rates)
 2018  2017
 Under 1 year
 1-5 years
 After 5 years
 Total  Total
Parent company           
Senior debt:Fixed rate$8,958
 $55,362
 $81,500
 $145,820
  $141,551
 Variable rate4,037
 14,025
 4,916
 22,978
  26,461
 
Interest rates(a)
0.17-6.30%
 0.23-4.95%
 0.45-6.40%
 0.17-6.40%
  0.16-7.25%
Subordinated debt:Fixed rate$146
 $1,948
 $12,214
 $14,308
  $14,646
 Variable rate—
 —
 9
 9
  9
 
Interest rates(a)
8.53% 3.38% 3.63-8.00%
 3.38-8.53%
  3.38-8.53%
 Subtotal$13,141
 $71,335
 $98,639
 $183,115
  $182,667
Subsidiaries           
Federal Home Loan Banks advances:Fixed rate$12
 $25
 $118
 $155
  $167
 Variable rate11,000
 29,300
 4,000
 44,300
  60,450
 
Interest rates(a)
2.58-2.95%
 2.36-2.96%
 2.43-2.52%
 2.36-2.96%
  1.18-2.00%
Senior debt:Fixed rate$1,574
 $6,454
 $8,406
 $16,434
  $11,990
 Variable rate6,667
 22,277
 6,657
 35,601
  26,218
 
Interest rates(a)
1.65-7.50%
 2.60-7.50%
 1.00-7.50%
 1.00-7.50%
  0.22-7.50%
Subordinated debt:Fixed rate$—
 $—
 $301
 $301
  $313
 Variable rate—
 —
 —
 —
  —
 
Interest rates(a)
—% —% 8.25% 8.25%  8.25%
 Subtotal$19,253
 $58,056
 $19,482
 $96,791
  $99,138
Junior subordinated debt:Fixed rate$—
 $—
 $659
 $659
  $690
 Variable rate—
 —
 1,466
 1,466
  1,585
 
Interest rates(a)
—% —% 3.04-8.75%
 3.04-8.75%
  1.88-8.75%
 Subtotal$—
 $—
 $2,125
 $2,125
  $2,275
Total long-term debt(b)(c)(d)
 $32,394
 $129,391
 $120,246
 $282,031
(f)(g) 
 $284,080
Long-term beneficial interests:           
Fixed rate$4,634
 $2,977
 $—
 $7,611
  $13,579
 Variable rate2,324
 3,471
 308
 6,103
  8,192
 Interest rates1.27-2.87%
 0.00-3.01%
 2.50-4.62%
 0.00-4.62%
  0.00-6.54%
Total long-term beneficial interests(e)
 $6,958
 $6,448
 $308
 $13,714
  $21,771
(a)The interest rates shown are the range of contractual rates in effect at December 31, 2018 and 2017, respectively, including non-U.S. dollar fixed- and variable-rate issuances, which excludes the effects of the associated derivative instruments used in hedge accounting relationships, if applicable. The use of these derivative instruments modifies the Firm’s exposure to the contractual interest rates disclosed in the table above. Including the effects of the hedge accounting derivatives, the range of modified rates in effect at December 31, 2018, for total long-term debt was (0.06)% to 8.88%, versus the contractual range of 0.17% to 8.75% presented in the table above. The interest rate ranges shown exclude structured notes accounted for at fair value.
(b)Included long-term debt of $47.7 billion and $63.5 billion secured by assets totaling $207.0 billion and $208.4 billion at December 31, 2018 and 2017, respectively. The amount of long-term debt secured by assets does not include amounts related to hybrid instruments.
(c)Included $54.9 billion and $47.5 billion of long-term debt accounted for at fair value at December 31, 2018 and 2017, respectively.
(d)Included $11.2 billion and $10.3 billion of outstanding zero-coupon notes at December 31, 2018 and 2017, respectively. The aggregate principal amount of these notes at their respective maturities is $37.4 billion and $33.5 billion, respectively. The aggregate principal amount reflects the contractual principal payment at maturity, which may exceed the contractual principal payment at the Firm’s next call date, if applicable.
(e)Included on the Consolidated balance sheets in beneficial interests issued by consolidated VIEs. Also included $28 million and $45 million accounted for at fair value at December 31, 2018 and 2017, respectively. Excluded short-term commercial paper and other short-term beneficial interests of $6.5 billion and $4.3 billion at December 31, 2018 and 2017, respectively.
(f)At December 31, 2018, long-term debt in the aggregate of $138.2 billion was redeemable at the option of JPMorgan Chase, in whole or in part, prior to maturity, based on the terms specified in the respective instruments.
(g)The aggregate carrying values of debt that matures in each of the five years subsequent to 2018 is $32.4 billion in 2019, $46.7 billion in 2020, $40.0 billion in 2021, $16.3 billion in 2022 and $26.4 billion in 2023.

JPMorgan Chase & Co./20182020 Form 10-K257269
Notes to consolidated financial statements

The weighted-average contractual interest rates for total long-term debt excluding structured notes accounted for at fair value were 3.28% 2.89% and 2.87% 3.13% as of December 31, 20182020 and 2017, 2019, respectively. In order to modify exposure to interest rate and currency exchange rate movements, JPMorgan Chase utilizes derivative instruments, primarily interest rate and cross-currency interest rate swaps, in conjunction with some of its debt issuances. The use of these instruments modifies the Firm’s interest expense on the associated debt. The modified weighted-average interest rates for total long-term debt, including the effects of related derivative instruments, were 3.64% 1.58% and 2.56% 3.19% as of December 31, 20182020 and 2017, 2019, respectively.
JPMorgan Chase & Co. has guaranteed certain long-term debt of its subsidiaries, including both long-term debt and structured notes. notes. These guarantees rank on parity with the Firm’s other unsecured and unsubordinated indebtedness. The amount of such guaranteed long-term debt and structured notes was $10.9$13.8 billion and $7.9$14.4 billion at December 31, 20182020 and 2017, 2019, respectively.
The Firm’s unsecured debt does not contain requirements that would call for an acceleration of payments, maturities or changes in the structure of the existing debt, provide any limitations on future borrowings or require additional collateral, based on unfavorable changes in the Firm’s credit ratings, financial ratios,, earnings or stock price.

Junior subordinated deferrable interest debentures
On September 10, 2018 the Firm’s last remaining issuer of outstanding trust preferred securities (“issuer trust”) was liquidated, resulting in $475 million of trust preferred securities and $15 million of trust common securities originally issued by the issuer trust being cancelled. The junior subordinated debentures previously held by the trust issuer were distributed pro rata to the holders of the trust preferred and trust common securities. The carrying value of the junior subordinated debt was $659 million as of December 31, 2018.

258270JPMorgan Chase & Co./20182020 Form 10-K



Note 2021 – Preferred stock
At December 31, 20182020 and 2017, 2019, JPMorgan Chase was authorized to issue 200 million shares of preferred stock, in one or more series, with a par value of $1$1 per share.

In the event of a liquidation or dissolution of the Firm, JPMorgan Chase’s preferred stock then outstanding takes precedence over the Firm’s common stock with respect to the payment of dividends and the distribution of assets.
The following is a summary of JPMorgan Chase’s non-cumulative preferred stock outstanding as of December 31, 2020 and 2019.
Shares(a)
Carrying value
(in millions)		Issue dateContractual rate
in effect at
December 31, 2020
Earliest redemption date(b)
Floating annualized
rate of
three-month LIBOR/Term SOFR plus:
Dividend declared per share(c)
December 31,December 31,Year ended December 31,
2020201920202019202020192018
Fixed-rate:
Series P0 0 $0 $0 2/5/20130 %3/1/2018NA$0$545.00$545.00
Series T0 0 0 0 1/30/20140 3/1/2019NA0167.50670.00
Series W0 0 0 0 6/23/20140 9/1/2019NA0472.50630.00
Series Y0 143,000 0 1,430 2/12/20150 3/1/2020NA153.13612.52612.52
Series AA142,500 142,500 1,425 1,425 6/4/20156.100 9/1/2020NA610.00610.00610.00
Series BB115,000 115,000 1,150 1,150 7/29/20156.150 9/1/2020NA615.00615.00615.00
Series DD169,625 169,625 1,696 1,696 9/21/20185.750 12/1/2023NA575.00575.00111.81(d)
Series EE185,000 185,000 1,850 1,850 1/24/20196.000 3/1/2024NA600.00511.67NA(e)
Series GG90,000 90,000 900 900 11/7/20194.750 12/1/2024NA506.67NANA(f)
Fixed-to-floating-rate:
Series I293,375 293,375 $2,934 $2,934 4/23/2008LIBOR + 3.47%4/30/2018LIBOR + 3.47%$428.03$593.23$646.38(g)
Series Q150,000 150,000 1,500 1,500 4/23/20135.150 5/1/2023LIBOR + 3.25515.00515.00515.00
Series R150,000 150,000 1,500 1,500 7/29/20136.000 8/1/2023LIBOR + 3.30600.00600.00600.00
Series S200,000 200,000 2,000 2,000 1/22/20146.750 2/1/2024LIBOR + 3.78675.00675.00675.00
Series U100,000 100,000 1,000 1,000 3/10/20146.125 4/30/2024LIBOR + 3.33612.50612.50612.50
Series V250,000 250,000 2,500 2,500 6/9/2014LIBOR + 3.32%7/1/2019LIBOR + 3.32436.85534.09500.00(h)
Series X160,000 160,000 1,600 1,600 9/23/20146.100 10/1/2024LIBOR + 3.33610.00610.00610.00
Series Z200,000 200,000 2,000 2,000 4/21/2015LIBOR + 3.80%5/1/2020LIBOR + 3.80453.52530.00530.00(i)
Series CC125,750 125,750 1,258 1,258 10/20/20174.625 11/1/2022LIBOR + 2.58462.50462.50462.50
Series FF225,000 225,000 2,250 2,250 7/31/20195.000 8/1/2024SOFR + 3.38500.00251.39NA(j)
Series HH300,000 0 3,000 0 1/23/20204.600 2/1/2025SOFR + 3.125470.22NANA(k)
Series II150,000 0 1,500 0 2/24/20204.000 4/1/2025SOFR + 2.745341.11NANA(l)
Total preferred stock3,006,250 2,699,250 $30,063 $26,993 
(a)Represented by depositary shares.
(b)Fixed-to-floating rate notes convert to a floating rate at the earliest redemption date.
(c)Dividends are declared quarterly. Dividends are payable quarterly on fixed-rate preferred stock. Dividends are payable semiannually on fixed-to-floating-rate preferred stock while at a fixed rate, and payable quarterly after converting to a floating rate.
(d)Dividends in the amount of $111.81 per share were declared on December 1, 2018 and 2017.include dividends from the original issue date of September 21, 2018 through November 30, 2018.
(e)Dividends in the amount of $211.67 per share were declared on April 12,2019 and include dividends from the original issue date of January 24, 2019 through May 31, 2019. Dividends in the amount of $150.00 per share were declared thereafter on July 10, 2019 and October 9, 2019.
(f)NaN dividends were declared for Series GG from the original issue date of November 7, 2019 through December 31, 2019.
(g)The dividend rate for Series I preferred stock became floating and payable quarterly starting on April 30, 2018; prior to which the dividend rate was fixed at 7.90% or $395.00 per share payable semi annually.
(h)The dividend rate for Series V preferred stock became floating and payable quarterly starting on July 1, 2019; prior to which the dividend rate was fixed at 5% or $250.00 per share payable semi annually. The Firm declared a dividend of $144.11 and $139.98 per share on outstanding Series V preferred stock on August 15, 2019 and November 15, 2019, respectively.
(i)Prior to May 1, 2020, the dividend rate was fixed at 5.3%.
(j)Dividends in the amount of $126.39 per share were declared on September 9, 2019 and include dividends from the original issue date of July 31, 2019 through October 31, 2019. Dividends in the amount of $125.00 per share were declared thereafter on December 10, 2019.
(k)Dividends in the amount of $125.22 per share were declared on March 13, 2020 and include dividends from the original issue date of January 23, 2020 through April 30, 2020. Dividends in the amount of $115.00 per share were declared quarterly thereafter.
(l)Dividends in the amount of $141.11 per share were declared on May 15, 2020 and include dividends from the original issue date of February 24, 2020 through June 30, 2020. Dividends in the amount of $100.00 per share were declared quarterly thereafter.

 
Shares at December 31,(a)
 
Carrying value
 (in millions)
at December 31,
 Issue dateContractual rate
in effect at
December 31, 2018		Earliest redemption dateDate at which dividend rate becomes floatingFloating annual
rate of
three-month LIBOR plus:		Dividend declared per share(b) 
 20182017 20182017
Fixed-rate:             
Series P90,000
90,000
 $900
$900
 2/5/20135.450%3/1/2018NANA$136.25 
Series T92,500
92,500
 925
925
 1/30/20146.700
3/1/2019NANA167.50 
Series W88,000
88,000
 880
880
 6/23/20146.300
9/1/2019NANA157.50 
Series Y143,000
143,000
 1,430
1,430
 2/12/20156.125
3/1/2020NANA153.13 
Series AA142,500
142,500
 1,425
1,425
 6/4/20156.100
9/1/2020NANA152.50 
Series BB115,000
115,000
 1,150
1,150
 7/29/20156.150
9/1/2020NANA153.75 
Series DD169,625
—
 1,696
—
 9/21/20185.750
12/1/2023NANA111.81
(c) 
              
Fixed-to-floating-rate:             
Series I430,375
600,000
 4,304
6,000
 4/23/2008LIBOR + 3.47%
4/30/20184/30/2018LIBOR + 3.47%$395.00
(d) 
            147.34
(d) 
            148.45
(d) 
            153.09
(d) 
Series Q150,000
150,000
 1,500
1,500
 4/23/20135.150
5/1/20235/1/2023LIBOR + 3.25257.50 
Series R150,000
150,000
 1,500
1,500
 7/29/20136.000
8/1/20238/1/2023LIBOR + 3.30300.00 
Series S200,000
200,000
 2,000
2,000
 1/22/20146.750
2/1/20242/1/2024LIBOR + 3.78337.50 
Series U100,000
100,000
 1,000
1,000
 3/10/20146.125
4/30/20244/30/2024LIBOR + 3.33306.25 
Series V250,000
250,000
 2,500
2,500
 6/9/20145.000
7/1/20197/1/2019LIBOR + 3.32250.00 
Series X160,000
160,000
 1,600
1,600
 9/23/20146.100
10/1/202410/1/2024LIBOR + 3.33305.00 
Series Z200,000
200,000
 2,000
2,000
 4/21/20155.300
5/1/20205/1/2020LIBOR + 3.80265.00 
Series CC125,750
125,750
 1,258
1,258
 10/20/20174.625
11/1/202211/1/2022LIBOR + 2.58231.25
(c) 
Total preferred stock2,606,750
2,606,750
 $26,068
$26,068
        
(a)JPMorgan Chase & Co./2020 Form 10-KRepresented by depositary shares.271
(b)Dividends on fixed-rate preferred stock are payable quarterly. Dividends on fixed-to-floating-rate preferred stock are payable semiannually while at a fixed rate, and payable quarterly after converting to a floating rate.
(c)Dividend per share is prorated based on the number of days outstanding for the period.
(d)The dividend rate for Series I preferred stock became floating and payable quarterly starting on April 30, 2018; prior to which the dividend rate was fixed at 7.90% or $395.00 per share payable semi annually. The Firm declared a dividend of $147.34, $148.45 and $153.09 per share on outstanding Series I preferred stock on June 15, 2018, September 14, 2018 and December 14, 2018, respectively.
Notes to consolidated financial statements
Each series of preferred stock has a liquidation value and redemption price per share of $10,000, plus accrued but unpaid dividends. The aggregate liquidation value was $30.5 billion at December 31, 2020.
On January 24, 2019,March 1, 2020, the Firm issued $1.85redeemed all $1.43 billion of 6.00%its 6.125% non-cumulative preferred stock, Series EE, and on JanuaryY.
On December 1, 2019, the Firm redeemed all $900 million of its 5.45% non-cumulative preferred stock, Series P.
On October 30, 2019, the Firm announced that it will redeem all $925 million of its outstanding 6.70% non-cumulative preferred stock, Series T, on March 1, 2019.On September 21, 2018, the Firm issued $1.7 billion of 5.75% non-cumulative preferred stock, Series DD. On October 30, 2018, the Firm redeemed $1.7$1.37 billion of its fixed-to-floating rate non-cumulative perpetual preferred stock, Series I.
On October 20, 2017,September 1, 2019, the Firm issued $1.3 billionredeemed all $880 million of fixed-to-floating rateits 6.30% non-cumulative preferred stock, Series CC, with an initial dividend rate of 4.625%. W.
On DecemberMarch 1,
2017, 2019, the Firm redeemed all $1.3 billion$925 million of its outstanding 5.50%6.70% non-cumulative preferred stock, Series O. Quarterly dividend per share for Series O was $137.50 for the years ended December 31, 2017 and 2016.T.
Redemption rights
Each series of the Firm’s preferred stock may be redeemed on any dividend payment date on or after the earliest redemption date for that series. All outstanding preferred stock series except Series I may also be redeemed following a “capital treatment event,” as described in the terms of each series. Any redemption of the Firm’s preferred stock is subject to non-objection from the Board of Governors of the Federal Reserve System (the “Federal Reserve”).

272JPMorgan Chase & Co./20182020 Form 10-K259

Notes to consolidated financial statements

Note 2122 – Common stock
At December 31, 20182020 and 2017,2019, JPMorgan Chase was authorized to issue 9.0 billion shares of common stock with a par value of $1 per share.
Common shares issued (newly issued or reissuance(reissuances from treasury) by JPMorgan Chase during the years ended December 31, 2018, 20172020, 2019 and 20162018 were as follows.
Year ended December 31,
(in millions)
2018
2017
2016
Year ended December 31,
(in millions)		202020192018
Total issued – balance at January 14,104.9
4,104.9
4,104.9
Total issued – balance at January 14,104.9 4,104.9 4,104.9 
Treasury – balance at January 1(679.6)(543.7)(441.4)Treasury – balance at January 1(1,020.9)(829.1)(679.6)
Repurchase(181.5)(166.6)(140.4)Repurchase(50.0)(213.0)(181.5)
Reissuance: Reissuance:
Employee benefits and compensation plans21.7
24.5
26.0
Employee benefits and compensation plans14.2 20.4 21.7 
Warrant exercise9.4
5.4
11.1
Warrant exercise0 0 9.4 
Employee stock purchase plans0.9
0.8
1.0
Employee stock purchase plans1.2 0.8 0.9 
Total reissuance32.0
30.7
38.1
Total reissuance15.4 21.2 32.0 
Total treasury – balance at December 31(829.1)(679.6)(543.7)Total treasury – balance at December 31(1,055.5)(1,020.9)(829.1)
Outstanding at December 313,275.8
3,425.3
3,561.2
Outstanding at December 313,049.4 3,084.0 3,275.8 
There were no0 warrants to purchase shares of common stock (“Warrants”) outstanding at December 31, 2018,2020 and December 31, 2019 as any Warrants that were not exercised on or before October 29, 2018 have expired. At December 31, 2017, and 2016, respectively,
On March 15, 2020, in response to the economic disruptions caused by the COVID-19 pandemic, the Firm had 15.0 million and 24.9 million Warrants outstanding.
On June 28, 2018, in conjunction withtemporarily suspended repurchases of its common stock. Subsequently, the Federal Reserve’s releaseReserve directed all large banks, including the Firm, to discontinue net share repurchases through the end of its 2018 CCAR results,2020. On December 18, 2020, the Firm’sFederal Reserve announced that all large banks, including the Firm, could resume share repurchases commencing in the first quarter of 2021, subject to certain restrictions. The Firm's Board of Directors has authorized a $20.7 billionnew common equityshare repurchase program. As of December 31, 2018, $10.4 billion of authorized repurchase capacity remained under the program. This authorization includes shares repurchasedprogram for up to offset issuances under the Firm’s share-based compensation plans.$30 billion.
The following table sets forth the Firm’s repurchases of common equitystock for the years ended December 31, 2018, 20172020, 2019 and 2016.2018. There were no0 Warrants repurchased during the years ended December 31, 2018, 2017 and 2016.2018.
Year ended December 31, (in millions) 2018
 2017
 2016
Total number of shares of common stock repurchased 181.5
 166.6
 140.4
Aggregate purchase price of common stock repurchases $19,983
 $15,410
 $9,082

Year ended December 31, (in millions)202020192018
Total number of shares of common stock repurchased50.0 213.0 181.5 
Aggregate purchase price of common stock repurchases$6,397 $24,121 $19,983 
The authorization to repurchase common shares is utilized at management’s discretion, and the timing of purchases and the exact amount of common shares that may be repurchased is subject to various factors, including market conditions; legal and regulatory considerations affecting the amount and timing of repurchase activity; the Firm’s capital position (taking into account goodwill and intangibles); internal capital generation; and alternative investment opportunities. The repurchase program does not include specific price targets or timetables; may be suspended by management at any time; and may be executed through open market purchases or privately negotiated transactions, or utilizing Rule 10b5-1 plans, which are written trading plans that the Firm may enter into from time to time enters into written trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934 to facilitate repurchases in accordance with the common equity repurchase program. A Rule 10b5-1 repurchase plan allowsand which allow the Firm to repurchase its equitycommon shares during periods when it wouldmay otherwise not otherwise be repurchasing common equity — forshares —for example, during internal trading “blackoutblackout periods.” All purchases under a Rule 10b5-1 plan must be made according to a predefined plan established when the Firm is not aware of material nonpublic information. For additional information regarding repurchases of the Firm’s equity securities, refer to Part II, Item 5: Market for registrant’s common equity, related stockholder matters and issuer purchases of equity securities, on page 30.
As of December 31, 2018,2020, approximately 8562.1 million shares of common stock were reserved for issuance under various employee incentive, compensation, option and stock purchase plans, and directors’ compensation plans.

260JPMorgan Chase & Co./20182020 Form 10-K273
Notes to consolidated financial statements


Note 2223 – Earnings per share
Basic earnings per share (“EPS”) is calculated using the two-class method. DilutiveUnder the two-class method, all earnings (distributed and undistributed) are allocated to common stock and participating securities. JPMorgan Chase grants RSUs under its share-based compensation programs, predominantly all of which entitle recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to dividends paid to holders of the Firm’s common stock. These unvested RSUs meet the definition of participating securities based on their respective rights to receive nonforfeitable dividends, and they are treated as a separate class of securities in computing basic EPS. Participating securities are not included as incremental shares in computing diluted EPS; refer to Note 9 for additional information.
Diluted EPS incorporates the potential impact of contingently issuable shares, including awards which require future service as a condition of delivery of the underlying common stock. Diluted EPS is calculated under both the two-class and treasury stock methods, and the more dilutive amount is reported. Under the two-class method, all earnings (distributed and undistributed) are allocated to each class of common stock and participating securities based on their respective rights to receive dividends. JPMorgan Chase grants RSUs under its share-based compensation programs, which entitle recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock; these unvested awards meet the definition of participating securities. Accordingly, these RSUs are treated as a separate class of securities in computing basic EPS, and are not included as incremental shares in computing dilutive EPS; refer to Note 9 for additional information. For each of the periods presented in the table below, diluted EPS calculated under the two-class method was more dilutive.

The following table presents the calculation of net income applicable to common stockholders and basic and diluted EPS for the years ended December 31, 2018, 20172020, 2019 and 2016.2018.
Year ended December 31,
(in millions,
except per share amounts)		202020192018
Basic earnings per share
Net income$29,131 $36,431 $32,474 
Less: Preferred stock dividends1,583 1,587 1,551 
Net income applicable to common equity27,548 34,844 30,923 
Less: Dividends and undistributed earnings allocated to participating securities138 202 214 
Net income applicable to common stockholders$27,410 $34,642 $30,709 
Total weighted-average basic shares outstanding3,082.4 3,221.5 3,396.4 
Net income per share$8.89 $10.75 $9.04 
Diluted earnings per share
Net income applicable to common stockholders$27,410 $34,642 $30,709 
Total weighted-average basic shares outstanding3,082.4 3,221.5 3,396.4 
Add: Dilutive impact of SARs and employee stock options, unvested PSUs and nondividend-earning RSUs, and warrants5.0 8.9 17.6 
Total weighted-average diluted shares outstanding3,087.4 3,230.4 3,414.0 
Net income per share$8.88 $10.72 $9.00 
Year ended December 31,
(in millions,
except per share amounts)
201820172016
Basic earnings per share   
Net income$32,474
$24,441
$24,733
Less: Preferred stock dividends1,551
1,663
1,647
Net income applicable to common equity30,923
22,778
23,086
Less: Dividends and undistributed earnings allocated to participating securities214
211
252
Net income applicable to common stockholders$30,709
$22,567
$22,834
    
Total weighted-average basic shares outstanding3,396.4
3,551.6
3,658.8
Net income per share$9.04
$6.35
$6.24
    
Diluted earnings per share   
Net income applicable to common stockholders$30,709
$22,567
$22,834
    
Total weighted-average basic shares outstanding3,396.4
3,551.6
3,658.8
Add: Employee stock options, SARs, warrants and unvested PSUs17.6
25.2
31.2
Total weighted-average diluted shares outstanding3,414.0
3,576.8
3,690.0
Net income per share$9.00
$6.31
$6.19







274JPMorgan Chase & Co./20182020 Form 10-K261

Notes to consolidated financial statements

Note 2324 – Accumulated other comprehensive income/(loss)
AOCI includes the after-tax change in unrealized gains and losses on investment securities, foreign currency translation adjustments (including the impact of related derivatives), fair value changes of excluded components on fair value hedges, cash flow hedging activities, and net loss and prior service costs/(credit) related to the Firm’s defined benefit pension and OPEB plans.plans, and fair value option-elected liabilities arising from changes in the Firm’s own credit risk (DVA).
Year ended December 31,
(in millions)		Unrealized
gains/(losses)
on investment securities		Translation adjustments, net of hedgesFair value
hedges		Cash flow hedgesDefined benefit pension and OPEB plansDVA on fair value option elected liabilitiesAccumulated other comprehensive income/(loss)
Balance at December 31, 2017$2,164 

$(470)$0 $76 $(1,521)$(368)$(119)
Cumulative effect of changes in accounting principles(a)
896 (277)(54)16 (414)(79)88 
Net change(1,858)20 (107)(201)(373)1,043 (1,476)
Balance at December 31, 2018$1,202 $(727)$(161)$(109)$(2,308)$596 $(1,507)
Net change2,855 20 30 172 964 (965)3,076 
Balance at December 31, 2019$4,057 $(707)$(131)$63 $(1,344)$(369)$1,569 
Net change4,123 234 19 2,320 212 (491)6,417 
Balance at December 31, 2020$8,180 (b)$(473)$(112)$2,383 $(1,132)$(860)$7,986 
(a)Represents the adjustment to AOCI as a result of the accounting standards adopted in the first quarter of 2018. Refer to Note 1 for additional information.
 
Year ended December 31,
(in millions)
Unrealized
gains/(losses)
on investment securities
 Translation adjustments, net of hedges 
Fair value
hedges(c)
Cash flow hedges Defined benefit pension and OPEB plansDVA on fair value option elected liabilitiesAccumulated other comprehensive income/(loss)
 
 Balance at December 31, 2015 $2,629

  $(162)  NA
 $(44)   $(2,231)  $—
  $192
 
Cumulative effect of change in accounting principle(a)
 —
   —
  NA
 —
   —
  154
  154
 Net change (1,105)   (2)  NA
 (56)   (28)  (330)  (1,521)
 Balance at December 31, 2016 $1,524
   $(164)  NA
 $(100)   $(2,259)  $(176)  $(1,175)
 Net change 640
   (306)  NA
 176
   738
  (192)  1,056
 Balance at December 31, 2017 $2,164
   $(470)  $—
 $76
   $(1,521)  $(368)  $(119)
 
Cumulative effect of changes in accounting principles:(b)
                     
 Premium amortization on purchased callable debt securities 261
   —
  —
 —
   —
  —
  261
 
Hedge accounting

 169
   —
  (54) —
   —
  —
  115
 Reclassification of certain tax effects from AOCI 466
   (277)  —
 16
   (414)  (79)  (288)
 Net change (1,858)   20
  (107) (201)   (373)  1,043
  (1,476)
 Balance at December 31, 2018 $1,202
   $(727)  $(161) $(109)   $(2,308)  $596
  $(1,507)
(a)Effective January 1, 2016, the Firm adopted new accounting guidance related to the recognition and measurement of financial liabilities where the fair value option has been elected. This guidance requires the portion of the total change in fair value caused by changes in the Firm’s own credit risk (DVA) to be presented separately in OCI; previously these amounts were recognized in net income.
(b)Represents the adjustment to AOCI as a result of the new accounting standards adopted in the first quarter of 2018. For additional information, refer to Note 1.
(c)Represents changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads, which are excluded from the assessment of hedge effectiveness and recorded in other comprehensive income. The initial cost of cross-currency basis spreads is recognized in earnings as part of the accrual of interest on the cross currency swap.

(b)Includes after-tax net unamortized unrealized gains of $3.3 billion related to AFS securities that have been transferred to HTM. Refer to Note 10 for further information.



































262JPMorgan Chase & Co./20182020 Form 10-K275

Notes to consolidated financial statements

The following table presents the pre-tax and after-tax changes in the components of OCI.
 2018 2017 2016
Year ended December 31, (in millions)Pre-tax Tax effect After-tax Pre-tax Tax effect After-tax Pre-tax Tax effect After-tax
Unrealized gains/(losses) on investment securities:                 
Net unrealized gains/(losses) arising during the period$(2,825) $665
 $(2,160) $944
 $(346) $598
 $(1,628) $611
 $(1,017)
Reclassification adjustment for realized (gains)/losses included in net income(a)
395
 (93) 302
 66
 (24) 42
 (141) 53
 (88)
Net change(2,430) 572
 (1,858) 1,010
 (370) 640
 (1,769) 664
 (1,105)
Translation adjustments(b):
                 
Translation(1,078) 156
 (922) 1,313
 (801) 512
 (261) 99
 (162)
Hedges1,236
 (294) 942
 (1,294) 476
 (818) 262
 (102) 160
Net change158
 (138) 20
 19
 (325) (306) 1
 (3) (2)
Fair value hedges, net change(c):
(140) 33
 (107) NA
 NA
 NA
 NA
 NA
 NA
Cash flow hedges:                 
Net unrealized gains/(losses) arising during the period(245) 58
 (187) 147
 (55) 92
 (450) 168
 (282)
Reclassification adjustment for realized (gains)/losses included in net income(d)
(18) 4
 (14) 134
 (50) 84
 360
 (134) 226
Net change(263) 62
 (201) 281
 (105) 176
 (90) 34
 (56)
Defined benefit pension and OPEB plans:                 
Prior service credit/(cost) arising during the period(29) 7
 (22) —
 —
 —
 —
 —
 —
Net gain/(loss) arising during the period(558) 102
 (456) 802
 (160) 642
 (366) 145
 (221)
Reclassification adjustments included in net income(e):
                 
Amortization of net loss103
 (24) 79
 250
 (90) 160
 257
 (97) 160
Amortization of prior service cost/(credit)(23) 6
 (17) (36) 13
 (23) (36) 14
 (22)
Curtailment (gain)/loss21
 (5) 16
 —
 —
 —
 —
 —
 —
Settlement (gain)/loss2
 —
 2
 2
 (1) 1
 4
 (1) 3
Foreign exchange and other34
 (9) 25
 (54) 12
 (42) 77
 (25) 52
Net change(450) 77
 (373) 964
 (226) 738
 (64) 36
 (28)
DVA on fair value option elected liabilities, net change:$1,364
 $(321) $1,043
 $(303) $111
 $(192) $(529) $199
 $(330)
Total other comprehensive income/(loss)$(1,761) $285
 $(1,476) $1,971
 $(915) $1,056
 $(2,451) $930
 $(1,521)
(a)The pre-tax amount is reported in investment securities gains/(losses) in the Consolidated statements of income.
(b)Reclassifications of pre-tax realized gains/(losses) on translation adjustments and related hedges are reported in other income/expense in the Consolidated statements of income. During the year ended December 31, 2018, the Firm reclassified a net pre-tax loss of $168 million to other expense related to the liquidation of certain legal entities, $17 million related to net investment hedge losses and $151 million related to cumulative translation adjustments. During the year ended December 31, 2017, the Firm reclassified a net pre-tax loss of $25 million to other expense related to the liquidation of a legal entity, $50 million related to net investment hedge gains and $75 million related to cumulative translation adjustments.
(c)Represents changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads, which are excluded from the assessment of hedge effectiveness and recorded in other comprehensive income. The initial cost of cross-currency basis spreads is recognized in earnings as part of the accrual of interest on the cross-currency swap.
(d)The pre-tax amounts are predominantly recorded in noninterest revenue, net interest income and compensation expense in the Consolidated statements of income.
(e)The pre-tax amount is reported in other expense in the Consolidated statements of income.

202020192018
Year ended December 31, (in millions)Pre-taxTax effectAfter-taxPre-taxTax effectAfter-taxPre-taxTax effectAfter-tax
Unrealized gains/(losses) on investment securities:
Net unrealized gains/(losses) arising during the period$6,228 $(1,495)$4,733 $4,025 $(974)$3,051 $(2,825)$665 $(2,160)
Reclassification adjustment for realized (gains)/losses included in net income(a)
(802)192 (610)(258)62 (196)395 (93)302 
Net change5,426 (1,303)4,123 3,767 (912)2,855 (2,430)572 (1,858)
Translation adjustments(b):
Translation1,407 (103)1,304 (49)33 (16)(1,078)156 (922)
Hedges(1,411)341 (1,070)46 (10)36 1,236 (294)942 
Net change(4)238 234 (3)23 20 158 (138)20 
Fair value hedges, net change(c):
25 (6)19 39 (9)30 (140)33 (107)
Cash flow hedges:
Net unrealized gains/(losses) arising during the period3,623 (870)2,753 122 (28)94 (245)58 (187)
Reclassification adjustment for realized (gains)/losses included in net income(d)
(570)137 (433)103 (25)78 (18)4 (14)
Net change3,053 (733)2,320 225 (53)172 (263)62 (201)
Defined benefit pension and OPEB plans, net change:214 (2)212 1,157 (193)964 (450)77 (373)
DVA on fair value option elected liabilities, net change:$(648)$157 $(491)$(1,264)$299 $(965)$1,364 $(321)$1,043 
Total other comprehensive income/(loss)$8,066 $(1,649)$6,417 $3,921 $(845)$3,076 $(1,761)$285 $(1,476)
(a)The pre-tax amount is reported in Investment securities gains/(losses) in the Consolidated statements of income.
(b)Reclassifications of pre-tax realized gains/(losses) on translation adjustments and related hedges are reported in other income/expense in the Consolidated statements of income. During the year ended December 31, 2020, the Firm reclassified a net pre-tax gain of $6 million to other income related to the liquidation of legal entities, $3 million related to net investment hedge gains and $3 million related to cumulative translation adjustments. During the year ended December 31, 2019, the Firm reclassified net pre-tax gains of $7 million to other income and $1 million to other expense, respectively. These amounts, which related to the liquidation of certain legal entities, are comprised of $18 million related to net investment hedge gains and $10 million related to cumulative translation adjustments. During the year ended December 31, 2018, the Firm reclassified a net pre-tax loss of $168 million to other expense related to the liquidation of certain legal entities, $17 million related to net investment hedge losses and $151 million related to cumulative translation adjustments.
(c)Represents changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads, which are excluded from the assessment of hedge effectiveness and recorded in other comprehensive income. The initial cost of cross-currency basis spreads is recognized in earnings as part of the accrual of interest on the cross-currency swap.
(d)The pre-tax amounts are primarily recorded in noninterest revenue, net interest income and compensation expense in the Consolidated statements of income.

276JPMorgan Chase & Co./20182020 Form 10-K263

Notes to consolidated financial statements

Note 2425 – Income taxes
JPMorgan Chase and its eligible subsidiaries file a consolidated U.S. federal income tax return. JPMorgan Chase uses the asset and liability method to provide income taxes on all transactions recorded in the Consolidated Financial Statements. This method requires that income taxes reflect the expected future tax consequences of temporary differences between the carrying amounts of assets or liabilities for book and tax purposes. Accordingly, a deferred tax asset or liability for each temporary difference is determined based on the tax rates that the Firm expects to be in effect when the underlying items of income and expense are realized. JPMorgan Chase’s expense for income taxes includes the current and deferred portions of that expense. A valuation allowance is established to reduce deferred tax assets to the amount the Firm expects to realize.
Due to the inherent complexities arising from the nature of the Firm’s businesses, and from conducting business and being taxed in a substantial number of jurisdictions, significant judgments and estimates are required to be made. Agreement of tax liabilities between JPMorgan Chase and the many tax jurisdictions in which the Firm files tax returns may not be finalized for several years. Thus, the Firm’s final tax-related assets and liabilities may ultimately be different from those currently reported.
Effective tax rate and expense
AThe following table presents a reconciliation of the applicable statutory U.S. federal income tax rate to the effective tax rate for each of the years ended December 31, 2018, 2017 and 2016, is presented in the following table.rate.
Effective tax rate       
Year ended December 31, 2018 2017 2016 
Statutory U.S. federal tax rate 21.0 % 35.0 % 35.0 % 
Increase/(decrease) in tax rate resulting from:       
U.S. state and local income taxes, net of U.S. federal income tax benefit 4.0
 2.2
 2.4
 
Tax-exempt income (1.5) (3.3) (3.1) 
Non-U.S. subsidiary earnings 0.6
 (3.1)
(a) 
(1.7)
(a) 
Business tax credits (3.5) (4.2) (3.9) 
Impact of the TCJA (0.7) 5.4
 —
 
Other, net 0.4
 (0.1) (0.3) 
Effective tax rate 20.3 % 31.9 % 28.4 % 
(a)Predominantly includes earnings of U.K. subsidiaries that were deemed to be reinvested indefinitely through December 31, 2017.

Impact of the TCJA
2018
Effective tax rate
Year ended December 31,202020192018
Statutory U.S. federal tax rate21.0 %21.0 %21.0 %
Increase/(decrease) in tax rate resulting from:
U.S. state and local income taxes, net of U.S. federal income tax benefit2.5 3.5 4.0 
Tax-exempt income(1.6)(1.4)(1.5)
Non-U.S. earnings1.4 1.8 0.6 
Business tax credits(6.3)(4.4)(3.5)
Tax audit resolutions0 (2.3)(0.1)
Impact of the TCJA(a)
0 0 (0.7)
Other, net0.7 0 0.5 
Effective tax rate17.7 %18.2 %20.3 %
The Firm’s (a)effective tax rate decreased in 2018 due to the TCJA, including the reduction in the U.S. federal statutory income tax rate as well as a $302 million nettax benefit recorded in 2018 resulting fromRepresents changes in the estimates related to the remeasurement of certain deferred taxes and the deemed repatriation tax on non-U.S. earnings. The change in estimate was recordedearnings under SEC Staff Accounting Bulletin No. 118 (“SAB 118”) and the accounting under SAB 118 is complete.
2017
The Firm’s effective tax rate increasedwhich was completed in 2017 driven by a2018. $1.9 billion income tax expense representing the estimated impact of the enactment of the TCJA. The $1.9 billion tax expense was predominantly driven by a deemed repatriation of the Firm’s unremitted non-U.S. earnings and adjustments to the value of certain tax-oriented investments partially offset by a benefit from the revaluation of the Firm’s net deferred tax liability.
The deemed repatriation of the Firm’s unremitted non-U.S. earnings is based on the post-1986 earnings and profits of each controlled foreign corporation. The calculation resulted in an estimated income tax expense of $3.7 billion.  Furthermore, accounting for income taxes requires the remeasurement of certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future. The Firm remeasured its deferred tax asset and liability balances in the fourth quarter of 2017 to the new statutory U.S. federal income tax rate of 21% as well as any federal benefit associated with state and local deferred income taxes. The remeasurement resulted in an estimated income tax benefit of $2.1 billion.
Adjustments were also recorded in 2017 to income tax expense for certain tax-oriented investments. These adjustments were driven by changes to affordable housing proportional amortization resulting from the reduction of the federal income tax rate under the TCJA. SAB 118 did not apply to these adjustments.


264JPMorgan Chase & Co./2018 Form 10-K


The following table reflects the components of income tax expense/(benefit) included in the Consolidated statements of income were as follows for each of the years ended December 31, 2018, 2017, and 2016.income.
Income tax expense/(benefit)
Year ended December 31,
(in millions)		 2018
 2017
 2016
Current income tax expense/(benefit)      
U.S. federal $2,854
 $5,718
 $2,488
Non-U.S. 2,077
 2,400
 1,760
U.S. state and local 1,638
 1,029
 904
Total current income tax expense/(benefit) 6,569
 9,147
 5,152
Deferred income tax expense/(benefit)      
U.S. federal 1,359
 2,174
 4,364
Non-U.S. (93) (144) (73)
U.S. state and local 455
 282
 360
Total deferred income tax
expense/(benefit)		 1,721
 2,312
 4,651
Total income tax expense $8,290
 $11,459
 $9,803

Income tax expense/(benefit)
Year ended December 31,
(in millions)		202020192018
Current income tax expense/(benefit)
U.S. federal$5,759 $3,284 $2,854 
Non-U.S.2,705 2,103 2,077 
U.S. state and local1,793 1,778 1,638 
Total current income tax expense/(benefit)10,257 7,165 6,569 
Deferred income tax expense/(benefit)
U.S. federal(3,184)709 1,359 
Non-U.S.(126)20 (93)
U.S. state and local(671)220 455 
Total deferred income tax
expense/(benefit)		(3,981)949 1,721 
Total income tax expense$6,276 $8,114 $8,290 
Total income tax expense includes $54$72 million, $252 million$1.1 billion and $55$54 million of tax benefits recorded in 2020, 2019, and 2018, 2017, and 2016, respectively, as a resultresulting from the resolution of tax audit resolutions.audits.
Tax effect of items recorded in stockholders’ equity
The preceding table does not reflect the tax effect of certain items that are recorded each period directly in stockholders’ equity.equity. The tax effect of all items recorded directly to stockholders’ equity resulted in a decrease of $827 million and $862 million in 2020 and 2019, respectively, and an increase of $172 million in 2018, a decrease of $915 million in 2017, and an increase of $925 million in 2016.2018.
Results from Non-U.S. earnings
The following table presents the U.S. and non-U.S. components of income before income tax expense.
Year ended December 31,
(in millions)		202020192018
U.S.$26,904 $36,670 $33,052 
Non-U.S.(a)
8,503 7,875 7,712 
Income before income tax expense$35,407 $44,545 $40,764 
(a)For purposes of this table, non-U.S. income is defined as income generated from operations located outside the U.S.
The Firm will recognize any U.S. income tax expense forit may incur on global intangible low tax income as income tax expense in the years endedperiod in which the tax is incurred.
December 31, 2018, 2017 and 2016.
Year ended December 31,
(in millions)		 2018
 2017
 2016
U.S. $33,052
 $27,103
 $26,651
Non-U.S.(a)
 7,712
 8,797
 7,885
Income before income tax expense $40,764
 $35,900
 $34,536
(a)JPMorgan Chase & Co./2020 Form 10-KFor purposes of this table, non-U.S. income is defined as income generated from operations located outside the U.S.277
Notes to consolidated financial statements
Prior to December 31, 2017, U.S. federal income taxes had not been provided on the undistributed earnings of certain non-U.S. subsidiaries, to the extent that such earnings had been reinvested abroad for an indefinite period of time. The Firm is no longer maintaining the indefinite reinvestment assertion on the undistributed earnings of those non-U.S. subsidiaries in light of the enactment of the TCJA. The U.S. federal and state and local income taxes associated with the undistributed and previously untaxed earnings of those non-U.S. subsidiaries was included in the deemed repatriation charge recorded as of December 31, 2017.
Affordable housing tax credits
The Firm recognized $1.5 billion $1.7 billion and $1.7 billion of tax credits and other tax benefits associated with investments in affordable housing projects within income tax expense for each of the three years 2018, 2017 ended 2020, 2019 and 2016, respectively.2018. The amount of amortization of such investments reported in income tax expense was $1.2 billion, $1.7$1.1 billion and $1.2 billion, respectively. The carrying value of these investments, which are reported in other assets on the Firm’s Consolidated balance sheets, was $7.9 $9.7 billion and $7.8$8.6 billion at December 31, 20182020 and 2017, 2019, respectively. The amount of commitments related to these investments, which are reported in accounts payable and other liabilities on the Firm’s Consolidated balance sheets, was $2.3 $3.8 billion and $2.4$2.8 billion at December 31, 20182020 and 2017, 2019, respectively.


JPMorgan Chase & Co./2018 Form 10-K265
Notes to consolidated financial statements

Deferred taxes
Deferred income tax expense/(benefit) results from differences between assets and liabilities measured for financial reporting purposes versus income tax return purposes. Deferred tax assets are recognized if, in management’s judgment, their realizability is determined to be more likely than not. If a deferred tax asset is determined to be unrealizable, a valuation allowance is established. The significant components of deferred tax assets and liabilities are reflected in the following table as of December 31, 2018 and 2017.table.
December 31, (in millions) 2018
 2017
December 31, (in millions)20202019
Deferred tax assets    Deferred tax assets
Allowance for loan losses $3,433
 $3,395
Allowance for loan losses$7,270 $3,400 
Employee benefits 1,129
 688
Employee benefits1,104 1,039 
Accrued expenses and other 2,701
 3,528
Accrued expenses and other3,332 2,767 
Non-U.S. operations 629
 327
Non-U.S. operations849 949 
Tax attribute carryforwards 163
 219
Tax attribute carryforwards757 605 
Gross deferred tax assets 8,055
 8,157
Gross deferred tax assets13,312 8,760 
Valuation allowance (89) (46)Valuation allowance(560)(557)
Deferred tax assets, net of valuation allowance $7,966
 $8,111
Deferred tax assets, net of valuation allowance$12,752 $8,203 
Deferred tax liabilities    Deferred tax liabilities
Depreciation and amortization $2,533
 $2,299
Depreciation and amortization$3,329 $2,852 
Mortgage servicing rights, net of hedges 2,586
 2,757
Mortgage servicing rights, net of hedges2,184 2,354 
Leasing transactions 4,719
 3,483
Leasing transactions5,124 5,598 
Non-U.S. operations —
 200
Other, net 3,713
 3,502
Other, net6,025 4,683 
Gross deferred tax liabilities 13,551
 12,241
Gross deferred tax liabilities16,662 15,487 
Net deferred tax (liabilities)/assets $(5,585) $(4,130)Net deferred tax (liabilities)/assets$(3,910)$(7,284)
JPMorgan Chase has recorded deferred tax assets of $163$757 million at December 31, 2018,2020, in connection with U.S. federal and non-U.S. net operating loss (“NOL”)NOL carryforwards, FTC carryforwards, and state and local capital loss carryforwards. At December 31, 2018,2020, total U.S. federal NOL carryforwards were approximately $423$799 million, non-U.S. NOL carryforwards were approximately $120$139 million, andFTC carryforwards were $444 million, state and local capital loss carryforwards were $1.3 billion.$1.1 billion, and other federal tax attributes were $393 million. If not utilized, a portion of the U.S. federal NOL carryforwards and other U.S. federal tax attributes will expire between 2022 and 2037 whereas others have an unlimited carryforward period.
Similarly, certain non-U.S. NOL carryforwards will expire between 2026 and 2036 whereas others have an unlimited carryforward period. The FTC carryforwards will expire between 2029 and 2030, and the state and local capital loss carryforwards will expire between 20202021 and 2022. Certain non-U.S. NOL carryforwards will expire between 2028 and 2034 whereas others have an unlimited carryforward period.
The valuation allowance at December 31, 2018,2020, was due to the state and local capital loss carryforwards, FTC carryforwards, and certain non-U.S. deferred tax assets, including NOL carryforwards.

Unrecognized tax benefits
At December 31, 2018, 20172020, 2019 and 2016,2018, JPMorgan Chase’s unrecognized tax benefits, excluding related interest expense and penalties, were $4.3 billion, $4.0 billion and $4.9 billion, $4.7respectively, of which $3.1 billion, $2.8 billion and $3.5 billion, respectively, of which$3.8 billion, $3.5 billion and $2.6 billion, respectively, if recognized, would reduce the annual effective tax rate. Included in the amount of unrecognized tax benefits are certain items that would not affect the effective tax rate if they were recognized in the Consolidated statements of income.These unrecognized items include the tax effect of certain temporary differences, the portion of gross state and local unrecognized tax benefits that would be offset by the benefit from associated U.S. federal income tax deductions, and the portion of gross non-U.S. unrecognized tax benefits that would have offsets in other jurisdictions. JPMorgan Chase is presently under audit by a number of taxing authorities, most notably by the Internal Revenue Service as summarized in the Tax examination status table below. As JPMorgan Chase is presently under audit by a number of taxing authorities, it is reasonably possible that over the next 12 months the resolution of these examinations may increase or decrease the gross balance of unrecognized tax benefits by as much as $0.9 billion. approximately $300 million. Upon settlement of an audit, the change in the unrecognized tax benefit would result from payment or income statement recognition.
The following table presents a reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2018, 2017 and 2016.benefits.
Year ended December 31,
(in millions)		 2018
 2017
 2016
Balance at January 1, $4,747
 $3,450
 $3,497
Increases based on tax positions related to the current period 980
 1,355
 262
Increases based on tax positions related to prior periods 649
 626
 583
Decreases based on tax positions related to prior periods (1,249) (350) (785)
Decreases related to cash settlements with taxing authorities (266) (334) (56)
Decreases related to a lapse of applicable statute of limitations —
 —
 (51)
Balance at December 31, $4,861
 $4,747
 $3,450

Year ended December 31,
(in millions)		202020192018
Balance at January 1,$4,024 $4,861 $4,747 
Increases based on tax positions related to the current period685 871 980 
Increases based on tax positions related to prior periods362 10 649 
Decreases based on tax positions related to prior periods(705)(706)(1,249)
Decreases related to cash settlements with taxing authorities(116)(1,012)(266)
Balance at December 31,$4,250 $4,024 $4,861 
After-tax interest expense/(benefit) and penalties related to income tax liabilities recognized in income tax expense were $147 million, $(52) million and $192 million $102 millionin 2020, 2019 and $86 million in 2018, 2017 and 2016, respectively.
At December 31, 20182020 and 2017, 2019, in addition to the liability for unrecognized tax benefits, the Firm had accrued $887 $966 million and $639$817 million, respectively, for income tax-related interest and penalties.


266278JPMorgan Chase & Co./20182020 Form 10-K


Tax examination status
JPMorgan Chase is continually under examination by the Internal Revenue Service, by taxing authorities throughout the world, and by many state and local jurisdictions throughout the U.S. The following table summarizes the status of significant income tax examinations of JPMorgan Chase and its consolidated subsidiaries as of December 31, 2018.2020.
December 31, 2018
Periods under examinationStatus
JPMorgan Chase – U.S.20062009 – 20102013Field examination of amended returns
JPMorgan Chase – U.S.2011 – 2013Field Examination
JPMorgan Chase – U.S.2014 - 2016Field Examination
JPMorgan Chase – New York State2012 - 2014Field Examination
JPMorgan Chase – New York City2012 - 2014Field Examination
JPMorgan Chase – California2011 – 2012Field Examination
JPMorgan Chase – U.K.2006 – 20162018Field examination of certain select entities


JPMorgan Chase & Co./20182020 Form 10-K267279
Notes to consolidated financial statements

Note 2526 – Restricted cash, other restricted
assets and intercompany funds transfers
Restricted cash and other restricted assets
Certain of the Firm’s cash and other assets are restricted as to withdrawal or usage. These restrictions are imposed by various regulatory authorities based on the particular activities of the Firm’s subsidiaries.
The business of JPMorgan Chase Bank, N.A. is subject to examination and regulation by the OCC. The Bank is a member of the U.S. Federal Reserve System, and its deposits in the U.S. are insured by the FDIC,, subject to applicable limits.
The Federal Reserve requires depository institutions to maintain cash reserves with a Federal Reserve Bank. The average required amount of reserve balances is deposited by the Firm’s bank subsidiaries. In addition, the Firm is required to maintain cash reserves at certain non-US central banks.
The Firm is also subject to rules and regulations established by other U.S. and non U.S. regulators.As part of its compliance with the respective regulatory requirements, the Firm’s broker-dealers (principallybroker-dealers (principally J.P. Morgan Securities LLC in the U.S and J.P. Morgan Securities plc in the U.K.) are subject to certain restrictions on cash and other assets.
Upon the adoption of the restricted cash guidance in the first quarter of 2018, restricted and unrestricted cash are reported together on the Consolidated balance sheets and Consolidated statements of cash flows. The following table presents the components of the Firm’s restricted cash:
December 31, (in billions)20202019
Cash reserves – Federal Reserve Banks(a)
$0 $26.6 
Segregated for the benefit of securities and cleared derivative customers19.3 16.0 
Cash reserves at non-U.S. central banks and held for other general purposes5.1 3.9 
Total restricted cash(b)
$24.4 $46.5 
(a)Effective March 26, 2020, the Federal Reserve eliminated reserve requirements for depository institutions
(b)Comprises $22.7 billion and $45.3 billionin deposits with banks, and $1.7 billion and $1.2 billion in cash and due from banks on the Consolidated balance sheets as of December 31, 2020 and 2019, respectively.
December 31, (in billions)20182017
Cash reserves – Federal Reserve Banks$22.1
$25.7
Segregated for the benefit of securities and futures brokerage customers14.6
16.8
Cash reserves at non-U.S. central banks and held for other general purposes4.1
3.3
Total restricted cash(a)
$40.8
$45.8
(a)Comprises $39.6 billion and $44.8 billion in deposits with banks, and $1.2 billion and $1.0 billion in cash and due from banks on the Consolidated balance sheets as of December 31, 2018 and 2017, respectively.
Also, as of December 31, 20182020 and 2017,2019, the Firm had the following other restricted assets:
•
•Cash and securities pledged with clearing organizations for the benefit of customers of $37.2 billion and $24.7 billion, respectively.
•pledged with clearing organizations for the benefit of customers of $20.6 billion and $18.0 billion, respectively.
Securities with a fair value of $9.7$1.3 billion and $3.5$8.8 billion, respectively, were also restricted in relation to customer activity.
Intercompany funds transfers
Restrictions imposed by U.S. federal law prohibit JPMorgan Chase & Co. (“Parent Company”) and certain of its affiliates from borrowing frombanking subsidiaries unless the loans are secured in specified amounts. Such secured loans provided by any banking subsidiary to the Parent Company or to any particular affiliate, together with certain other transactions with such affiliate (collectively referred to as “covered transactions”), are generally limited to 10% of the banking subsidiary’s total capital, as determined by the risk-based capital guidelines; the aggregate amount of covered transactions between any banking subsidiary and all of its affiliates is limited to 20% of the banking subsidiary’s total capital.
The Parent Company’s two principal subsidiaries are JPMorgan Chase Bank, N.A. and JPMorgan Chase Holdings LLC, an intermediate holding company (the “IHC”). The IHC holds the stock of substantially all of JPMorgan Chase’s subsidiaries other than JPMorgan Chase Bank, N.A. and its subsidiaries. The IHC also owns other assets and owes intercompany indebtedness owing to the holding company. The Parent Company is obligated to contribute to the IHC substantially all the net proceeds received from securities issuances (including issuances of senior and subordinated debt securities and of preferred and common stock).
The principal sources of income and funding for the Parent Company are dividends from JPMorgan Chase Bank, N.A. and dividends and extensions of credit from the IHC. In addition to dividend restrictions set forth in statutes and regulations, the Federal Reserve, the OCC and the FDIC have authority under the Financial Institutions Supervisory Act to prohibit or to limit the payment of dividends by the banking organizations they supervise, including the Parent Company and its subsidiaries that are banks or bank holding companies, if, in the banking regulator’s opinion, payment of a dividend would constitute an unsafe or unsound practice in light of the financial condition of the banking organization. The IHC is prohibited from paying dividends or extending credit to the Parent Company if certain capital or liquidity “thresholds” are breached or if limits are otherwise imposed by the Parent Company’s management or Board of Directors.
At January 1, 2019,2021, the Parent Company’s banking subsidiaries could pay, in the aggregate, approximately $10 $13 billion in dividends to their respective bank holding companies without the prior approval of their relevant banking regulators. The capacity to pay dividends in 2019 2021 will be supplemented by the banking subsidiaries’ earnings during the year.

268280JPMorgan Chase & Co./20182020 Form 10-K



Note 2627 – Regulatory capital
The Federal Reserve establishes capital requirements, including well-capitalized standards, for the consolidated financial holding company. The OCC establishes similar minimum capital requirements and standards for the Firm’s principal IDI includingsubsidiary, JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A.
CapitalThe capital rules under Basel III establish minimum capital ratios and overall capital adequacy standards for large and internationally active U.S. bank holding companies and banks, including the Firm and its IDI subsidiaries. Basel III set forth twosubsidiaries, including JPMorgan Chase Bank, N.A. Two comprehensive approaches are prescribed for calculating RWA: a standardized approach (“Basel III Standardized”), and an advanced approach (“Basel III Advanced”). CertainFor each of the requirementsrisk-based capital ratios, the capital adequacy of Basel III were subjectthe Firm and JPMorgan Chase Bank, N.A. is evaluated against the lower of the Standardized or Advanced approaches compared to phase-in periods that began on January 1, 2014 and continued through the end of 2018 (“transitional period”).their respective minimum capital ratios.
The three components of regulatory capital under the Basel III rules are as illustrated below:
jpm-20201231_g12.jpg
Under the risk-based capital and leverage-basedcapitalguidelines of the Federal Reserve, JPMorgan Chase is required to maintain minimum ratios for CET1 capital, Tier 1 capital, Total capital, Tier 1 leverage and the SLR. Failure to meet these minimum requirements could cause the Federal Reserve to take action. IDI subsidiaries are also subject to these capital requirements established by their respective primary regulators.
The following table presents the minimum and well-capitalized ratios to which the Firm and its IDI subsidiaries were subject as of December 31, 2018.2020 and 2019.
Standardized Minimum capital ratios
Advanced
Minimum capital ratios
Well-capitalized ratios
BHC(a)(b)(c)
IDI(c)(d)
BHC(a)(c)
IDI(c)(d)
BHC(e)
IDI(f)
Capital ratios  
CET1 capital11.3 %7.0 %10.5 %7.0 %NA6.5 %
Tier 1 capital12.8 8.5 12.0 8.5 6.0 8.0 
Total capital14.8 10.5 14.0 10.5 10.0 10.0 
Tier 1 leverage4.0 4.0 4.0 4.0 NA5.0 
SLRNANA5.0 6.0 NA6.0 
 Minimum capital ratiosWell-capitalized ratios
 
BHC(a)(e)(f)
IDI(b)(e)(f)
BHC(c)
IDI(d)
Capital ratios    
CET19.0%6.375%—%6.5%
Tier 110.5
7.875
6.0
8.0
Total12.5
9.875
10.0
10.0
Tier 1 leverage4.0
4.00
5.0
5.0
SLR5.0
6.00
—
6.0
Note: The table above is as defined by the regulations issued by the Federal Reserve, OCC and FDIC and to which the Firm and its IDI subsidiaries are subject.
(a)Represents the minimum capital ratios applicable to the Firm. The CET1, Tier 1 and Total capital minimum capital ratios each include a respective minimum requirement plus a GSIB surcharge of 3.5% as calculated under Method 2; plus a 3.3% SCB for Basel III Standardized ratios and a fixed 2.5% capital conservation buffer for Basel III Advanced ratios. The countercyclical buffer is currently set to 0% by the federal banking agencies.
(a)
(b)For the period ended December 31, 2019, the CET1, Tier 1, Total, Tier 1 leverage and SLR minimum capital ratios under Basel III Standardized applicable to the Firm were 10.5%, 12.0%, 14.0%, 4.0%, and 5.0%, respectively.
(c)Represents minimum SLR requirement of 3.0%, as well as supplementary leverage buffer requirements of 2.0% and 3.0% for BHC and IDI, respectively.
(d)Represents requirements for JPMorgan Chase’s IDI subsidiaries. The CET1, Tier 1 and Total capital minimum capital ratios include a fixed capital conservation buffer requirement of 2.5% that is applicable to the IDI subsidiaries. The IDI subsidiaries are not subject to the GSIB surcharge.
(e)Represents requirements for bank holding companies pursuant to regulations issued by the Federal Reserve.
(f)Represents requirements for IDI subsidiaries pursuant to regulations issued under the FDIC Improvement Act.

Current Expected Credit Losses
Effective January 1, 2020, the Firm adopted the Financial Instruments – Credit Losses guidance under U.S. GAAP. As permitted under the U.S. capital rules issued by the federal banking agencies in 2019, the Firm initially elected to phase-in the January 1, 2020 (“day 1”) CECL adoption impact to retained earnings of $2.7 billion to CET1 capital, at 25% per year in each of 2020 to 2023. As part of their response to the impact of the COVID-19 pandemic, on March 31, 2020, the federal banking agencies issued an interim final rule (issued as final on August 26, 2020) that provided the option to delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period.
The final rule provides a uniform approach for estimating the effects of CECL compared to the legacy incurred loss model during the first two years of the transition period (the “day 2” transition amount), whereby the Firm may exclude from CET1 capital 25% of the change in the Transitional minimum capital ratios applicable to the Firm under Basel III at December 31, 2018. At December 31, 2018, the CET1 minimum capital ratio includes 1.875% resulting from the phase in of the Firm’s 2.5% capital conservation buffer, and 2.625% resulting from the phase in of the Firm’s 3.5% GSIB surcharge.
(b)
Represents requirements for JPMorgan Chase’s IDI subsidiaries. The CET1 minimum capital ratio includes 1.875% resulting from the phase in of the 2.5% capital conservation buffer that is applicable to the IDI subsidiaries. The IDI subsidiaries are not subject to the GSIB surcharge.
(c)
Represents requirements for bank holding companies pursuant to regulations issued by the Federal Reserve.
(d)
Represents requirements for IDI subsidiaries pursuant to regulations issued under the FDIC Improvement Act.
(e)For the period ended December 31, 2017 the CET1, Tier 1, Total and Tier 1 leverage minimum capital ratios applicable to the Firm were 7.5%, 9.0%, 11.0% and 4.0% and the CET1, Tier 1, Total and Tier 1 leverage minimum capital ratios applicable to the Firm’s IDI subsidiaries were 5.75%, 7.25%, 9.25% and 4.0% respectively.
(f)
Represents minimum SLR requirement of 3.0%, as well as, supplementary leverage buffers of 2.0% and 3.0% for BHC and IDI, respectively.

JPMorgan Chase & Co./20182020 Form 10-K269281
Notes to consolidated financial statements

allowance for credit losses (excluding allowances on PCDloans). The cumulative day 2 transition amount as at December 31, 2021 that is not recognized in CET1 capital, as well as the $2.7 billion day 1 impact, will be phased into CET1 capital at 25% per year beginning January 1, 2022. The Firm has elected to apply the CECL capital transition provisions, and accordingly, for the year ended December 31, 2020, the capital metrics of the Firm exclude $5.7 billion, which is the $2.7 billion day 1 impact to
retained earnings and 25% of the $12.2 billion increase in the allowance for credit losses (excluding allowances on PCD loans).
The impacts of the CECL capital transition provisions have also been incorporated into Tier 2 capital, adjusted average assets, and total leverage exposure. Refer to Note 1 for further information on the CECL accounting guidance.
The following tables present the risk-based and leverage-based capital metrics for JPMorgan Chase and its significant IDI subsidiariesJPMorgan Chase Bank, N.A. under both the Basel III Standardized and Basel III Advanced Approaches. As of December 31, 20182020, the capital metrics are presented applying the CECL capital transition provisions. As of December 31, 2020 and 2017, 2019, JPMorgan Chase and all of its IDI subsidiariesJPMorgan Chase Bank, N.A. were well-capitalized and met all capital requirements to which each was subject.
December 31, 2020
(in millions, except ratios)		Basel III StandardizedBasel III Advanced
JPMorgan
Chase & Co.(c)
JPMorgan
Chase Bank, N.A.(c)
JPMorgan
Chase & Co.(c)
JPMorgan
Chase Bank, N.A.(c)
Risk-based capital metrics:
CET1 capital$205,078 $234,235 $205,078 $234,235 
Tier 1 capital234,844 234,237 234,844 234,237 
Total capital269,923 252,045 257,228 239,673 
Risk-weighted assets1,560,609 1,492,138 1,484,431 1,343,185 
CET1 capital ratio13.1 %15.7 %13.8 %17.4 %
Tier 1 capital ratio15.0 15.7 15.8 17.4 
Total capital ratio17.3 16.9 17.3 17.8 
Leverage-based capital metrics:
Adjusted average assets(a)
$3,353,319 $2,970,285 $3,353,319 $2,970,285 
Tier 1 leverage ratio7.0 %7.9 %7.0 %7.9 %
Total leverage exposure(b)
NANA$3,401,542 $3,688,797 
SLR(b)
NANA6.9 %6.3 %
December 31, 2019
(in millions, except ratios)		Basel III StandardizedBasel III Advanced
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
Risk-based capital metrics:
CET1 capital$187,753 $206,848 $187,753 $206,848 
Tier 1 capital214,432 206,851 214,432 206,851 
Total capital242,589 224,390 232,112 214,091 
Risk-weighted assets1,515,869 1,457,689 1,397,878 1,269,991 
CET1 capital ratio12.4 %14.2 %13.4 %16.3 %
Tier 1 capital ratio14.1 14.2 15.3 16.3 
Total capital ratio16.0 15.4 16.6 16.9 
Leverage-based capital metrics:
Adjusted average assets(a)
$2,730,239 $2,353,432 $2,730,239 $2,353,432 
Tier 1 leverage ratio7.9 %8.8 %7.9 %8.8 %
Total leverage exposureNANA$3,423,431 $3,044,509 
SLRNANA6.3 %6.8 %
(a)Adjusted average assets, for purposes of calculating the leverage ratio, includes total quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill and other intangible assets.
(b)As of December 31, 2020, JPMorgan Chase’s total leverage exposure for purposes of calculating the SLR, excludes on-balance sheet amounts of U.S. Treasury securities and deposits at Federal Reserve Banks, as provided by the interim final rule issued by the Federal Reserve on April 1, 2020. On June 1, 2020, the Federal Reserve, OCC and FDIC issued an interim final rule that provides IDI subsidiaries with an option to apply this temporary exclusion subject to certain restrictions. As of December 31, 2020, JPMorgan Chase Bank, N.A. has not elected to apply this exclusion.
(c)As of December 31, 2020, the capital metrics for the Firm reflect the exclusion of assets purchased from money market mutual fund clients pursuant to nonrecourse advances provided under the MMLF. Additionally, loans originated under the PPP for the Firm and JPMorgan Chase Bank, N.A. receive a zero percent risk weight.
December 31, 2018
(in millions, except ratios)		Basel III Standardized Transitional Basel III Advanced Transitional
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
Chase Bank
USA, N.A.
 
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
Chase Bank
USA, N.A.
Regulatory capital       
CET1 capital$183,474
$187,259
$23,696
 $183,474
$187,259
$23,696
Tier 1 capital209,093
187,259
23,696
 209,093
187,259
23,696
Total capital237,511
198,494
28,628
 227,435
192,250
27,196
        
Assets       
Risk-weighted1,528,916
1,348,230
112,513
 1,421,205
1,205,539
174,469
Adjusted average(a)
2,589,887
2,189,293
118,036
 2,589,887
2,189,293
118,036
        
Capital ratios(b)
       
CET112.0%13.9%21.1% 12.9%15.5%13.6%
Tier 113.7
13.9
21.1
 14.7
15.5
13.6
Total15.5
14.7
25.4
 16.0
15.9
15.6
Tier 1 leverage(c)
8.1
8.6
20.1
 8.1
8.6
20.1

December 31, 2017
(in millions, except ratios)		Basel III Standardized Transitional Basel III Advanced Transitional
JPMorgan
Chase & Co.		JPMorgan
Chase Bank, N.A.		 Chase Bank
USA, N.A.		 JPMorgan
Chase & Co.		JPMorgan
Chase Bank, N.A.		 Chase Bank
USA, N.A.
Regulatory capital         
CET1 capital$183,300
$184,375
 $21,600
 $183,300
$184,375
 $21,600
Tier 1 capital208,644
184,375
 21,600
 208,644
184,375
 21,600
Total capital238,395
195,839
 27,691
 227,933
189,510
(d) 
26,250
          
Assets         
Risk-weighted1,499,506
1,338,970
(d) 
113,108
 1,435,825
1,241,916
(d) 
190,523
Adjusted average(a)
2,514,270
2,116,031
 126,517
 2,514,270
2,116,031
 126,517
          
Capital ratios(b)
         
CET112.2%13.8% 19.1% 12.8%14.8%
(d) 
11.3%
Tier 113.9
13.8
 19.1
 14.5
14.8
(d) 
11.3
Total15.9
14.6
(d) 
24.5
 15.9
15.3
(d) 
13.8
Tier 1 leverage(c)
8.3
8.7
 17.1
 8.3
8.7
 17.1
(a)
Adjusted average assets, for purposes of calculating the Tier 1 leverage ratio, includes total quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill and other intangible assets.
(b)
For each of the risk-based capital ratios, the capital adequacy of the Firm and its IDI subsidiaries is evaluated against the lower of the two ratios as calculated under Basel III approaches (Standardized or Advanced).
(c)
The Tier 1 leverage ratio is not a risk-based measure of capital.
(d)
The prior period amounts have been revised to conform with the current period presentation.
 December 31, 2018 December 31, 2017
 Basel III Advanced Fully Phased-InBasel III Advanced Transitional
(in millions, except ratios)
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
Chase Bank
USA, N.A.
 
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
Chase Bank
USA, N.A.
Total leverage exposure(a)
3,269,988
$2,813,396
$177,328
 $3,204,463
$2,775,041
$182,803
SLR(a)
6.4%6.7%13.4% 6.5%6.6%11.8%
(a)Effective January 1, 2018, the SLR was fully phased-in under Basel III. The December 31, 2017 amounts were calculated under the Basel III Transitional rules.

270282JPMorgan Chase & Co./20182020 Form 10-K



Note 2728 – Off–balance sheet lending-related
financial instruments, guarantees, and
other commitments
JPMorgan Chase provides lending-related financial instruments (e.g., commitments and guarantees) to address the financing needs of its customers and clients. The contractual amount of these financial instruments represents the maximum possible credit risk to the Firm should the customer or client draw upon the commitment or the Firm be required to fulfill its obligation under the guarantee, and should the customer or client subsequently fail to perform according to the terms of the contract. Most of these commitments and guarantees arehave historically been refinanced, extended, cancelled, or expireexpired without being drawn or a default occurring. As a result, the total contractual amount of these instruments is not, in the Firm’s view, representative of its expected future credit exposure or funding requirements.
To provide for probableexpected credit losses inherent in wholesale and certain consumer lending-commitments,lending-related commitments, an allowance for credit losses on lending-related commitments is maintained.Refer to Note 13 for further information regarding the allowance for credit losses on lending-related commitments.commitments, including the impact of the Firm’s adoption of CECL accounting guidance on January 1, 2020. The following table summarizes the contractual amounts and carrying values of off-balance sheet lending-related financial instruments, guarantees and other commitments at December 31, 20182020 and 2017. 2019. The amounts in the table below for credit card and home equity lending-related commitments represent the total available credit for these products. The Firm has not experienced, and does not anticipate, that all available lines of credit for these products will be utilized at the same time. The Firm can reduce or cancel credit card lines of credit by providing the borrower notice or, in some cases as permitted by law, without notice.In addition, the Firm typically closes credit card lines when the borrower is 60 days or more past due. The Firm may reduce or close HELOCs when there are significant decreases in the value of the underlying property, or when there has been a demonstrable decline in the creditworthiness of the borrower.

JPMorgan Chase & Co./20182020 Form 10-K271283
Notes to consolidated financial statements

In conjunction with the adoption of CECL, the Firm reclassified risk-rated loans and lending-related commitments from the consumer, excluding credit card portfolio segment to the wholesale portfolio segment, to align with the methodology applied in determining the allowance. Prior-period amounts have been revised to conform with the current presentation. Refer to Note 1 for further information.
Off–balance sheet lending-related financial instruments, guarantees and other commitments
Contractual amount
Carrying value(j)
2020201920202019
By remaining maturity at December 31,
(in millions)		Expires in 1 year or lessExpires after
1 year through
3 years		Expires after
3 years through
5 years		Expires after 5 yearsTotalTotal
Lending-related
Consumer, excluding credit card:
Residential Real Estate(a)
$26,788 $1,597 $3,962 $13,700 $46,047 $30,217 148 12 
Auto and other10,471 1 8 792 11,272 9,952 0 0 
Total consumer, excluding credit card37,259 1,598 3,970 14,492 57,319 40,169 148 12 
Credit card(b)
658,506 0 0 0 658,506 650,720 0 0 
Total consumer(b)(c)
695,765 1,598 3,970 14,492 715,825 690,889 148 12 
Wholesale:
Other unfunded commitments to extend credit(d)(e)
96,490 174,335 128,736 16,267 415,828 380,307 2,148 952 
Standby letters of credit and other financial guarantees(d)
17,478 7,986 4,051 1,467 30,982 34,242 443 618 
Other letters of credit(d)
2,982 45 26 0 3,053 2,961 14 4 
Total wholesale(c)
116,950 182,366 132,813 17,734 449,863 417,510 2,605 1,574 
Total lending-related$812,715 $183,964 $136,783 $32,226 $1,165,688 $1,108,399 $2,753 $1,586 
Other guarantees and commitments
Securities lending indemnification agreements and guarantees(f)
$250,418 $0 $0 $0 $250,418 $204,827 $0 $0 
Derivatives qualifying as guarantees2,489 541 12,182 39,203 54,415 53,089 322 159 
Unsettled resale and securities borrowed agreements95,084 1,764 0 0 96,848 117,951 2 0 
Unsettled repurchase and securities loaned agreements104,289 612 0 0 104,901 73,351 (1)0 
Loan sale and securitization-related indemnifications:
Mortgage repurchase liabilityNANANANANANA84 59 
Loans sold with recourseNANANANA889 944 23 27 
Exchange & clearing house guarantees and commitments(g)
142,003 0 0 0 142,003 206,432 0 0 
Other guarantees and commitments (e)(h)
2,457 574 758 2,541 6,330 6,334 (i)52 (66)
(a)Includes certain commitments to purchase loans from correspondents.
(b)Also includes commercial card lending-related commitments primarily in CB and CIB.
(c)Predominantly all consumer and wholesale lending-related commitments are in the U.S.
(d)At December 31, 2020 and 2019, reflected the contractual amount net of risk participations totaling $72 million and $76 million, respectively, for other unfunded commitments to extend credit; $8.5 billion and $9.8 billion, respectively, for standby letters of credit and other financial guarantees; and $357 million and $546 million, respectively, for other letters of credit. In regulatory filings with the Federal Reserve these commitments are shown gross of risk participations.
(e)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans, which resulted in a corresponding reclassification of commitments from Other guarantees and commitments to Wholesale other unfunded commitments to extend credit. Prior-period amounts have been revised to conform with the current presentation.
(f)At December 31, 2020 and 2019, collateral held by the Firm in support of securities lending indemnification agreements was $264.3 billion and $216.2 billion, respectively. Securities lending collateral primarily consists of cash, G7 government securities, and securities issued by U.S. GSEs and government agencies.
(g)At December 31, 2020 and 2019, includes guarantees to the Fixed Income Clearing Corporation under the sponsored member repo program and commitments and guarantees associated with the Firm’s membership in certain clearing houses.
(h)At December 31, 2020 and 2019, primarily includes letters of credit hedged by derivative transactions and managed on a market risk basis, and unfunded commitments related to certain tax-oriented equity investments.
(i)Prior-period amounts have been revised to conform with the current presentation.
(j)For lending-related products, the carrying value represents the allowance for lending-related commitments and the guarantee liability; for derivative-related products, and lending-related commitments for which the fair value option was elected, the carrying value represents the fair value.
Off–balance sheet lending-related financial instruments, guarantees and other commitments 
 Contractual amount 
Carrying value(i)
 2018 2017 20182017
By remaining maturity at December 31,
(in millions)		Expires in 1 year or lessExpires after
1 year through
3 years		Expires after
3 years through
5 years		Expires after 5 yearsTotal Total   
Lending-related          
Consumer, excluding credit card:          
Home equity$796
$1,095
$1,813
$17,197
$20,901
 $20,360
 $12
$12
Residential mortgage(a)
5,469
—
—
12
5,481
 5,736
 —
—
Auto6,954
878
78
101
8,011
 9,255
 2
2
Consumer & Business Banking10,580
566
102
425
11,673
 13,202
 19
19
Total consumer, excluding credit card23,799
2,539
1,993
17,735
46,066
 48,553
 33
33
Credit card605,379
—
—
—
605,379
 572,831
 —
—
Total consumer(b)
629,178
2,539
1,993
17,735
651,445
 621,384
 33
33
Wholesale:          
Other unfunded commitments to extend credit(c)
62,384
123,751
154,177
11,178
351,490
 331,160
 852
840
Standby letters of credit and other financial guarantees(c)
14,408
11,462
5,248
2,380
33,498
 35,226
 521
636
Other letters of credit(c)
2,608
177
40
—
2,825
 3,712
 3
3
Total wholesale(d)
79,400
135,390
159,465
13,558
387,813
 370,098
 1,376
1,479
Total lending-related$708,578
$137,929
$161,458
$31,293
$1,039,258
 $991,482
 $1,409
$1,512
Other guarantees and commitments          
Securities lending indemnification agreements and guarantees(e)
$186,077
$—
$—
$—
$186,077
 $179,490
 $—
$—
Derivatives qualifying as guarantees2,099
299
12,614
40,259
55,271
 57,174
 367
304
Unsettled resale and securities borrowed agreements102,008
—
—
—
102,008
 76,859
 —
—
Unsettled repurchase and securities loaned agreements57,732
—
—
—
57,732
 44,205
 —
—
Loan sale and securitization-related indemnifications:          
Mortgage repurchase liabilityNA
NA
NA
NA
NA
 NA
 89
111
Loans sold with recourseNA
NA
NA
NA
1,019
 1,169
 30
38
Exchange & clearing house guarantees and commitments(f)(g)
58,960
—
—
—
58,960
 13,871
 —
—
Other guarantees and commitments (g)(h)
3,874
542
299
3,468
8,183
 8,206
 (73)(76)
(a)Includes certain commitments to purchase loans from correspondents.
(b)Predominantly all consumer lending-related commitments are in the U.S.
(c)At December 31, 2018 and 2017, reflected the contractual amount net of risk participations totaling $282 million and $334 million, respectively, for other unfunded commitments to extend credit; $10.4 billion and $10.4 billion, respectively, for standby letters of credit and other financial guarantees; and $385 million and $405 million, respectively, for other letters of credit. In regulatory filings with the Federal Reserve these commitments are shown gross of risk participations.
(d)Predominantly all wholesale lending-related commitments are in the U.S.
(e)At December 31, 2018 and 2017, collateral held by the Firm in support of securities lending indemnification agreements was $195.6 billion and $188.7 billion, respectively. Securities lending collateral primarily consists of cash and securities issued by governments that are members of G7 and U.S. government agencies.
(f)At December 31, 2018, includes guarantees to the Fixed Income Clearing Corporation under the sponsored member repo program and commitments and guarantees associated with the Firm’s membership in certain clearing houses. At December 31, 2017 includes commitments and guarantees associated with the Firm’s membership in certain clearing houses.
(g)Certain guarantees and commitments associated with the Firm’s membership in clearing houses previously disclosed in “other guarantees and commitments” are now disclosed in “Exchange and clearing house guarantees and commitments”. Prior period amounts have been revised to conform with the current period presentation.
(h)At December 31, 2018 and 2017, primarily includes letters of credit hedged by derivative transactions and managed on a market risk basis, and unfunded commitments related to institutional lending. Additionally, includes unfunded commitments predominantly related to certain tax-oriented equity investments.
(i)For lending-related products, the carrying value represents the allowance for lending-related commitments and the guarantee liability; for derivative-related products, the carrying value represents the fair value.

272284JPMorgan Chase & Co./20182020 Form 10-K


Other unfunded commitments to extend credit
Other unfunded commitments to extend credit generally consist of commitments for working capital and general corporate purposes, extensions of credit to support commercial paper facilities and bond financings in the event that those obligations cannot be remarketed to new investors, as well as committed liquidity facilities to clearing organizations. The Firm also issues commitments under multipurpose facilities which could be drawn upon in several forms, including the issuance of a standby letter of credit.
The Firm acts as a settlement and custody bank in the U.S. tri-party repurchase transaction market. In its role as settlement and custody bank, the Firm in part is exposed to the intra-day credit risk of its cash borrower clients, usually broker-dealers.This exposure arises under secured clearance advance facilities that the Firm extended to its clients (i.e. cash borrowers); these facilities contractually limit the Firm’s intra-day credit risk to the facility amountand must be repaid by the end of the day. As of December 31, 2017, the secured clearance advance facility maximum outstanding commitment amount was$1.5 billion. As of December 31, 2018 the Firm no longer offers such arrangements to its clients.Guarantees
Guarantees
U.S. GAAP requires that a guarantor recognize, at the inception of a guarantee, a liability in an amount equal to the fair value of the obligation undertaken in issuing the guarantee. U.S. GAAP defines a guarantee as a contract that contingently requires the guarantor to pay a guaranteed party based upon: (a) changes in an underlying asset, liability or equity security of the guaranteed party; or (b) a third party’s failure to perform under a specified agreement. The Firm considers the following off–balance sheet arrangements to be guarantees under U.S. GAAP: standby letters of credit and other financial guarantees, securities lending indemnifications, certain indemnificat
ionindemnification agreements included within third-party contractual arrangements, certain derivative contracts and the guarantees under the sponsored member repo program.
As required by U.S. GAAP, the Firm initially records guarantees at the inception date fair value of the non-contingent obligation assumed (e.g., the amount of consideration received or the net present value of the premium receivable). For certain types of guarantees,these obligations, the Firm records this fair value amount in other liabilities with an offsetting entry recorded in cash (for premiums received),
or other assets (for premiums receivable). Any premium receivable recorded in other assets is reduced as cash is received under the contract, and the fair value of the liability recorded at inception is amortized into income as lending and deposit-related fees over the life of the guarantee contract. ForThe lending-related contingent obligation is recognized based on expected credit losses in addition to, and separate from, any non-contingent obligation.
Non-lending-related contingent obligations are recognized when the liability becomes probable and reasonably estimable. These obligations are not recognized if the estimated amount is less than the carrying amount of any non-contingent liability recognized at inception (adjusted for any amortization). Examples of non-lending-related contingent obligations include indemnifications provided in sales agreements, where a portion of the sale proceeds is allocated to the guarantee, which adjusts the gain or loss that would otherwise result from the transaction. For these indemnifications, the initial liability is amortized to income as the Firm’s risk is reduced (i.e., over time or when the indemnification expires). Any contingent liability that exists as a result of issuing the guarantee or indemnification is recognized when it becomes probable and reasonably estimable. The contingent portion of the liability is not recognized if the estimated amount is less than the carrying amount of the liability recognized at inception (adjusted for any amortization).
The contractual amount and carrying value of guarantees and indemnifications are included in the table on page 272. 284.
For additional information on the guarantees, see below.
Standby letters of credit and other financial guarantees
Standby letters of credit and other financial guarantees are conditional lending commitments issued by the Firm to guarantee the performance of a client or customer to a third party under certain arrangements, such as commercial paper facilities, bond financings, acquisition financings, trade and similar transactions.
The following table summarizes the contractual amount and carrying value of standby letters of credit and other financial guarantees and other letters of credit arrangements as of December 31, 20182020 and 2017.2019.
Standby letters of credit, other financial guarantees and other letters of credit
20202019
December 31,
(in millions)		Standby letters of credit and
other financial guarantees		Other letters
of credit		Standby letters of credit and
other financial guarantees		Other letters
of credit
Investment-grade(a)
$22,850 $2,263 $26,880 $2,137 
Noninvestment-grade(a)
8,132 790 7,362 824 
Total contractual amount$30,982 $3,053 $34,242 $2,961 
Allowance for lending-related commitments$80 $14 $216 $4 
Guarantee liability363 0 402 0 
Total carrying value$443 $14 $618 $4 
Commitments with collateral$17,238 $498 $17,853 $728 
(a)The ratings scale is based on the Firm’s internal risk ratings. Refer to Note 12 for further information on internal risk ratings.
 2018 2017
December 31,
(in millions)
Standby letters of credit and
other financial guarantees
 
Other letters
of credit
 Standby letters of credit and
other financial guarantees		 Other letters
of credit
Investment-grade(a)
 $26,420
  $2,079
  $28,492
  $2,646
Noninvestment-grade(a)
 7,078
  746
  6,734
  1,066
Total contractual amount $33,498
  $2,825
  $35,226
  $3,712
Allowance for lending-related commitments $167
  $3
  $192
  $3
Guarantee liability 354
  —
  444
  —
Total carrying value $521
  $3
  $636
  $3
Commitments with collateral $17,400
  $583
  $17,421
  $878
(a)The ratings scale is based on the Firm’s internal ratings which generally correspond to ratings as defined by S&P and Moody’s.

JPMorgan Chase & Co./20182020 Form 10-K273285
Notes to consolidated financial statements

Securities lending indemnifications
Through the Firm’s securities lending program, counterparties’ securities, via custodial and non-custodial arrangements, may be lent to third parties. As part of this program, the Firm provides an indemnification in the lending agreements which protects the lender against the failure of the borrower to return the lent securities. To minimize its liability under these indemnification agreements, the Firm obtains cash or other highly liquid collateral with a market value exceeding 100% of the value of the securities on loan from the borrower. Collateral is marked to market daily to help assure that collateralization is adequate. Additional collateral is called from the borrower if a shortfall exists, or collateral may be released to the borrower in the event of overcollateralization. If a borrower defaults, the Firm would use the collateral held to purchase replacement securities in the market or to credit the lending client or counterparty with the cash equivalent thereof.
The cash collateral held by the Firm may be invested on behalf of the client in indemnified resale agreements, whereby the Firm indemnifies the client against the loss of principal invested. To minimize its liability under these agreements, the Firm obtains collateral with a market value exceeding 100% of the principal invested.
Derivatives qualifying as guarantees
The Firm transacts in certain derivative contracts that have the characteristics of a guarantee under U.S. GAAP. These contracts include written put options that require the Firm to purchase assets upon exercise by the option holder at a specified price by a specified date in the future. The Firm may enter into written put option contracts in order to meet client needs, or for other trading purposes. The terms of written put options are typically five years or less.
Derivatives deemed to be guarantees also includes stable value contracts, commonly referred to as “stable value products”, that require the Firm to make a payment of the difference between the market value and the book value of a counterparty’s reference portfolio of assets in the event that market value is less than book value and certain other conditions have been met. Stable value products are transacted in order to allow investors to realize investment returns with less volatility than an unprotected portfolio. These contracts are typically longer-term or may have no stated maturity, but allow the Firm to elect to terminate the contract under certain conditions.
The notional value of derivatives guarantees generally represents the Firm’s maximum exposure. However, exposure to certain stable value products is contractually limited to a substantially lower percentage of the notional amount.
The fair value of derivative guarantees reflects the probability, in the Firm’s view, of whether the Firm will be required to perform under the contract. The Firm reduces exposures to these contracts by entering into offsetting transactions, or by entering into contracts that hedge the market risk related to the derivative guarantees.

The following table summarizes the derivatives qualifying as guarantees as of December 31, 20182020 and 2017.2019.
(in millions)December 31, 2018
 December 31, 2017
Notional amounts   
Derivative guarantees$55,271
 $57,174
Stable value contracts with contractually limited exposure28,637
 29,104
Maximum exposure of stable value contracts with contractually limited exposure2,963
 3,053
    
Fair value   
Derivative payables367
 304
Derivative receivables—
 —

(in millions)December 31, 2020December 31, 2019
Notional amounts
Derivative guarantees$54,415 $53,089 
Stable value contracts with contractually limited exposure27,752 28,877 
Maximum exposure of stable value contracts with contractually limited exposure2,803 2,967 
Fair value
Derivative payables322 159 
In addition to derivative contracts that meet the characteristics of a guarantee, the Firm is both a purchaser and seller of credit protection in the credit derivatives market. ForRefer to Note 5 for a further discussion of credit derivatives, refer to Note 5.derivatives.
Unsettled securities financing agreements
In the normal course of business, the Firm enters into resale and securities borrowed agreements. At settlement, these commitments result in the Firm advancing cash to and receiving securities collateral from the counterparty. The Firm also enters into repurchase and securities loaned agreements. At settlement, these commitments result in the Firm receiving cash from and providing securities collateral to the counterparty. Such agreements settle at a future date. These agreements generally do not meet the definition of a derivative, and therefore, are not recorded on the Consolidated balance sheets until settlement date. These agreements predominantly have regular-way settlement terms. ForRefer to Note 11 for a further discussion of securities financing agreements, refer to Note 11.agreements.
Loan sales- and securitization-related indemnifications
Mortgage repurchase liability
In connection with the Firm’s mortgage loan sale and securitization activities with U.S. GSEs the Firm has made representations and warranties that the loans sold meet certain requirements, and that may require the Firm to repurchase mortgage loans and/or indemnify the loan purchaser if such representations and warranties are breached by the Firm. Further, although the Firm’s securitizations are predominantly nonrecourse, the Firm does provide recourse servicing in certain limited cases where it agrees to share credit risk with the owner of the mortgage loans. To the extent that repurchase demands that are received relate to loans that the Firm purchased from third parties that remain viable, the Firm typically will have the right to seek a recovery of related repurchase losses from the third party. Generally, the maximum amount of future payments the Firm would be required to make for breaches of these representations and warranties would be equal to the unpaid principal balance of such loans that are deemed to have defects that were sold to purchasers (including securitization-related SPEs) plus, in certain circumstances, accrued interest on such loans and certain expenses.

274JPMorgan Chase & Co./2018 Form 10-K


Private label securitizations
The liability related to repurchase demands associated with private label securitizations is separately evaluated by the Firm in establishing its litigation reserves.
ForRefer to Note 30 for additional information regarding litigation, refer to Note 29.litigation.
Loans sold with recourse
The Firm provides servicing for mortgages and certain commercial lending products on both a recourse and nonrecourse basis. In nonrecourse servicing, the principal credit risk to the Firm is the cost of temporary servicing advances of funds (i.e., normal servicing advances). In recourse servicing, the servicer agrees to share credit risk
286JPMorgan Chase & Co./2020 Form 10-K

with the owner of the mortgage loans, such as Fannie Mae or Freddie Mac or a private investor, insurer or guarantor. Losses on recourse servicing predominantly occur when foreclosure sales proceeds of the property underlying a defaulted loan are less than the sum of the outstanding principal balance, plus accrued interest on the loan and the cost of holding and disposing of the underlying property. The Firm’s securitizations are predominantly nonrecourse, thereby effectively transferring the risk of future credit losses to the purchaser of the mortgage-backed securities issued by the trust. At December 31, 20182020 and 2017, 2019, the unpaid principal balance of loans sold with recourse totaled $1.0 billion $889 million and $1.2 billion, $944 million, respectively. The carrying value of the related liability that the Firm has recorded in accounts payable and other liabilities on the Consolidated balance sheets, which is representative of the Firm’s view of the likelihood it will have to perform under its recourse obligations, was $30 $23 million and $38$27 million at December 31, 20182020 and 2017, 2019, respectively.
Other off-balance sheet arrangements
Indemnification agreements – general
In connection with issuing securities to investors outside the U.S., the Firm may agree to pay additional amounts to the holders of the securities in the event that, due to a change in tax law, certain types of withholding taxes are imposed on payments on the securities. The terms of the securities may also give the Firm the right to redeem the securities if such additional amounts are payable. The Firm may also enter into indemnification clauses in connection with the licensing of software to clients (“software licensees”) or when it sells a business or assets to a third party (“third-party purchasers”), pursuant to which it indemnifies software licensees for claims of liability or damages that may occur subsequent to the licensing of the software, or third-party purchasers for losses they may incur due to actions taken by the Firm prior to the sale of the business or assets. It is difficult to estimate the Firm’s maximum exposure under these indemnification arrangements, since this would require an assessment of future changes in tax law and future claims that may be made against the Firm that have not yet occurred. However, based on historical experience, management expects the risk of loss to be remote.
CardMerchant charge-backs
Under the rules of Visa USA, Inc.,payment networks, the Firm, in its role as a merchant acquirer, retains a contingent liability for disputed processed credit and MasterCard International, JPMorgan Chase Bank, N.A., is primarily liable fordebit card transactions that result in a charge-back to the amount of each processed card sales transaction that is the subject of a dispute between a cardmember and a merchant. If a dispute is resolved in the cardmember’scardholder’s favor, Merchant Services will (through the cardmember’scardholder’s issuing bank) credit or refund the amount to the cardmembercardholder and will charge back the transaction to the merchant. If Merchant Services is unable to collect the amount from the merchant, Merchant Services will bear the loss for the amount credited or refunded to the cardmember.cardholder. Merchant Services mitigates this risk by withholding future settlements, retaining cash reserve accounts or by obtaining other collateral. However, in the unlikely event that: (1) a merchant ceases operations and is unable to deliver products, services or a refund; (2)In addition, Merchant
Services does not have sufficient collateral from the merchant to provide cardmember refunds; and (3) Merchant Services does not have sufficient financial resources to provide cardmember refunds, JPMorgan Chase Bank, N.A., would recognize the loss.
Merchant Services incurred aggregate losses of $30 million, $28 million, and $85 million on $1,366.1 billion, $1,191.7 billion, and $1,063.4 billion of aggregate volume processed for the years ended December 31, 2018, 2017 and 2016, respectively. Incurred losses from merchant charge-backs are charged to other expense, with the offset recorded inrecognizes a valuation allowance against accrued interest and accounts receivable onthat covers the Consolidated balance sheets.payment or performance risk to the Firm related to charge-backs. The carrying value of the valuation allowance was $23 $12 million and $7$11 million at December 31, 20182020 and 2017, respectively, which2019, respectively.
For the Firm believes, based on historical experienceyears ended December 31, 2020, 2019 and the collateral held by2018, Merchant Services processed an aggregate volume of $144 million$1,597.3 billion, $1,511.5 billion, and $141 million at December 31, 2018 and 2017, respectively, is representative of the payment or performance risk to the Firm related to charge-backs.$1,366.1 billion, respectively.
Clearing Services – Client Credit Risk
The Firm provides clearing services for clients by entering into securities purchases and sales and derivative contracts with CCPs, including ETDs such as futures and options, as well as OTC-cleared derivative contracts. As a clearing member, the Firm stands behind the performance of its clients, collects cash and securities collateral (margin) as well as any settlement amounts due from or to clients, and remits them to the relevant CCP or client in whole or part. There are two types of margin: variation margin is posted on a daily basis based on the value of clients’ derivative contracts and initial margin is posted at inception of a derivative contract, generally on the basis of the potential changes in the variation margin requirement for the contract.
As a clearing member, the Firm is exposed to the risk of nonperformance by its clients, but is not liable to clients for the performance of the CCPs. Where possible, the Firm seeks to mitigate its risk to the client through the collection of appropriate amounts of margin at inception and throughout the life of the transactions. The Firm can also cease providing clearing services if clients do not adhere to

JPMorgan Chase & Co./2018 Form 10-K275
Notes to consolidated financial statements

their obligations under the clearing agreement. In the event of nonperformance by a client, the Firm would close out the client’s positions and access available margin. The CCP would utilize any margin it holds to make itself whole, with any remaining shortfalls required to be paid by the Firm as a clearing member.
The Firm reflects its exposure to nonperformance risk of the client through the recognition of margin receivables from clients and margin payables to CCPs; the clients’ underlying securities or derivative contracts are not reflected in the Firm’s Consolidated Financial Statements.
It is difficult to estimate the Firm’s maximum possible exposure through its role as a clearing member, as this would require an assessment of transactions that clients may execute in the future. However, based upon historical experience, and the credit risk mitigants available to the Firm, management believes it is unlikely that the Firm will have to make any material payments under these arrangements and the risk of loss is expected to be remote.
ForRefer to Note 5 for information on the derivatives that the Firm executes for its own account and records in its Consolidated Financial Statements, referStatements.

JPMorgan Chase & Co./2020 Form 10-K287
Notes to Note 5.consolidated financial statements
Exchange & Clearing House Memberships
The Firm is a member of several securities and derivative exchanges and clearing houses, both in the U.S. and other countries, and it provides clearing services to its clients. Membership in some of these organizations requires the Firm to pay a pro rata share of the losses incurred by the organization as a result of the default of another member. Such obligations vary with different organizations. These obligations may be limited to the amount (or a multiple of the amount) of the Firm’s contribution to the guarantee fund maintained by a clearing house or exchange as part of the resources available to cover any losses in the event of a member default. Alternatively, these obligations may also include a pro rata share of the residual losses after applying the guarantee fund. Additionally, certain clearing houses require the Firm as a member to pay a pro rata share of losses that may result from the clearing house’s investment of guarantee fund contributions and initial margin, unrelated to and independent of the default of another member. Generally a payment would only be required should such losses exceed the resources of the clearing house or exchange that are contractually required to absorb the losses in the first instance. In certain cases, it is difficult to estimate the Firm’s maximum possible exposure under these membership agreements, since this would require an assessment of future claims that may be made against the Firm that have not yet occurred. However, based on historical experience, management expects the risk of loss to the Firm to be remote.Where the Firm’s maximum possible exposure can be estimated, the amount is disclosed in the table on page 272,284, in the Exchange & clearing house guarantees and commitments line.
Sponsored Member Repo Program
In 2018 the Firm commenced the sponsored member repo program wherein the
The Firm acts as a sponsoring member to clear eligible overnight resale and repurchase agreements through the Government Securities Division of the Fixed Income Clearing Corporation (“FICC”) on behalf of clients that become sponsored members under the FICC’s rules. The Firm also guarantees to the FICC the prompt and full payment and performance of its sponsored member clients’ respective obligations under the FICC’s rules. The Firm minimizes its liability under these overnight guarantees byobtaining a security interest in the cash or high qualityhigh-quality securities collateral that the clients place with the clearing househouse; therefore, the Firm expects the risk of loss to be remote. The Firm’s maximum possible exposure, without taking into consideration the associated collateral, is includedin the Exchange & clearing house guarantees and commitments line on page 272. For284. Refer to Note 11 for additional information on credit risk mitigation practices on resale agreements and the types of collateral pledged under repurchase agreements, refer to Note 11.agreements.
Guarantees of subsidiaries
In the normal course of business, the Parent Company may provide counterparties with guarantees of certain of the trading and other obligations of its subsidiarieson a contract-by-contract basis, as negotiated with the Firm’s
counterparties. The obligations of the subsidiaries are included on the Firm’s Consolidated balance sheets or are reflected as off-balance sheet commitments; therefore, the Parent Company has not recognized a separate liability for these guarantees. The Firm believes that the occurrence of any event that would trigger payments by the Parent Company under these guarantees is remote.
The Parent Company has guaranteed certain long-term debt and structured notes of its subsidiaries, including JPMorgan Chase Financial Company LLC (“JPMFC”), a 100%-owned and consolidated finance subsidiary. All securities issued by JPMFC are fully and unconditionally guaranteed by the Parent Company.Company and no other subsidiary of the parent company guarantees these securities. These guarantees, which rank on a parity with the Firm’s unsecured and unsubordinated indebtedness, are not included in the table on page 272284 of this Note. For additional information, referRefer to Note 19.20 for additional information.

276288JPMorgan Chase & Co./20182020 Form 10-K


Note 28 – Commitments, pledged assets and
collateral
Lease commitments
AtDecember 31, 2018, JPMorgan Chase and its subsidiaries were obligated under a number of noncancelable operating leases for premises and equipment used primarily for banking purposes. Certain leases contain renewal options or escalation clauses providing for increased rental payments based on maintenance, utility and tax increases, or they require the Firm to perform restoration work on leased premises. No lease agreement imposes restrictions on the Firm’s ability to pay dividends, engage in debt or equity financing transactions or enter into further lease agreements.
The following table presents required future minimum rental payments under operating leases with noncancelable lease terms that expire afterDecember 31, 2018.
Year ended December 31, (in millions) 
20191,561
20201,520
20211,320
20221,138
2023973
After 20234,480
Total minimum payments required10,992
Less: Sublease rentals under noncancelable subleases(825)
Net minimum payments required$10,167

Total rental expense was as follows.
Year ended December 31,
(in millions)
      
 2018 2017 2016
Gross rental expense $1,881
 $1,853
 $1,860
Sublease rental income (239) (251) (241)
Net rental expense $1,642
 $1,602
 $1,619

Note 29 – Pledged assets and collateral
Pledged assets
The Firm may pledgepledges financial assets that it owns to maintain potential borrowing capacity at discount windows with Federal Reserve banks, various other central banks and FHLBs. Additionally, pledgedthe Firm pledges assets are used for other purposes, including to collateralize repurchase and other securities financing agreements, to cover short sales and to collateralize derivative contracts and deposits. deposits. Certain of these pledged assets may be sold or repledged or otherwise used by the secured parties and are parenthetically identified on the Consolidated balance sheets as assets pledged.
The following table presents the Firm’s pledged assets.
December 31, (in billions) 2018 2017
Assets that may be sold or repledged or otherwise used by secured parties $104.0
 $135.8
Assets that may not be sold or repledged or otherwise used by secured parties 83.7
 68.1
Assets pledged at Federal Reserve banks and FHLBs 475.3
 493.7
Total assets pledged $663.0
 $697.6

December 31, (in billions)20202019
Assets that may be sold or repledged or otherwise used by secured parties$166.6 $125.2 
Assets that may not be sold or repledged or otherwise used by secured parties113.9 80.2 
Assets pledged at Federal Reserve banks and FHLBs455.3 478.9 
Total pledged assets$735.8 $684.3 
Total pledged assets pledged do not include assets of consolidated VIEs; these assets are used to settle the liabilities of those entities. Refer to Note 14 for additional information on assets and liabilities of consolidated VIEs. ForRefer to Note 11 for additional information on the Firm’s securities financing activities, referactivities. Refer to Note 11. For 20 for additional information on the Firm’s long-term debt, refer to Note 19. debt. The significant components of the Firm’s pledged assets were as follows.
December 31, (in billions)20202019
Investment securities$80.2 $35.9 
Loans420.5 460.4 
Trading assets and other235.1 188.0 
Total pledged assets$735.8 $684.3 
December 31, (in billions)
2018
2017
Investment securities
$59.5

$86.2
Loans
440.1

437.7
Trading assets and other
163.4

173.7
Total assets pledged
$663.0

$697.6

Collateral
Collateral
The Firm accepts financial assets as collateral that it is permitted to sell or repledge, deliver or otherwise use. This collateral is generally obtained under resale and other securities financing agreements, prime brokerage-related held-for-investment customer margin loansreceivables and derivative contracts.Collateral is generally used under repurchase and other securities financing agreements, to cover short sales, and to collateralize derivative contracts and deposits.
The following table presents the fair value of collateral accepted.
December 31, (in billions)
2018
2017
Collateral permitted to be sold or repledged, delivered, or otherwise used
$1,245.3

$968.8
Collateral sold, repledged, delivered or otherwise used
998.3

771.0

December 31, (in billions)20202019
Collateral permitted to be sold or repledged, delivered, or otherwise used$1,451.7 $1,282.5 
Collateral sold, repledged, delivered or otherwise used1,038.9 1,000.5 (a)
Certain prior period amounts for both(a)Includes collateral and pledged assets (includingrepledged to the corresponding pledged assets parenthetical disclosure for trading assets and other assets onFederal Reserve under the Consolidated balance sheets) have been revised to conform with the current period presentation.Federal Reserve’s open market operations.

JPMorgan Chase & Co./20182020 Form 10-K277289
Notes to consolidated financial statements

Note 2930 – Litigation
Contingencies
As of December 31, 2018,2020, the Firm and its subsidiaries and affiliates are defendants, or putative defendants or respondents in numerous legal proceedings, including private, civil litigations and regulatory/government investigations. The litigations range from individual actions involving a single plaintiff to class action lawsuits with potentially millions of class members. Investigations involve both formal and informal proceedings, by both governmental agencies and self-regulatory organizations. These legal proceedings are at varying stages of adjudication, arbitration or investigation, and involve each of the Firm’s lines of business and several geographies and a wide variety of claims (including common law tort and contract claims and statutory antitrust, securities and consumer protection claims), some of which present novel legal theories.
The Firm believes the estimate of the aggregate range of reasonably possible losses, in excess of reserves established, for its legal proceedings is from $0 to approximately $1.5 billion at December 31, 2018.2020. This estimated aggregate range of reasonably possible losses was based upon currentlyinformation available informationas of that date for those proceedings in which the Firm believes that an estimate of reasonably possible loss can be made. For certain matters, the Firm does not believe that such an estimate can be made, as of that date. The Firm’s estimate of the aggregate range of reasonably possible losses involves significant judgment, given:
•the number, variety and varying stages of the proceedings, including the fact that many are in preliminary stages,
•the existence in many such proceedings of multiple defendants, including the Firm, whose share of liability (if any) has yet to be determined,
•the numerous yet-unresolved issues in many of the proceedings, including issues regarding class certification and the scope of many of the claims, and
•the attendant uncertainty of the various potential outcomes of such proceedings, including where the Firm has made assumptions concerning future rulings by the court or other adjudicator, or about the behavior or incentives of adverse parties or regulatory authorities, and those assumptions prove to be incorrect.
In addition, the outcome of a particular proceeding may be a result which the Firm did not take into account in its estimate because the Firm had deemed the likelihood of that outcome to be remote. Accordingly, the Firm’s estimate of the aggregate range of reasonably possible losses will change from time to time, and actual losses may vary significantly.
Set forth below are descriptions of the Firm’s material legal proceedings.
American Depositary Receipts Pre-Release Inquiry.Advisory and Other Activities. In December 2018,November 2020, JPMorgan Chase Bank, N.A. reachedentered into a settlementresolution with the U.S. SecuritiesOffice of the Comptroller of the Currency (“OCC”) regarding historical deficiencies in internal controls and Exchange Commission regarding its inquiryinternal audit for certain fiduciary activities. In connection with the resolution, JPMorgan Chase Bank, N.A. paid a $250 million Civil Money Penalty. The OCC found that JPMorgan Chase Bank, N.A. has remediated the deficiencies that led to the penalty.
Amrapali. India’s Enforcement Directorate (“ED”) is investigating JPMorgan India Private Limited in connection with investments made in 2010 and 2012 by 2 offshore funds formerly managed by JPMorgan Chase entities into activityresidential housing projects developed by the Amrapali Group (“Amrapali”). In 2017, numerous creditors filed civil claims against Amrapali including petitions brought by home buyers relating to pre-released American Depositary Receipts.delays in delivering or failure to deliver residential units. The home buyers’ petitions have been overseen by the Supreme Court of India since 2017 pursuant to its jurisdiction over public interest litigation. In July 2019, the Supreme Court of India issued an order making preliminary findings that Amrapali and other parties, including unspecified JPMorgan Chase entities and the offshore funds that had invested in the projects, violated certain currency control and money laundering provisions, and ordering the ED to conduct a further inquiry under India’s Prevention of Money Laundering Act (“PMLA”) and Foreign Exchange Management Act (“FEMA”). In May 2020, the Enforcement Directorate issued a provisional attachment order as part of the criminal PMLA proceedings freezing approximately $25 million held by JPMorgan India Private Limited. In June 2020, the funds were transferred to an account held by the Supreme Court of India. A separate civil proceeding relating to alleged FEMA violations is ongoing. The Firm is responding to and cooperating with the investigation.    
Federal Republic of Nigeria Litigation. JPMorgan Chase Bank, N.A. operated an escrow and depository account for the Federal Government of Nigeria (“FGN”) and two major international oil companies. The account held approximately $1.1 billion in connection with a dispute among the clients over rights to an oil field. Following the settlement of the dispute, JPMorgan Chase Bank, N.A. paid out the monies in the account in 2011 and 2013 in accordance with directions received from its clients. In November 2017, the Federal Republic of Nigeria (“FRN”) commenced a claim in the English High Court for approximately $875 million in payments made out of the accounts. The FRN, claiming to be the same entity as the FGN, alleges that the payments were instructed as part of a complex fraud not involving JPMorgan Chase Bank, N.A., but that JPMorgan Chase Bank, N.A. was or should have been on
290JPMorgan Chase & Co./2020 Form 10-K

notice that the payments may be fraudulent. JPMorgan Chase Bank, N.A. applied for summary judgment and was unsuccessful. The claim is ongoing and a trial has been scheduled to commence in February 2022.
Foreign Exchange Investigations and Litigation. The Firm previously reported settlements with certain government authorities relating to its foreign exchange (“FX”) sales and trading activities and controls related to those activities. FX-related investigations and inquiries by government authorities, including competition authorities, are ongoing, and the Firm is cooperating with and working to resolveAmong those matters. Inresolutions, in May 2015, the Firm pleaded guilty to a single violation of federal antitrust law. In January 2017, the Firm was sentenced, with judgment entered thereafter and a term of probation ending in January 2020. The term of probation has concluded, with the Firm remaining in good standing throughout the probation period. The Department of Labor has granted the Firm a five-year exemption of disqualification that allows the Firm and its affiliates to continue to rely on the Qualified Professional Asset Manager exemption under the Employee Retirement Income Security Act (“ERISA”) until January 2023. The Firm will need to reapply in due course for a further exemption to cover the remainder of the ten-year disqualification period. Separately, in February 2017A South Africa Competition Commission matter is the remaining FX-related governmental inquiry, and is currently pending before the South Africa Competition Commission referred its FX investigation of the Firm and other banks to the South Africa Competition Tribunal, which is conducting civil proceedings concerning that matter.Tribunal.
The Firm is also one of a number of foreign exchange dealers named as defendants in a class action filed inIn August 2018, the United States District Court for the Southern District of New York granted final approval to the Firm’s settlement of a consolidated class action brought by U.S.-based plaintiffs, which principally allegingalleged violations of federal antitrust laws based on an alleged conspiracy to manipulate foreign exchange rates (the “U.S. class action”). In January 2015, the Firm entered into a settlement agreement in the U.S. class action. Following this settlement, a numberand also sought damages on behalf of additional putative class actions were filed seeking damages for persons who transacted in FX futures and options on futures (the “exchanged-based actions”), consumers who purchased foreign currencies at allegedly inflated rates (the “consumer action”), participants or beneficiaries of qualified ERISA plans (the “ERISA actions”), and purported indirect purchasers of FX instruments (the “indirect purchaser action”). Since then, the Firm has entered into a revised settlement agreement to resolve the consolidated U.S. class action, including the exchange-based actions. The Court granted final approval of that settlement agreement in August 2018.futures. Certain members of the settlement class filed requests to the Court to be excluded from the class, and certain of them filed a complaint against the Firm and a number of other foreign exchange dealers in November 2018 (the “opt-out action”).

278JPMorgan Chase & Co./2018 Form 10-K


The District Court has dismissed one2018. A number of these actions remain pending. Further, putative class actions have been filed against the ERISAFirm and a number of other foreign exchange dealers on behalf of certain consumers who purchased foreign currencies at allegedly inflated rates and purported indirect purchasers of FX instruments; these actions and the United States Court of Appeals for the Second Circuit affirmed that dismissal in July 2018. The second ERISA action was voluntarily dismissed with prejudice in November 2018. The indirect purchaser action, the consumer action and the opt-out actionalso remain pending in the District Court.
General Motors Litigation. JPMorgan Chase Bank, N.A. participated in, In 2020, the Court approved a settlement by the Firm and was the Administrative Agent on behalf11 other defendants of a syndicateclass action filed by purported indirect purchasers for a total of lenders on, a $1.5 billion syndicated Term Loan facility (“Term Loan”) for General Motors Corporation (“GM”).$10 million. In July 2009, in connection with the GM bankruptcy proceedings, the Official Committee of Unsecured Creditors of Motors Liquidation Company (“Creditors Committee”) filed a lawsuit against JPMorgan Chase Bank, N.A., in itsaddition, some FX-related individual capacity and as Administrative Agent for other lenders on the Term Loan, seeking to hold the underlying lien invalidputative class actions based on similar alleged underlying conduct have been filed outside the filing of a UCC-3 termination statement relating to the Term Loan. In January 2015, following several court proceedings, the United States Court of Appeals for the Second Circuit reversed the Bankruptcy Court’s dismissal of the Creditors Committee’s claim and remanded the case to the Bankruptcy Court with instructions to enter partial summary judgment for the Creditors Committee as to the termination statement. The proceedingsU.S., including in the Bankruptcy Court thereafter continued with respect to, among other things, additional defenses asserted by JPMorgan Chase Bank, N.A.U.K., Israel and the value of additional collateral on the Term Loan that was unaffected by the filing of the termination statement at issue. In addition, certain Term Loan lenders filed cross-claims in the Bankruptcy Court against JPMorgan Chase Bank, N.A. seeking indemnification and asserting various claims. In January 2019, the parties reached an agreement in principle to fully resolve the litigation, including the cross-claims filed against the Firm. The agreement is subject to definitive documentation and court approval, and is not expected to have any material impact on the Firm. The Bankruptcy Court has stayed all deadlines in the action to allow the parties to finalize the settlement agreement for submission to the Bankruptcy Court.Australia.
Interchange Litigation. GA grouproups of merchants and retail associations filed a series of class action complaints alleging that Visa and Mastercard, as well as certain banks, conspired to set the price of credit and debit card interchange fees and enacted respectiverelated rules in violation of antitrust laws. TheIn 2012, the parties initially settled the cases for a cash payment, a temporary reduction of credit card interchange, and modifications to certain credit card
network rules. In December 2013, the District Court granted final approval of the settlement.
A number of merchants appealed the settlement to the United States Court of Appeals for the Second Circuit, which, in June 2016, vacated the District Court’s certification of the class action and reversed2017, after the approval of that settlement was reversed on appeal, the class settlement. In March 2017, the U.S. Supreme Court declined petitions seeking review of the decision of
the Court of Appeals. The case was remanded to the United States District Court for the Eastern District of New York for further proceedings consistent with the appellate decision.
The original class action was divided into two2 separate actions, one seeking primarily monetary relief and the other seeking primarily injunctive relief. In September 2018, the parties to the class action seeking monetary relief finalized an agreement which amends and supersedes the prior settlement agreement, and the plaintiffs filed a motion seeking preliminary approval of the modified settlement. Thisagreement. Pursuant to this settlement, provides for the defendants to contributecollectively contributed an additional $900 million to the approximately $5.3 billion currentlypreviously held in escrow from the original settlement. In JanuaryDecember 2019, the amended agreement was preliminarily approved by the District Court,Court. Certain merchants appealed the District Court’s approval order, and formal noticethose appeals are pending. Based on the percentage of merchants that opted out of the amended class settlement, will proceed$700 million has been returned to the defendants from the settlement escrow in accordance with the District Court’s order. $600 million of the additional amount will be funded from the litigation escrow account established under the Visa defendants’ Retrospective Responsibility Plan, and $300 million will be paid by Mastercard and certain banks in accordance with an agreement among themselves regarding their respective shares. In June 2018, Visa deposited an additional $600 million into its litigation escrow account, which in turn led to a corresponding change in the conversion rate of Visa Class B to Class A shares. Of the Mastercard-related portion, the Firm’s share is approximately $36 million.settlement agreement. The class action seeking primarily injunctive relief continues separately.
In addition, certain merchants have filed individual actions raising similar allegations against Visa and Mastercard, as well as against the Firm and other banks, and some of those actions are proceeding.remain pending.
LIBOR and Other Benchmark Rate Investigations and Litigation. JPMorgan Chase has received subpoenas and requests for documents and, in some cases, interviews,responded to inquiries from federal and statevarious governmental agencies and entities including the U.S. Commodity Futures Trading Commission and various state attorneys general, as well as the European Commission (“EC”), the Swiss Competition Commission (“ComCo”) and other regulatory authorities and banking associations around the world relating primarily to the process by which interest rates were submitted to the British Bankers Association (“BBA”) in connection with the setting of the BBA’sAssociation’s London Interbank Offered Rate (“LIBOR”) for various currencies principally in 2007 and 2008. Some of the inquiries also relate to similar processes by which information on rates was submitted to the European Banking Federation (“EBF”) in connection with the setting of the EBF’sFederation’s Euro Interbank Offered Rate (“EURIBOR”). The Firm continues to cooperate with these investigations to the extent that they are ongoing. ComCo’sSwiss Competition Commission’s investigation relating to EURIBOR, to which the Firm and other banks are subject, continues. In December 2016, the ECEuropean Commission issued a decision against the Firm and other banks finding an infringement of European antitrust rules relating to EURIBOR. The Firm has filed an appeal of that decision

JPMorgan Chase & Co./2018 Form 10-K279
Notes to consolidated financial statements

with the European General Court, and that appeal is pending.
In addition, the Firm has been named as a defendant along with other banks in a series of individual and putative class actions related to benchmarks, filedincluding U.S. dollar LIBOR during the period that it was administered by the BBA and, in various United States District Courts, including twoa separate consolidated putative class actions relating to U.S. dollar LIBORaction, during the period that it was administered by ICE Benchmark Administration. These actions have been filed, or consolidated for pre-trial purposes, in the United States District Court for the Southern District of New York. In these actions, plaintiffs make varying allegations that in various periods, starting in 2000 or later, defendants either individually or collectively manipulated various benchmark rates by submitting rates that were artificially low or high. Plaintiffs allege that they transacted in loans, derivatives or other financial instruments whose values are affected by
JPMorgan Chase & Co./2020 Form 10-K291
Notes to consolidated financial statements
changes in these rates and assert a variety of claims including antitrust claims seeking treble damages. These matters are in various stages of litigation.
The Firm has agreed to settle putative class actions related to exchange-traded Eurodollar futures contracts, Swiss franc LIBOR, EURIBOR, the Singapore Interbank Offered Rate, the Singapore Swap Offer Rate and the Australian Bank Bill Swap Reference Rate. Those settlements are all subject to further documentation and court approval.
In actions related to U.S. dollar LIBOR during the period that it was administered by the BBA, the Firm has resolved certain of these actions, and others are in various stages of litigation. The District Court dismissed certain claims, including antitrust claims brought by some plaintiffs whom the District Court found did not have standing to assert such claims, and permitted certain claims to proceed, including antitrust, claims, claims underCommodity Exchange Act, Section 10(b) of the CommoditySecurities Exchange Act and common law claims to proceed.claims. The plaintiffs whose antitrust claims were dismissed for lack of standing have filed an appeal. In February 2018, as to those actions which the Firm has not agreed to settle, theThe District Court (i) granted class certification with respect to certainof antitrust claims related to bonds and interest rate swaps sold directly by the defendants (ii)and denied class certification with respect to state common law claims broughtmotions filed by other plaintiffs. In the holders of those bonds and swaps and (iii) denied class certification with respect to theconsolidated putative class action related to LIBOR-based loans heldthe time period that U.S. dollar LIBOR was administered by plaintiff lending institutions.ICE Benchmark Administration, the District Court granted defendants’ motion to dismiss plaintiffs’ complaint, and the plaintiffs have appealed. The Firm’s settlements of putative class actions related to Swiss franc LIBOR, the Singapore Interbank Offered Rate and the Singapore Swap Offer Rate (“SIBOR”), and the Australian Bank Bill Swap Reference Rate, and one of the putative class actions related to U.S. dollar LIBOR remain subject to court approval. In the class actions related to SIBOR and Swiss franc LIBOR, the District Court concluded that the Court lacked subject matter jurisdiction, and plaintiffs’ appeals of those decisions are pending.
Municipal Derivatives Litigation. Several civilIn addition to the actions were commenced againstpending or consolidated in the Firm relating to certain Jefferson County, Alabama (the “County”) warrant underwritings and swap transactions. The actions generally allegedSouthern District of New York, in August 2020, a group of individual plaintiffs filed a lawsuit asserting antitrust claims in the United States District Court for the Northern District of California, alleging that the Firm made paymentsand other defendants were engaged in an unlawful agreement to certain third parties in exchangeset LIBOR and conspired to monopolize the market for being chosen to underwrite more than $3.0 billion in warrants issued by the CountyLIBOR-based consumer loans and to act as the counterparty for certain swaps executed by the County.credit cards. The County subsequently filed for bankruptcycomplaint seeks injunctive relief and in November 2013, the Bankruptcy Court confirmed a Plan of Adjustment pursuant to which the above-described actions against the Firm were releasedmonetary damages.
Metals and dismissed with prejudice. Certain sewer rate payers filed an appeal challenging the
confirmation of the Plan of Adjustment, and that appeal was dismissed by the United States Court of Appeals for the Eleventh Circuit. The appellants have filed a petition seeking review by the Supreme Court of the United States.
Precious MetalsU.S. Treasuries Investigations and Litigation.Litigation and Related Inquiries. Various authorities, includingThe Firm previously reported that it and/or certain of its subsidiaries had entered into resolutions with the U.S. Department of Justice’s Criminal Division, are conductingJustice (“DOJ”), the U.S. Commodity Futures Trading Commission (“CFTC”) and the U.S. Securities and Exchange Commission (“SEC”), which, collectively, resolved those agencies’ respective investigations relating to historical trading practices by former employees in the precious metals and U.S. treasuries markets and related conduct. conduct from 2008 to 2016.
The Firm is respondingentered into a Deferred Prosecution Agreement (“DPA”) with the DOJ in which it agreed to the filing of a criminal information charging JPMorgan Chase & Co. with 2 counts of wire fraud and cooperatingagreed, along with these investigations. JPMorgan Chase Bank, N.A. and J.P. Morgan Securities LLC, to certain terms and obligations as set forth therein. Under the terms
of the DPA, the criminal information will be dismissed after three years, provided that JPMorgan Chase & Co., JPMorgan Chase Bank, N.A. and J.P. Morgan Securities LLC fully comply with all of their obligations.
Across the 3 resolutions with the DOJ, CFTC and SEC, JPMorgan Chase & Co., JPMorgan Chase Bank, N.A. and J.P. Morgan Securities LLC agreed to pay a total monetary amount of approximately $920 million. A portion of the total monetary amount includes victim compensation payments.
Several putative class action complaints have been filed in the United States District Court for the Southern District of New York against the Firm and certain current and former employees, alleging a precious metals futures and options price manipulation scheme in violation of the Commodity Exchange Act. Some of the complaints also allege unjust enrichment and deceptive acts or practices under the General Business Law of the State of New York. The Court consolidated these putative class actions in February 2019, and the consolidated action is stayed through May 2021. In addition, several putative class actions have been filed in the United States District Courts for the Northern District of Illinois and Southern District of New York against the Firm, isalleging manipulation of U.S. Treasury futures and options, and bringing claims under the Commodity Exchange Act. Some of the complaints also allege unjust enrichment. The actions in the Northern District of Illinois have been transferred to the Southern District of New York. The Court consolidated these putative class actions in October 2020 and set a defendant indeadline of February 2021 for the filing of a consolidated complaint. NaN putative class action complaints have also been filed under the Securities Exchange Act of 1934 in the United States District Court for the SouthernEastern District of New York against the Firm and certain individual defendants on behalf of shareholders who acquired shares during the putative class period alleging monopolization of silver futures in violationthat certain SEC filings of the Sherman Act.Firm were materially false or misleading in that they did not disclose certain information relating to the above-referenced investigations. Plaintiffs have filed a stipulation seeking consolidation of the actions and the appointment of co-lead plaintiffs and counsel, which is pending Court approval.
Wendel. Since 2012, the French criminal authorities have been investigating a series of transactions entered into by senior managers of Wendel Investissement (“Wendel”) during the period from 2004 through 2007 to restructure their shareholdings in Wendel. JPMorgan Chase Bank, N.A., Paris branch provided financing for the transactions to a number of managers of Wendel in 2007. JPMorgan Chase has cooperated with the investigation. The investigating judges issued an ordonnance de renvoi in November 2016, referring JPMorgan Chase Bank, N.A. to the French tribunal correctionnel for alleged complicity in tax fraud. No date for trial has been set by the court. The Firm has been successful in legal challenges made to the Court of Cassation, France’s highest court, with respect to the criminal proceedings. In January 2018, the Paris Court of Appeal issued a decision cancelling the mise en examen of JPMorgan Chase Bank, N.A. The Court of Cassation, France’s highest court, ruled in September 2018 that a mise en examen is a prerequisite for an
292JPMorgan Chase & Co./2020 Form 10-K

ordonnance de renvoi and remanded the case to the Court of Appeal to consider JPMorgan Chase Bank, N.A.’s application forin January 2020 ordered the annulment of the ordonnance de renvoireferring JPMorgan Chase Bank, N.A. to the French tribunal correctionnel. AnyThe Court of Appeal found in January 2021 that it had no power to take further actionsaction against JPMorgan Chase following the Court of Cassation’s ruling. At the opening of a trial of the managers of Wendel in January 2021, the tribunal correctionnel directed the criminal proceedings are stayedauthorities to clarify whether a further investigation should be opened against JPMorgan Chase, pending which the outcome of that application.trial was postponed. In addition, a number of the managers have commenced civil proceedings against JPMorgan Chase Bank, N.A. The claims are separate, involve different allegations and are at various stages of proceedings.
* * *
In addition to the various legal proceedings discussed above, JPMorgan Chase and its subsidiaries are named as defendants or are otherwise involved in a substantial number of other legal proceedings. The Firm believes it has meritorious defenses to the claims asserted against it in its currently outstanding legal proceedings and it intends to defend itself vigorously. Additional legal proceedings may be initiated from time to time in the future.

280JPMorgan Chase & Co./2018 Form 10-K


The Firm has established reserves for several hundred of its currently outstanding legal proceedings. In accordance with the provisions of U.S. GAAP for contingencies, the Firm accrues for a litigation-related liability when it is probable that such a liability has been incurred and the amount of the loss can be reasonably estimated. The Firm evaluates its outstanding legal proceedings each quarter to assess its litigation reserves, and makes adjustments in such reserves, upwardsupward or downward, as appropriate, based on management’s best judgment after consultation with counsel. During the year ended December 31, 2018, theThe Firm’s legal expense was $1.1 billion, $239 million and $72 million and for the years ended December 31, 20172020, 2019 and 2016, it was a benefit of $(35) million and $(317) million,2018, respectively. There is no assurance that the Firm’s litigation reserves will not need to be adjusted in the future.
In view of the inherent difficulty of predicting the outcome of legal proceedings, particularly where the claimants seek very large or indeterminate damages, or where the matters present novel legal theories, involve a large number of parties or are in early stages of discovery, the Firm cannot state with confidence what will be the eventual outcomes of the currently pending matters, the timing of their ultimate resolution or the eventual losses, fines, penalties or consequences related to those matters. JPMorgan Chase believes, based upon its current knowledge and after consultation with counsel, consideration of the material legal proceedings described above and after taking into account its current litigation reserves and its estimated aggregate range of possible losses, that the other legal proceedings currently pending against it should not have a material adverse effect on the Firm’s consolidated financial condition. The Firm notes, however, that in light of the uncertainties involved in such proceedings, there is no assurance that the ultimate resolution of these matters will
not significantly exceed the reserves it has currently accrued or that a matter will not have material reputational consequences. As a result, the outcome of a particular matter may be material to JPMorgan Chase’s operating results for a particular period, depending on, among other factors, the size of the loss or liability imposed and the level of JPMorgan Chase’s income for that period.


JPMorgan Chase & Co./20182020 Form 10-K281293
Notes to consolidated financial statements

Note 3031 – International operations
The following table presents income statement and balance sheet-related information for JPMorgan Chase by major international geographic area. The Firm defines international activities for purposes of this footnote presentation as business transactions that involve clients residing outside of the U.S., and the information presented below is based predominantly on the domicile of the client, the location from which the client relationship is managed, booking location or the location of the trading desk. However, many of the Firm’s U.S. operations serve international businesses.

As the Firm’s operations are highly integrated, estimates and subjective assumptions have been made to apportion revenue and expense between U.S. and international operations. These estimates and assumptions are consistent with the allocations used for the Firm’s segment reporting as set forth in Note 31.32.
The Firm’s long-lived assets for the periods presented are not considered by management to be significant in relation to total assets. The majority of the Firm’s long-lived assets are located in the U.S.
As of or for the year ended December 31,
(in millions)
Revenue(c)
Expense(d)
Income before income tax
expense		Net incomeTotal assets
2020
Europe/Middle East/Africa$16,566 $10,987 $5,579 $3,868 $530,687 (e)
Asia-Pacific9,289 5,558 3,731 2,630 252,553 
Latin America/Caribbean2,740 1,590 1,150 837 61,980 
Total international28,595 18,135 10,460 7,335 845,220 
North America(a)
90,948 66,001 24,947 21,796 2,540,851 
Total$119,543 $84,136 $35,407 $29,131 $3,386,071 
2019(b)
Europe/Middle East/Africa$15,887 $9,860 $6,027 $4,158 $391,369 (e)
Asia-Pacific7,254 5,060 2,194 1,467 183,023 
Latin America/Caribbean2,405 1,561 844 609 47,820 
Total international25,546 16,481 9,065 6,234 622,212 
North America(a)
89,853 54,373 35,480 30,197 2,065,167 
Total$115,399 $70,854 $44,545 $36,431 $2,687,379 
2018(b)
Europe/Middle East/Africa$16,459 $10,032 $6,427 $4,569 $424,935 (e)
Asia-Pacific6,991 4,884 2,107 1,481 171,547 
Latin America/Caribbean2,365 1,301 1,064 744 43,871 
Total international25,815 16,217 9,598 6,794 640,353 
North America(a)
82,968 51,802 31,166 25,680 1,982,179 
Total$108,783 $68,019 $40,764 $32,474 $2,622,532 
As of or for the year ended December 31,
(in millions)		 
Revenue(b)(c)
 
Expense(c)(d)
 Income before income tax
expense		 Net income Total assets
 
2018           
Europe/Middle East/Africa $16,181
 $9,953
 $6,228
 $4,444
 $423,835
(e) 
Asia/Pacific 7,119
 4,866
 2,253
 1,593
 171,242
 
Latin America/Caribbean 2,435
 1,413
 1,022
 718
 46,560
 
Total international 25,735
 16,232
 9,503
 6,755
 641,637
 
North America(a)
 83,294
 52,033
 31,261
 25,719
 1,980,895
 
Total $109,029
 $68,265
 $40,764
 $32,474
 $2,622,532
 
2017           
Europe/Middle East/Africa $15,120
 $9,347
 $5,773
 $4,007
 $407,145
(e) 
Asia/Pacific 6,028
 4,500
 1,528
 852
 163,718
 
Latin America/Caribbean 1,994
 1,523
 471
 299
 44,569
 
Total international 23,142
 15,370
 7,772
 5,158
 615,432
 
North America(a)
 77,563
 49,435
 28,128
 19,283
 1,918,168
 
Total $100,705
 $64,805
 $35,900
 $24,441
 $2,533,600
 
2016           
Europe/Middle East/Africa $14,418
 $9,126
 $5,292
 $3,783
 $394,134
(e) 
Asia/Pacific 6,313
 4,414
 1,899
 1,212
 156,946
 
Latin America/Caribbean 1,959
 1,632
 327
 208
 42,971
 
Total international 22,690
 15,172
 7,518
 5,203
 594,051
 
North America(a)
 73,879
 46,861
 27,018
 19,530
 1,896,921
 
Total $96,569
 $62,033
 $34,536
 $24,733
 $2,490,972
 
(a)Substantially reflects the U.S.
(a)Substantially reflects the U.S.
(b)Revenue is composed of net interest income and noninterest revenue.
(c)Effective January 1, 2018, the Firm adopted the revenue recognition guidance. The revenue recognition guidance was applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.
(d)Expense is composed of noninterest expense and the provision for credit losses.
(e)Total assets for the U.K. were approximately $296 billion, $309 billion, and $310 billion at December 31, 2018, 2017 and 2016, respectively.

(b)Prior-period amounts have been revised to conform with the current presentation.
(c)Revenue is composed of net interest income and noninterest revenue.
(d)Expense is composed of noninterest expense and the provision for credit losses.
(e)Total assets for the U.K. were approximately $353 billion, $309 billion and $299 billion at December 31, 2020, 2019 and 2018, respectively.
282294JPMorgan Chase & Co./20182020 Form 10-K



Note 3132 – Business segments
The Firm is managed on a line of businessan LOB basis. There are four4 major reportable business segments – Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking and Asset & Wealth Management. In addition, there is a Corporate segment. Thesegment.The business segments are determined based on the products and services provided, or the type of customer served, and they reflect the manner in which financial information is currently evaluated by the Firm’s Operating Committee. Segment results are presented on a managed basis. For a further discussion concerning JPMorgan Chase’s business segments, referRefer to Segment results of this footnote.footnote for a further discussion of JPMorgan Chase’s business segments.
The following is a description of each of the Firm’s business segments, and the products and services they provide to their respective client bases.
Consumer & Community Banking
CCBConsumer & Community Banking offers services to consumers and businesses through bank branches, ATMs, digital (including onlinemobile and mobile)online) and telephone banking. CCB is organized into Consumer & Business Banking (including Consumer Banking/ChaseBanking, J.P. Morgan Wealth Management and Business Banking), Home Lending (including Home Lending Production, Home Lending Servicing and Real Estate Portfolios) and Card Merchant Services & Auto. Consumer & Business Banking offers deposit and investment products, payments and services to consumers, and lending, deposit, and cash management and payment solutions to small businesses. Home Lending includes mortgage origination and servicing activities, as well as portfolios consisting of residential mortgages and home equity loans. Card Merchant Services & Auto issues credit cards to consumers and small businesses offers payment processing services to merchants, and originates and services auto loans and leases.
Corporate & Investment Bank
The CIB,Corporate & Investment Bank, which consists of Banking and Markets & InvestorSecurities Services, offers a broad suite of investment banking, market-making, prime brokerage, and treasury and securities products and services to a global client base of corporations, investors, financial institutions, merchants, government and municipal entities. Banking offers a full range of investment banking products and services in all major capital markets, including advising on corporate strategy and structure, capital-raising in equity and debt markets, as well as loan origination and syndication. Banking also includes Treasury Services,Wholesale Payments, which provides transactionpayments services consisting of cash managementenabling clients to manage payments and liquidity solutions.receipts globally, and cross-border financing. Markets & InvestorSecurities Services isincludes Markets, a global market-
maker inmarket-maker across products, including cash securities and derivative instruments, andwhich also offers sophisticated risk management solutions, prime brokerage, and
research. Markets & InvestorSecurities Services also includes Securities Services, a leading global custodian which provides custody, fund accounting and administration, and securities lending products principally for asset managers, insurance companies and public and private investment funds.
Commercial Banking
CB delivers extensive industry knowledge, local expertise and dedicated service to U.S. and U.S. multinational clients, including corporations, municipalities, financial institutions and nonprofit entities with annual revenue generally ranging from $20 million to $2 billion. In addition, CB provides financing to real estate investors and owners. Partnering with the Firm’s other businesses, CBCommercial Banking provides comprehensive financial solutions, including lending, treasury services,wholesale payments, investment banking and asset management to meet its clients’ domesticproducts across 3 primary client segments: Middle Market Banking, Corporate Client Banking and international financial needs.Commercial Real Estate Banking. Other includes amounts not aligned with a primary client segment.
Middle Market Banking covers small and midsized companies, local governments and nonprofit clients.
Corporate Client Banking covers large corporations.
Commercial Real Estate Banking covers investors, developers, and owners of multifamily, office, retail, industrial and affordable housing properties.
Asset & Wealth Management
AWM,Asset & Wealth Management, with client assets of $2.7$3.7 trillion, is a global leader in investment and wealth management. AWM clients include institutions, high-net-worth individuals and retail investors in many major markets throughout the world. AWM offers
Asset Management
Offers multi-asset investment management solutions across most major asset classes including equities, fixed income, alternatives and money market funds. AWM also offers multi-asset investment management,funds to institutional and retail investors providing solutions for a broad range of clients’ investment needs. For
Wealth Management clients, AWM also provides
Provides retirement products and services, brokerage, and banking services includingcustody, trusts and estates, loans, mortgages, deposits and deposits. investment management to high net worth clients.
The majority of AWM’s client assets are in actively managed portfolios.
Corporate
The Corporate segment consists of Treasury and Chief Investment Office and Other Corporate, which includes corporate staff functions and expense that is centrally managed. Treasury and CIO is predominantly responsible for measuring, monitoring, reporting and managing the Firm’s liquidity, funding, capital, structural interest rate and foreign exchange risks. The major Other Corporate functions include Real Estate, Technology, Legal, Corporate Finance, Human Resources, Internal Audit, Risk Management, Compliance, Control Management, Corporate Responsibility and various Other Corporate groups.


JPMorgan Chase & Co./20182020 Form 10-K283295
Notes to consolidated financial statements

Segment results
The following table provides a summary of the Firm’s segment results as of or for the years ended December 31, 2018, 20172020, 2019 and 2016,2018, on a managed basis.The Firm’s definition of managed basis starts with the reported U.S. GAAP results and includes certain reclassifications to present total net revenue for the Firm (and each of the reportable business segments) on an FTE basis. Accordingly, revenue from investments that receive tax credits and tax-exempt securities is presented in the managed results on a basis comparable to taxable investments and securities. This allows management to assess the comparability of revenue from year-to-year arising from both taxable and tax-exempt sources. The corresponding income tax impact related to tax-exempt items is recorded within income tax expense/(benefit). These adjustments have no impact on net income as reported by the Firm as a whole or by the lines of business.
LOBs.
Business segment capital allocation
Each business segment is allocated capital by taking into consideration a variety of factors including capital levels of similarly rated peers and applicable regulatory capital requirements. ROE is measured and internal targets for expected returns are established as key measures of a business segment’s performance.
The Firm’s allocation methodology incorporates Basel III Standardized RWA, Basel III Advanced RWA, leverage, the GSIB surcharge, and a simulation of capital in a severe stress environment. On at least an annual basis, theThe assumptions and methodologies used into allocate capital allocation are periodically assessed and as a result, the capital allocated to linesthe LOBs may change from time to time. 
Business segment changes
In the fourth quarter of 2020, the Firm transferred certain assets, liabilities, revenue, expense and headcount associated with certain wealth management clients from AWM to the J.P. Morgan Wealth Management business may change.unit within CCB. Prior-period amounts have been revised to conform with the current presentation, including the transfer of approximately 1,650 technology and support staff during the second and third quarters of 2020. Ultra-high-net-worth and certain high-net-worth client relationships remained in AWM.

In the first quarter of 2020, the Firm began reporting a Wholesale Payments business unit within CIB following a realignment of the Firm’s wholesale payments businesses. The Wholesale Payments business comprises:
•Merchant Services, which was realigned from CCB to CIB
•Treasury Services and Trade Finance in CIB. Trade Finance was previously reported in Lending in CIB.
In connection with the alignment of Wholesale Payments, the assets, liabilities and headcount associated with the Merchant Services business were realigned to CIB from CCB, and the revenue and expenses of the Merchant Services business are reported across CCB, CIB and CB based primarily on client relationships. In the fourth quarter of 2020, payment processing-only clients along with the associated revenue and expenses were realigned to CIB’s Wholesale Payments business from CCB and CB. Payment processing-only clients are those that only use payment services offered by Merchant Services, and in general do not currently utilize other services offered by the Firm. Prior-period amounts have been revised to reflect this realignment and revised allocation methodology.
Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.
Net income in 2018 for each of the business segments reflects the favorable impact of the reduction in the U.S. federal statutory income tax rate as a result of the TCJA.
Segment results and reconciliation(a)
(Table continued on next page)
As of or for the year ended
December 31,
(in millions, except ratios)
Consumer & Community Banking(b)
Corporate & Investment BankCommercial BankingAsset & Wealth Management
202020192018202020192018202020192018202020192018
Noninterest revenue$17,740 $17,796 $15,338 $35,120 $30,060 $27,854 $3,067 $2,710 $2,620 $10,822 $10,236 $10,052 
Net interest income33,528 37,337 35,933 14,164 9,205 9,528 6,246 6,554 6,716 3,418 3,355 3,375 
Total net revenue51,268 55,133 51,271 49,284 39,265 37,382 9,313 9,264 9,336 14,240 13,591 13,427 
Provision for credit losses12,312 4,954 4,754 2,726 277 (60)2,113 296 129 263 59 52 
Noninterest expense27,990 28,276 27,168 23,538 22,444 21,876 3,798 3,735 3,627 9,957 9,747 9,575 
Income/(loss) before income tax expense/(benefit)10,966 21,903 19,349 23,020 16,544 15,566 3,402 5,233 5,580 4,020 3,785 3,800 
Income tax expense/(benefit)2,749 5,362 4,642 5,926 4,590 3,767 824 1,275 1,316 1,028 918 855 
Net income/(loss)$8,217 $16,541 $14,707 $17,094 $11,954 $11,799 $2,578 $3,958 $4,264 $2,992 $2,867 $2,945 
Average equity$52,000 $52,000 $51,000 $80,000 $80,000 $70,000 $22,000 $22,000 $20,000 $10,500 $10,500 $9,000 
Total assets496,705 541,367 560,177 1,097,219 914,705 909,292 228,932 220,514 220,229 203,384 173,175 161,047 
Return on equity15 %31 %28 %20 %14 %16 %11 %17 %20 %28 %26 %32 %
Overhead ratio55 51 53 48 57 59 41 40 39 70 72 71 
(Table continued on next page)             
As of or for the year ended
December 31,
(in millions, except ratios)
 Consumer & Community Banking Corporate & Investment Bank Commercial Banking Asset & Wealth Management
 201820172016 201820172016 201820172016 201820172016
Noninterest revenue $16,260
$14,710
$15,255
 $26,968
$24,539
$24,449
 $2,343
$2,522
$2,320
 $10,539
$10,456
$9,789
Net interest income 35,819
31,775
29,660
 9,480
10,118
10,891
 6,716
6,083
5,133
 3,537
3,379
3,033
Total net revenue 52,079
46,485
44,915
 36,448
34,657
35,340
 9,059
8,605
7,453
 14,076
13,835
12,822
Provision for credit losses 4,753
5,572
4,494
 (60)(45)563
 129
(276)282
 53
39
26
Noninterest expense 27,835
26,062
24,905
 20,918
19,407
19,116
 3,386
3,327
2,934
 10,353
10,218
9,255
Income/(loss) before income tax expense/(benefit) 19,491
14,851
15,516
 15,590
15,295
15,661
 5,544
5,554
4,237
 3,670
3,578
3,541
Income tax expense/(benefit) 4,639
5,456
5,802
 3,817
4,482
4,846
 1,307
2,015
1,580
 817
1,241
1,290
Net income/(loss) $14,852
$9,395
$9,714
 $11,773
$10,813
$10,815
 $4,237
$3,539
$2,657
 $2,853
$2,337
$2,251
Average equity $51,000
$51,000
$51,000
 $70,000
$70,000
$64,000
 $20,000
$20,000
$16,000
 $9,000
$9,000
$9,000
Total assets 557,441
552,601
535,310
 903,051
826,384
803,511
 220,229
221,228
214,341
 170,024
151,909
138,384
Return on equity 28%17%18% 16%14%16% 20%17%16% 31%25%24%
Overhead ratio 53
56
55
 57
56
54
 37
39
39
 74
74
72



284296JPMorgan Chase & Co./20182020 Form 10-K



























(Table continued from previous page)          
As of or for the year ended
December 31,
(in millions, except ratios)
 Corporate 
Reconciling Items(a)
 Total
 201820172016 20182017 2016 201820172016
Noninterest revenue $(263)$1,085
$938
 $(1,877)$(2,704)
(b) 
$(2,265) $53,970
$50,608
$50,486
Net interest income 135
55
(1,425) (628)(1,313) (1,209) 55,059
50,097
46,083
Total net revenue (128)1,140
(487) (2,505)(4,017) (3,474) 109,029
100,705
96,569
Provision for credit losses (4)—
(4) —
—
 —
 4,871
5,290
5,361
Noninterest expense 902
501
462
 —
—
 —
 63,394
59,515
56,672
Income/(loss) before income
tax expense/(benefit)
 (1,026)639
(945) (2,505)(4,017) (3,474) 40,764
35,900
34,536
Income tax expense/(benefit) 215
2,282
(241) (2,505)(4,017)
(b) 
(3,474) 8,290
11,459
9,803
Net income/(loss) $(1,241)$(1,643)$(704) $—
$—
 $—
 $32,474
$24,441
$24,733
Average equity $79,222
$80,350
$84,631
 $—
$—
 $—
 $229,222
$230,350
$224,631
Total assets 771,787
781,478
799,426
 NA
NA
 NA
 2,622,532
2,533,600
2,490,972
Return on equity NM
NM
NM
 NM
NM
 NM
 13%10%10%
Overhead ratio NM
NM
NM
 NM
NM
 NM
 58
59
59

(a)Segment results on a managed basis reflect revenue on a FTE basis with the corresponding income tax impact recorded within income tax expense/(benefit). These adjustments are eliminated in reconciling items to arrive at the Firm’s reported U.S. GAAP results.
(b)Included $375 million related to tax-oriented investments as a result of the enactment of the TCJA.



































(Table continued from previous page)
As of or for the year ended
December 31,
(in millions, except ratios)		Corporate
Reconciling Items(a)
Total(b)
202020192018202020192018202020192018
Noninterest revenue$1,199 $(114)$(263)$(2,968)$(2,534)$(1,877)$64,980 $58,154 $53,724 
Net interest income(2,375)1,325 135 (418)(531)(628)54,563 57,245 55,059 
Total net revenue(1,176)1,211 (128)(3,386)(3,065)(2,505)119,543 115,399 108,783 
Provision for credit losses66 (1)(4)0 0 0 17,480 5,585 4,871 
Noninterest expense1,373 1,067 902 0 0 0 66,656 65,269 63,148 
Income/(loss) before income
tax expense/(benefit)
(2,615)145 (1,026)(3,386)(3,065)(2,505)35,407 44,545 40,764 
Income tax expense/(benefit)(865)(966)215 (3,386)(3,065)(2,505)6,276 8,114 8,290 
Net income/(loss)$(1,750)$1,111 $(1,241)$0 $0 $0 $29,131 $36,431 $32,474 
Average equity$72,365 $68,407 $79,222 $0 $0 $0 $236,865 $232,907 $229,222 
Total assets1,359,831 837,618 771,787 NANANA3,386,071 2,687,379 2,622,532 
Return on equityNMNMNMNMNMNM12 %15 %13 %
Overhead ratioNMNMNMNMNMNM56 57 58 
(a)Segment results on a managed basis reflect revenue on a FTE basis with the corresponding income tax impact recorded within income tax expense/(benefit). These adjustments are eliminated in reconciling items to arrive at the Firm’s reported U.S. GAAP results.
(b)In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
JPMorgan Chase & Co./20182020 Form 10-K285297
Notes to consolidated financial statements

Note 3233 – Parent Company
The following tables present Parent Company-only financial statements. Effective January 1, 2018,
Statements of income and comprehensive income
Year ended December 31,
(in millions)		202020192018
Income
Dividends from subsidiaries and affiliates:
Bank and bank holding company$6,000 $26,000 $32,501 
Non-bank(a)
0 0 2 
Interest income from subsidiaries63 223 216 
Other income from subsidiaries:
Bank and bank holding company2,019 2,738 515 
Non-bank(569)197 (444)
Other income205 (1,731)888 
Total income7,718 27,427 33,678 
Expense
Interest expense/(income) to subsidiaries and affiliates(a)
(8,830)(5,303)2,291 
Other interest expense14,150 13,246 4,581 
Noninterest expense2,222 1,992 1,793 
Total expense7,542 9,935 8,665 
Income before income tax benefit and undistributed net income of subsidiaries176 17,492 25,013 
Income tax benefit1,324 2,033 1,838 
Equity in undistributed net income of subsidiaries27,631 16,906 5,623 
Net income$29,131 $36,431 $32,474 
Other comprehensive income, net6,417 3,076 (1,476)
Comprehensive income$35,548 $39,507 $30,998 
Balance sheets
December 31, (in millions)20202019
Assets
Cash and due from banks$54 $32 
Deposits with banking subsidiaries6,811 5,309 
Trading assets1,775 3,011 
Advances to, and receivables from, subsidiaries:
Bank and bank holding company27 2,358 
Non-bank86 84 
Investments (at equity) in subsidiaries and affiliates:
Bank and bank holding company508,602 471,207 
Non-bank1,011 1,044 
Other assets10,058 10,699 
Total assets$528,424 $493,744 
Liabilities and stockholders’ equity
Borrowings from, and payables to, subsidiaries and affiliates(a)
$25,150 $23,410 
Short-term borrowings924 2,616 
Other liabilities9,612 9,288 
Long-term debt(b)(c)
213,384 197,100 
Total liabilities(c)
249,070 232,414 
Total stockholders’ equity279,354 261,330 
Total liabilities and stockholders’ equity$528,424 $493,744 
Statements of cash flows
Year ended December 31,
(in millions)		202020192018
Operating activities
Net income$29,131 $36,431 $32,474 
Less: Net income of subsidiaries and affiliates(a)
33,631 42,906 38,125 
Parent company net loss(4,500)(6,475)(5,651)
Cash dividends from subsidiaries and affiliates(a)
6,000 26,000 32,501 
Other operating adjustments15,357 9,862 (4,400)
Net cash provided by/(used in) operating activities16,857 29,387 22,450 
Investing activities
Net change in:
Advances to and investments in subsidiaries and affiliates, net(2,663)(6)(e)8,036 
All other investing activities, net24 71 63 
Net cash provided by/(used in) investing activities(2,639)65 8,099 
Financing activities
Net change in:
Borrowings from subsidiaries and affiliates(a)
1,425 2,941 (2,273)
Short-term borrowings(20)(56)(678)
Proceeds from long-term borrowings37,312 25,569 25,845 
Payments of long-term borrowings(34,194)(21,226)(21,956)
Proceeds from issuance of preferred stock4,500 5,000 1,696 
Redemption of preferred stock(1,430)(4,075)(1,696)
Treasury stock repurchased(6,517)(24,001)(19,983)
Dividends paid(12,690)(12,343)(10,109)
All other financing activities, net(1,080)(1,290)(1,526)
Net cash used in financing activities(12,694)(29,481)(30,680)
Net decrease in cash and due from banks and deposits with banking subsidiaries1,524 (29)(131)
Cash and due from banks and deposits with banking subsidiaries at the beginning of the year5,341 5,370 5,501 
Cash and due from banks and deposits with banking subsidiaries at the end of the year$6,865 $5,341 $5,370 
Cash interest paid$5,445 $7,957 $6,911 
Cash income taxes paid, net(d)
5,366 3,910 1,782 
(a)Affiliates include trusts that issued guaranteed capital debt securities (“issuer trusts”).
(b)At December 31, 2020, long-term debt that contractually matures in 2021 through 2025 totaled $10.8 billion, $10.0 billion, $19.1 billion, $21.8 billion, and $13.5 billion, respectively.
(c)Refer to Notes 20 and 28 for information regarding the Parent Company’s guarantees of its subsidiaries’ obligations.
(d)Represents payments, net of refunds, made by the Parent Company adopted several new accounting standards. Certainto various taxing authorities and includes taxes paid on behalf of certain of its subsidiaries that are subsequently reimbursed. The reimbursements were $8.3 billion, $6.4 billion, and $1.2 billion for the years ended December 31, 2020, 2019, and 2018, respectively.
(e)As a result of the new accounting standards were applied retrospectivelymerger of Chase Bank USA, N.A. with and accordingly, prior period amounts were revised. For additional information, referinto JPMorgan Chase Bank, N.A., JPMorgan Chase Bank, N.A. distributed $13.5 billion to Note 1.the Parent company as a return of capital, which the Parent company contributed to the IHC.

Statements of income and comprehensive income(a)
Year ended December 31,
(in millions)
 2018
 2017
 2016
Income      
Dividends from subsidiaries and affiliates:      
Bank and bank holding company $32,501
 $13,000
 $10,000
Non-bank(b)
 2
 540
 3,873
Interest income from subsidiaries 216
 72
 794
Other interest income —
 41
 207
Other income from subsidiaries:      
Bank and bank holding company 515
 1,553
 852
Non-bank (444) (88) 1,165
Other income 888
 (623) (846)
Total income 33,678
 14,495
 16,045
Expense      
Interest expense to subsidiaries and affiliates(b)
 2,291
 400
 105
Other interest expense 4,581
 5,202
 4,413
Noninterest expense 1,793
 (1,897) 1,643
Total expense 8,665
 3,705
 6,161
Income before income tax benefit and undistributed net income of subsidiaries 25,013
 10,790
 9,884
Income tax benefit 1,838
 1,007
 876
Equity in undistributed net income of subsidiaries 5,623
 12,644
 13,973
Net income $32,474
 $24,441
 $24,733
Other comprehensive income, net (1,476) 1,056
 (1,521)
Comprehensive income $30,998
 $25,497
 $23,212
Balance sheets(a)
    
December 31, (in millions) 2018
 2017
Assets    
Cash and due from banks $55
 $163
Deposits with banking subsidiaries 5,315
 5,338
Trading assets 3,304
 4,773
Advances to, and receivables from, subsidiaries:    
Bank and bank holding company 3,334
 2,106
Non-bank 74
 82
Investments (at equity) in subsidiaries and affiliates:    
Bank and bank holding company 449,628
 451,713
Non-bank(b)
 1,077
 422
Other assets 10,478
 10,426
Total assets $473,265
 $475,023
Liabilities and stockholders’ equity    
Borrowings from, and payables to, subsidiaries and affiliates(b)
 $20,017
 $23,426
Short-term borrowings 2,672
 3,350
Other liabilities 8,821
 8,302
Long-term debt(c)(d)
 185,240
 184,252
Total liabilities(d)
 216,750
 219,330
Total stockholders’ equity 256,515
 255,693
Total liabilities and stockholders’ equity $473,265
 $475,023
Statements of cash flows(a)
  
Year ended December 31,
(in millions)
 2018
 2017
 2016
Operating activities      
Net income $32,474
 $24,441
 $24,733
Less: Net income of subsidiaries and affiliates(b)
 38,125
 26,185
 27,846
Parent company net loss (5,651) (1,744) (3,113)
Cash dividends from subsidiaries and affiliates(b)
 32,501
 13,540
 13,873
Other operating adjustments (4,400) 4,635
 (18,166)
Net cash provided by/(used in) operating activities 22,450
 16,431
 (7,406)
Investing activities      
Net change in:      
Proceeds from paydowns and maturities from available-for-sale securities
 Securities
 —
 —
 353
Other changes in loans, net —
 78
 1,793
Advances to and investments in subsidiaries and affiliates, net 8,036
 (280) (51,967)
All other investing activities, net 63
 49
 114
Net cash provided by/(used in) investing activities 8,099
 (153) (49,707)
Financing activities      
Net change in:      
Borrowings from subsidiaries and affiliates(b)
 (2,273) 13,862
 2,957
Short-term borrowings (678) (481) 109
Proceeds from long-term borrowings 25,845
 25,855
 41,498
Payments of long-term borrowings (21,956) (29,812) (29,298)
Proceeds from issuance of preferred stock 1,696
 1,258
 —
Redemption of preferred stock (1,696) (1,258) —
Treasury stock repurchased (19,983) (15,410) (9,082)
Dividends paid (10,109) (8,993) (8,476)
All other financing activities, net (1,526) (1,361) (905)
Net cash used in financing activities (30,680) (16,340) (3,197)
Net decrease in cash and due from banks and deposits with banking subsidiaries (131) (62) (60,310)
Cash and due from banks and deposits with banking subsidiaries at the beginning of the year 5,501
 5,563
 65,873
Cash and due from banks and deposits with banking subsidiaries at the end of the year $5,370
 $5,501
 $5,563
Cash interest paid $6,911
 $5,426
 $4,550
Cash income taxes paid, net(e)
 1,782
 1,775
 1,053
(a)In 2016, in connection with the Firm’s 2016 Resolution Submission, the Parent Company established the IHC, and contributed substantially all of its direct subsidiaries (totaling $55.4 billion) other than JPMorgan Chase Bank, N.A., as well as most of its other assets (totaling $160.5 billion) and intercompany indebtedness to the IHC. Total noncash assets contributed were $62.3 billion. In 2017, the Parent Company transferred $16.2 billion of noncash assets to the IHC to complete the contributions to the IHC.
(b)Affiliates include trusts that issued guaranteed capital debt securities (“issuer trusts”). For further discussion on these issuer trusts, refer to Note 19.
(c)At December 31, 2018, long-term debt that contractually matures in 2019 through 2023 totaled 13.1 billion, $22.1 billion, $20.3 billion, $12.8 billion, and $16.2 billion, respectively.
(d)For information regarding the Parent Company’s guarantees of its subsidiaries’ obligations, refer to Notes 19 and 27.
(e)Represents payments, net of refunds, made by the Parent Company to various taxing authorities and includes taxes paid on behalf of certain of its subsidiaries that are subsequently reimbursed. The reimbursements were $1.2 billion, $4.1 billion, and $3.0 billion for the years ended December 31, 2018, 2017, and 2016, respectively.

286298JPMorgan Chase & Co./20182020 Form 10-K
Supplementary information

Selected quarterly financial data (unaudited)
As of or for the period ended2018 2017 As of or for the period ended20202019
(in millions, except per share, ratio, headcount data and where otherwise noted)4th quarter3rd quarter2nd quarter1st quarter 4th quarter 3rd quarter2nd quarter1st quarter (in millions, except per share, ratio, headcount data and where otherwise noted)4th quarter3rd quarter2nd quarter1st quarter4th quarter3rd quarter2nd quarter1st quarter
Selected income statement data      Selected income statement data
Total net revenue$26,109
$27,260
$27,753
$27,907
 $24,457
 $25,578
$25,731
$24,939
 
Total noninterest expense15,720
15,623
15,971
16,080
 14,895
 14,570
14,767
15,283
 
Pre-provision profit10,389
11,637
11,782
11,827
 9,562
 11,008
10,964
9,656
 
Total net revenue(a)
Total net revenue(a)
$29,224 $29,147 $32,980 $28,192 $28,285 $29,291 $28,747 $29,076 
Total noninterest expense(a)
Total noninterest expense(a)
16,048 16,875 16,942 16,791 16,293 16,372 16,256 16,348 
Pre-provision profit(b)
Pre-provision profit(b)
13,176 12,272 16,038 11,401 11,992 12,919 12,491 12,728 
Provision for credit losses1,548
948
1,210
1,165
 1,308
 1,452
1,215
1,315
 Provision for credit losses(1,889)611 10,473 8,285 1,427 1,514 1,149 1,495 
Income before income tax expense8,841
10,689
10,572
10,662
 8,254
 9,556
9,749
8,341
 Income before income tax expense15,065 11,661 5,565 3,116 10,565 11,405 11,342 11,233 
Income tax expense1,775
2,309
2,256
1,950
 4,022
 2,824
2,720
1,893
 Income tax expense2,929 2,218 878 251 2,045 2,325 1,690 2,054 
Net income$7,066
$8,380
$8,316
$8,712
 $4,232
(g) 
$6,732
$7,029
$6,448
 Net income$12,136 $9,443 $4,687 $2,865 $8,520 $9,080 $9,652 $9,179 
Earnings per share data      Earnings per share data
Net income: Basic$1.99
$2.35
$2.31
$2.38
 $1.08
 $1.77
$1.83
$1.66
 Net income: Basic$3.80 $2.93 $1.39 $0.79 $2.58 $2.69 $2.83 $2.65 
Diluted1.98
2.34
2.29
2.37
 1.07
 1.76
1.82
1.65
  Diluted3.79 2.92 1.38 0.78 2.57 2.68 2.82 2.65 
Average shares: Basic3,335.8
3,376.1
3,415.2
3,458.3
 3,489.7
 3,534.7
3,574.1
3,601.7
 Average shares: Basic3,079.7 3,077.8 3,076.3 3,095.8 3,140.7 3,198.5 3,250.6 3,298.0 
Diluted3,347.3
3,394.3
3,434.7
3,479.5
 3,512.2
 3,559.6
3,599.0
3,630.4
 Diluted3,085.1 3,082.8 3,081.0 3,100.7 3,148.5 3,207.2 3,259.7 3,308.2 
Market and per common share data      Market and per common share data
Market capitalization$319,780
$375,239
$350,204
$374,423
 $366,301
 $331,393
$321,633
$312,078
 Market capitalization$387,492 $293,451 $286,658 $274,323 $429,913 $369,133 $357,479 $328,387 
Common shares at period-end3,275.8
3,325.4
3,360.9
3,404.8
 3,425.3
 3,469.7
3,519.0
3,552.8
 Common shares at period-end3,049.4 3,048.2 3,047.6 3,047.0 3,084.0 3,136.5 3,197.5 3,244.0 
Book value per share70.35
69.52
68.85
67.59
 67.04
 66.95
66.05
64.68
 Book value per share81.75 79.08 76.91 75.88 75.98 75.24 73.88 71.78 
TBVPS(a)
56.33
55.68
55.14
54.05
 53.56
 54.03
53.29
52.04
 
TBVPS(b)
TBVPS(b)
66.11 63.93 61.76 60.71 60.98 60.48 59.52 57.62 
Cash dividends declared per share0.80
0.80
0.56
0.56
 0.56
 0.56
0.50
0.50
 Cash dividends declared per share0.90 0.90 0.90 0.90 0.90 0.90 0.80 0.80 
Selected ratios and metrics      Selected ratios and metrics
ROE(b)
12%14%14%15% 7% 11%12%11% 
ROTCE(a)(b)
14
17
17
19
 8
 13
14
13
 
ROE(c)
ROE(c)
19 %15 %7 %4 %14 %15 %16 %16 %
ROTCE(b)(c)
ROTCE(b)(c)
24 19 9 5 17 18 20 19 
ROA(b)
1.06
1.28
1.28
1.37
 0.66
 1.04
1.10
1.03
 
ROA(b)
1.42 1.14 0.58 0.40 1.22 1.30 1.41 1.39 
Overhead ratio60
57
58
58
 61
 57
57
61
 Overhead ratio55 58 51 60 58 56 57 56 
Loans-to-deposits ratio67
65
65
63
 64
 63
63
63
 
LCR (average)(c)
113
115
115
115
 119
 120
115
N/A
 
Loans-to-deposits ratio(d)
Loans-to-deposits ratio(d)
47 49 52 57 64 64 65 66 
Firm LCR (average)Firm LCR (average)110 114 117 114 116 115 113 111 
JPMorgan Chase Bank, N.A. LCR (average)JPMorgan Chase Bank, N.A. LCR (average)160 157 140 117 116 112 112 109 
CET1 capital ratio(d)(e)
12.0
12.0
12.0
11.8
 12.2
 12.5
12.5
12.4
 13.1 13.1 12.4 11.5 12.4 12.3 12.2 12.1 
Tier 1 capital ratio(d)(e)
13.7
13.6
13.6
13.5
 13.9
 14.1
14.2
14.1
 15.0 15.0 14.3 13.3 14.1 14.1 14.0 13.8 
Total capital ratio(d)(e)
15.5
15.4
15.5
15.3
 15.9
 16.1
16.0
15.6
 17.3 17.3 16.7 15.5 16.0 15.9 15.8 15.7 
Tier 1 leverage ratio(d)(e)
8.1
8.2
8.2
8.2
 8.3
 8.4
8.5
8.4
 7.0 7.0 6.9 7.5 7.9 7.9 8.0 8.1 
SLR(e)
6.4
6.5
6.5
6.5
 6.5
 6.6
6.7
6.6
 
SLR(e)
6.9 7.0 6.8 6.0 6.3 6.3 6.4 6.4 
Selected balance sheet data (period-end)Selected balance sheet data (period-end)      Selected balance sheet data (period-end)
Trading assets(d)$413,714
$419,827
$418,799
$412,282
 $381,844
 $420,418
$407,064
$402,513
 $503,126 $505,822 $491,716 $510,923 $369,687 $457,274 $485,567 $495,021 
Investment Securities261,828
231,398
233,015
238,188
 $249,958
 263,288
263,458
281,850
 Investment Securities589,999 531,136 558,791 471,144 398,239 394,251 307,264 267,365 
Loans(d)984,554
954,318
948,414
934,424
 $930,697
 913,761
908,767
895,974
 1,012,853 989,740 1,009,382 1,049,610 997,620 980,019 990,775 990,515 
Core loans931,856
899,006
889,433
870,536
 863,683
 843,432
834,935
812,119
 
Average core loans907,271
894,279
877,640
861,089
 850,166
 837,522
824,583
805,382
 
Total assets2,622,532
2,615,183
2,590,050
2,609,785
 2,533,600
 2,563,074
2,563,174
2,546,290
 Total assets3,386,071 3,246,076 3,213,616 3,139,431 2,687,379 2,764,661 2,727,379 2,737,188 
Deposits1,470,666
1,458,762
1,452,122
1,486,961
 1,443,982
 1,439,027
1,439,473
1,422,999
 Deposits2,144,257 2,001,416 1,931,029 1,836,009 1,562,431 1,525,261 1,524,361 1,493,441 
Long-term debt282,031
270,124
273,114
274,449
 284,080
 288,582
292,973
289,492
 Long-term debt281,685 279,175 317,003 299,344 291,498 296,472 288,869 290,893 
Common stockholders’ equity230,447
231,192
231,390
230,133
 229,625
 232,314
232,415
229,795
 Common stockholders’ equity249,291 241,050 234,403 231,199 234,337 235,985 236,222 232,844 
Total stockholders’ equity256,515
258,956
257,458
256,201
 255,693
 258,382
258,483
255,863
 Total stockholders’ equity279,354 271,113 264,466 261,262 261,330 264,348 263,215 259,837 
Headcount256,105
255,313
252,942
253,707
 252,539
 251,503
249,257
246,345
 Headcount255,351 256,358 256,710 256,720 256,981 257,444 254,983 255,998 
Credit quality metrics      Credit quality metrics
Allowance for credit losses$14,500
$14,225
$14,367
$14,482
 $14,672
 $14,648
$14,480
$14,490
 
Allowance for loan losses and lending- related commitmentsAllowance for loan losses and lending- related commitments$30,737 $33,637 $34,301 $25,391 $14,314 $14,400 $14,295 $14,591 
Allowance for loan losses to total retained loans1.39%1.39%1.41%1.44% 1.47% 1.49%1.49%1.52% Allowance for loan losses to total retained loans2.95 %3.26 %3.27 %2.32 %1.39 %1.42 %1.39 %1.43 %
Allowance for loan losses to retained loans excluding purchased credit-impaired loans(f)
1.23
1.23
1.22
1.25
 1.27
 1.29
1.28
1.31
 
Nonperforming assets$5,190
$5,034
$5,767
$6,364
 $6,426
 $6,154
$6,432
$6,826
 
Nonperforming assets(d)
Nonperforming assets(d)
$10,906 $11,462 $9,715 $7,062 $5,054 $5,993 $5,260 $5,616 
Net charge-offs1,236
1,033
1,252
1,335
 1,264
 1,265
1,204
1,654
(h) 
Net charge-offs1,050 1,180 1,560 1,469 1,494 1,371 1,403 1,361 
Net charge-off rate0.52%0.43%0.54%0.59% 0.55% 0.56%0.54%0.76%
(h) 
Net charge-off rate0.44 %0.49 %0.64 %0.62 %0.63 %0.58 %0.60 %0.58 %
Effective January 1, 2018,2020, the Firm adopted several newthe Financial Instruments – Credit Losses (“CECL”) accounting standards. Certainguidance. Refer to Note 1 for further information.
(a)In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
(b)Pre-provision profit, TBVPS and ROTCE are each non-GAAP financial measures. Tangible common equity (“TCE”) is also a non-GAAP financial measure. Refer to Explanation and Reconciliation of the new accounting standards were applied retrospectivelyFirm’s Use of Non-GAAP Financial Measures on pages 62–64 for a further discussion of these measures.
(c)Quarterly ratios are based on annualized amounts.
(d)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans and accordingly, prior periodother assets. Prior-period amounts were revised. Forhave been revised to conform with the current presentation.
(e)The capital metrics reflect the relief provided by the Federal Reserve Board in response to the COVID-19 pandemic, including the CECL capital transition provisions that became effective in the first quarter of 2020. The SLR reflects the temporary exclusions of U.S. Treasury securities and deposits at Federal Reserve Banks that became effective in the second quarter of 2020. Refer to Regulatory Developments Relating to the COVID-19 Pandemic on pages 52-53 and Capital Risk Management on pages 91-101 for additional information, refer to Note 1.information.
(a)TBVPS and ROTCE are non-GAAP financial measures. For further discussion of these measures, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 57-59.
(b)Quarterly ratios are based upon annualized amounts.
(c)The percentage represents the Firm’s reported average LCR per the U.S. LCR public disclosure requirements, which became effective April 1, 2017.    
(d)Ratios presented are calculated under the Basel III Transitional rules and for the capital ratios represent the lower of the Standardized or Advanced approach. As of December 31, 2018, and September 30, 2018, the Firm’s capital ratios were equivalent whether calculated on a transitional or fully phased-in basis. Refer to Capital Risk Management on pages 85-94 for additional information on Basel III.
(e)Effective January 1, 2018, the SLR was fully phased-in under Basel III. The SLR is defined as Tier 1 capital divided by the Firm’s total leverage exposure. Ratios prior to March 31, 2018 were

calculated under the Basel III Transitional rules.
(f)Excludes the impact of residential real estate PCI loans, a non-GAAP financial measure. For further discussion of these measures, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 57-59, and the Allowance for credit losses on pages 120–122.
(g)The Firm’s results for the three months ended December 31, 2017, included a $2.4 billion decrease to net income as a result of the enactment of the TCJA. For additional information related to the impact of the TCJA, refer to Note 24.
(h)Excluding net charge-offs of $467 million related to the student loan portfolio sale, the net charge-off rates for the three months ended March 31, 2017 would have been 0.54%.

JPMorgan Chase & Co./20182020 Form 10-K287299
Distribution of assets, liabilities and stockholders’ equity; interest rates and interest differentials

Consolidated average balance sheet,sheets, interest and rates
Provided below is a summary of JPMorgan Chase’s consolidated average balances, interest rates and interest differentialsrates on a taxable-equivalent basis for the years 20162018 through 2018.2020. Income computed on a taxable-equivalent basis is the income reported in the Consolidated statements of income, adjusted to present interest income
and average rates earned on
assets exempt from income taxes (i.e., federal taxes) on a basis comparable with other taxable investments. The incremental tax rate used for calculating the taxable-equivalent adjustment was approximately 24%, 37% in 2020, 2019 and 38% in 2018, 2017 and 2016, respectively.2018.
(Table continued on next page)
(Unaudited)2020
Year ended December 31,
(Taxable-equivalent interest and rates; in millions, except rates)		Average
balance
Interest(h)
Rate
Assets
Deposits with banks$444,058 $749 0.17 %
Federal funds sold and securities purchased under resale agreements275,926 2,436 0.88 
Securities borrowed143,472 (302)(0.21)(j)
Trading assets – debt instruments(a)
322,936 7,869 2.44 
  Taxable securities476,650 7,843 1.65 
  Non-taxable securities(b)
33,287 1,437 4.32 
Total investment securities509,937 9,280 1.82 (k)
Loans(a)
1,004,597 43,886 (i)4.37 
All other interest-earning assets(a)(c)
78,784 1,023 1.30 
Total interest-earning assets2,779,710 64,941 2.34 
Allowance for loan losses(25,775)
Cash and due from banks22,241 
Trading assets – equity and other instruments(a)
118,055 
Trading assets – derivative receivables76,572 
Goodwill, MSRs and other intangible assets51,934 
All other noninterest-earning assets(a)
180,411 
Total assets$3,203,148 
Liabilities
Interest-bearing deposits$1,389,224 $2,357 0.17 %
Federal funds purchased and securities loaned or sold under repurchase agreements255,421 1,058 0.41 
Short-term borrowings(d)
38,853 372 0.96 
Trading liabilities – debt and all other interest-bearing liabilities(e)(f)
205,255 195 0.10 (j)
Beneficial interests issued by consolidated VIEs19,216 214 1.12 
Long-term debt254,400 5,764 2.27 
Total interest-bearing liabilities2,162,369 9,960 0.46 
Noninterest-bearing deposits517,527 
Trading liabilities – equity and other instruments(f)
32,628 
Trading liabilities – derivative payables61,593 
All other liabilities, including the allowance for lending-related commitments162,267 
Total liabilities2,936,384 
Stockholders’ equity
Preferred stock29,899 
Common stockholders’ equity236,865 
Total stockholders’ equity266,764 (g)
Total liabilities and stockholders’ equity$3,203,148 
Interest rate spread1.88 %
Net interest income and net yield on interest-earning assets$54,981 1.98 
(Table continued on next page)      
(Unaudited)2018
Year ended December 31,
(Taxable-equivalent interest and rates; in millions, except rates)		Average
balance		 
Interest(g)
 Average
rate
Assets      
Deposits with banks$405,514
 $5,907
 1.46% 
Federal funds sold and securities purchased under resale agreements217,150
 3,819
 1.76
 
Securities borrowed115,082
 728

0.63
 
Trading assets – debt instruments261,051
 8,763
 3.36
 
Taxable securities194,232
 5,653
 2.91
 
Non-taxable securities(a)
42,456
 1,987
 4.68
 
Total investment securities236,688
 7,640
 3.23
(i) 
Loans944,885
 47,796
(h) 
5.06
 
All other interest-earning assets(b)
48,818
 3,417
 7.00
 
Total interest-earning assets2,229,188
 78,070
 3.50
 
Allowance for loan losses(13,269)     
Cash and due from banks21,694
     
Trading assets – equity instruments101,872
     
Trading assets – derivative receivables60,734
     
Goodwill, MSRs and other intangible assets54,669
     
Other assets154,010
     
Total assets$2,608,898
     
Liabilities      
Interest-bearing deposits$1,060,605
 $5,973
 0.56% 
Federal funds purchased and securities loaned or sold under repurchase agreements189,282
 3,066
 1.62
 
Short-term borrowings(c)
63,523
 1,144
 1.80
 
Trading liabilities – debt and all other interest-bearing liabilities(d)(e)
178,161
 3,729
 2.09
 
Beneficial interests issued by consolidated VIEs21,079
 493
 2.34
 
Long-term debt276,414
 7,978
 2.89
 
Total interest-bearing liabilities1,789,064
 22,383
 1.25
 
Noninterest-bearing deposits395,856
     
Trading liabilities – equity instruments(e)
34,295
     
Trading liabilities – derivative payables43,075
     
All other liabilities, including the allowance for lending-related commitments91,137
     
Total liabilities2,353,427
     
Stockholders’ equity      
Preferred stock26,249
     
Common stockholders’ equity229,222
     
Total stockholders’ equity255,471
(f) 
    
Total liabilities and stockholders’ equity$2,608,898
     
Interest rate spread    2.25% 
Net interest income and net yield on interest-earning assets  $55,687
 2.50
 
Effective January 1, 2018,(a)In the third quarter of 2020, the Firm adopted several new accounting standards. Certain ofreclassified certain fair value option elected lending-related positions from trading assets to loans and other assets. Prior-period amounts have been revised to conform with the new accounting standards were applied retrospectivelycurrent presentation.
(b)Represents securities that are tax-exempt for U.S. federal income tax purposes.
(c)Includes brokerage-related held-for-investment customer receivables, which are classified in accrued interest and accordingly, prior period amounts were revised. For additional information, refer to Note 1.
(a)Represents securities that are tax-exempt for U.S. federal income tax purposes.
(b)Includes held-for-investment margin loans, which are classified in accrued interest and accounts receivable, and all other interest-earning assets, which are classified in other assets on the Consolidated balance sheets.
(c)Includes commercial paper.
(d)Other interest-bearing liabilities include brokerage customer payables.
(e)The combined balance of trading liabilities – debt and equity instruments were $107.0 billion, $90.7 billion and $92.8 billion for the years ended December 31, 2018, 2017 and 2016, respectively.
(f)The ratio of average stockholders’ equity to average assets was 9.8% for 2018, 10.0% for 2017, and 10.2% for 2016. The return on average stockholders’ equity, based on net income, was 12.7% for 2018, 9.5% for 2017, and 9.9% for 2016.
(g)Interest includes the effect of related hedging derivatives. Taxable-equivalent amounts are used where applicable.
(h)Fees and commissions on loans included in loan interest amounted to $1.2 billion in 2018, $1.0 billion in 2017, and $808 million in 2016.
(i)The annualized rate for securities based on amortized cost was 3.25% in 2018, 3.13% in 2017, and 2.99% in 2016, and does not give effect to changes in fair value that are reflected in AOCI.
(j)Negative interest income and yield is related to client-driven demand for certain securities combined with the impact of low interest rates; this is matched book activity and the negative interest expense on the corresponding securities loaned is recognized in interest expense and reported within trading liabilities – debt and all other interest-bearing liabilities.

accounts receivable, and all other interest-earning assets, which are classified in other assets on the Consolidated Balance Sheets.
(d)Includes commercial paper.
288JPMorgan Chase & Co./2018 Form 10-K

(e)All other interest-bearing liabilities include brokerage-related customer payables.
Within the Consolidated average balance sheets, interest and rates summary, the principal amounts of nonaccrual loans have been included in the average loan balances used to determine the average interest rate earned on loans. ForRefer to Note 12 for additional information on nonaccrual loans, including interest accrued, refer to Note 12.accrued.




(Table continued from previous page)          
2017 2016 
Average
balance
 
Interest(g)
 
Average
rate
 
Average
balance
 
Interest(g)
 
Average
rate
 
             
$439,663
 $4,238
 0.96%  $393,599
 $1,879
 0.48% 
191,820
 2,327
 1.21
  205,367
 2,265
 1.10
 
95,324
 (37)
(j) 
(0.04)  102,964
 (332)
(j) 
(0.32) 
237,206
 7,714
 3.25
  215,565
 7,373
 3.42
 
223,592
 5,534
 2.48
  235,211
 5,538
 2.35
 
45,086
 2,769
 6.14
  44,176
 2,662
 6.03
 
268,678
 8,303
 3.09
(i) 
 279,387
 8,200
 2.94
(i) 
906,397
 41,296
(h) 
4.56
  866,378
 36,866
(h) 
4.26
 
41,504
 1,844
 4.44
  38,344
 859
 2.24
 
2,180,592
 65,685
 3.01
  2,101,604
 57,110
 2.72
 
(13,453)      (13,965)     
20,432
      18,705
     
115,913
      95,528
     
59,588
      70,897
     
53,999
      53,752
     
138,991
      135,098
     
$2,556,062
      $2,461,619
     
             
$1,013,221
 $2,857
 0.28%  $925,270
 $1,356
 0.15% 
187,386
 1,611
 0.86
  178,720
 1,089
 0.61
 
46,532
 481
 1.03
  36,140
 203
 0.56
 
171,814
 2,070
 1.21
  177,765
 1,102
 0.62
 
32,457
 503
 1.55
  40,180
 504
 1.25
 
291,489
 6,753
 2.32
  295,573
 5,564
 1.88
 
1,742,899
 14,275
 0.82
  1,653,648
 9,818
 0.59
 
404,165
      402,698
     
21,022
      20,737
     
44,122
      55,927
     
87,292
      77,910
     
2,299,500
      2,210,920
     
             
26,212
      26,068
     
230,350
      224,631
     
256,562
(f) 
     250,699
(f) 
    
$2,556,062
      $2,461,619
     
    2.19%      2.13% 
  $51,410
 2.36
    $47,292
 2.25
 

300JPMorgan Chase & Co./20182020 Form 10-K289








(Table continued from previous page)
20192018
Average
balance
Interest(h)
RateAverage
balance
Interest(h)
Rate
$280,004 $3,887 1.39 %$405,514 $5,907 1.46 %
275,429 6,146 2.23 217,150 3,819 1.76 
131,291 1,574 1.20 115,082 913 0.79 
294,958 9,189 3.12 208,266 7,206 3.46 
284,127 7,962 2.80 194,232 5,653 2.91 
35,748 1,655 4.63 42,456 1,987 4.68 
319,875 9,617 3.01 (k)236,688 7,640 3.23 (k)
989,943 52,012 (i)5.25 977,406 49,208 (i)5.03 
53,779 2,146 3.99 52,551 2,035 3.87 
2,345,279 84,571 3.61 2,212,657 76,728 3.47 
(13,331)(13,269)
20,645 21,694 
114,323 118,152 
53,786 60,734 
53,683 54,669 
167,456 154,261 
$2,741,841 $2,608,898 
$1,115,848 $8,957 0.80 %$1,045,037 $5,973 0.57 %
227,994 4,630 2.03 189,282 3,066 1.62 
52,426 1,248 2.38 54,993 1,144 2.08 
182,105 2,585 1.42 177,788 2,387 1.34 
22,501 568 2.52 21,079 493 2.34 
247,968 8,807 3.55 243,246 7,978 3.28 
1,848,842 26,795 1.45 1,731,425 21,041 1.22 
407,219 411,424 
31,085 34,667 
42,560 43,075 
151,717 132,836 
2,481,423 2,353,427 
27,511 26,249 
232,907 229,222 
260,418 (g)255,471 (g)
$2,741,841 $2,608,898 
2.16 %2.25 %
$57,776 2.46 $55,687 2.52 
(f) The combined balance of trading liabilities – debt and equity instruments was $106.5 billion, $101.0 billion and $107.0 billion for the years ended December 31, 2020, 2019 and 2018, respectively.
(g) The ratio of average stockholders’ equity to average assets was 8.3%, 9.5% and 9.8% for the years ended December 31, 2020, 2019 and 2018, respectively. The return on average stockholders’ equity, based on net income, was 10.9%, 14.0% and 12.7% for the years ended December 31, 2020, 2019 and 2018, respectively.
(h) Interest includes the effect of related hedging derivatives. Taxable-equivalent amounts are used where applicable.
(i) Fees and commissions on loans included in loan interest amounted to $1.0 billion for the year ended December 31, 2020, and $1.2 billion each for the years ended December 31, 2019 and 2018.
(j) Negative interest income and yield are related to the impact of current interest rates combined with the fees paid on client-driven securities borrowed balances. The negative interest expense related to prime brokerage customer payables is recognized in interest expense and reported within trading liabilities - debt and all other interest-bearing liabilities.
(k) The annualized rate for securities based on amortized cost was 1.85%, 3.05% and 3.25% for the years ended December 31, 2020, 2019 and 2018, respectively, and does not give effect to changes in fair value that are reflected in AOCI.

JPMorgan Chase & Co./2020 Form 10-K301
Interest rates and interest differential analysis of net interest income – U.S. and non-U.S.


Presented below is a summary of interest rates and interest differentialsrates segregated between U.S. and non-U.S. operations for the years 20162018 through 2018.2020. The segregation of U.S. and non-U.S. components is based on
the location of the office recording the transaction. Intercompany funding generally consists of dollar-denominated deposits originated in various locations that are centrally managed by Treasury and CIO.
(Table continued on next page)
2020
(Unaudited)
Year ended December 31,
(Taxable-equivalent interest and rates; in millions, except rates)		Average balanceInterestRate
Interest-earning assets
Deposits with banks:
U.S.$294,669 $768 0.26 %
Non-U.S.149,389 (19)(0.01)
Federal funds sold and securities purchased under resale agreements:
U.S.141,409 1,341 0.95 
Non-U.S.134,517 1,095 0.81 
Securities borrowed:(a)
U.S.100,026 (305)(0.30)
Non-U.S.43,446 3 0.01 
Trading assets – debt instruments: (b)
U.S.216,025 5,056 2.34 
Non-U.S.106,911 2,813 2.63 
Investment securities:
U.S.475,832 8,703 1.83 
Non-U.S.34,105 577 1.69 
Loans:(b)
U.S.909,850 41,708 4.58 
Non-U.S.94,747 2,178 2.30 
All other interest-earning assets, predominantly U.S.(b)
78,784 1,023 1.30 
Total interest-earning assets2,779,710 64,941 2.34 
Interest-bearing liabilities
Interest-bearing deposits:
U.S.1,068,857 2,288 0.21 
Non-U.S.320,367 69 0.02 
Federal funds purchased and securities loaned or sold under repurchase agreements:
U.S.204,958 863 0.42 
Non-U.S.50,463 195 0.39 
Trading liabilities – debt, short-term and all other interest-bearing liabilities:(a)(c)
U.S.151,120 (30)(0.02)
Non-U.S.92,988 597 0.64 
Beneficial interests issued by consolidated VIEs, predominantly U.S.19,216 214 1.12 
Long-term debt:
U.S.247,623 5,704 2.30 
Non-U.S.6,777 60 0.89 
Intercompany funding:
U.S.(46,327)(1,254)— 
Non-U.S.46,327 1,254 — 
Total interest-bearing liabilities2,162,369 9,960 0.46 
Noninterest-bearing liabilities(d)
617,341 
Total investable funds$2,779,710 $9,960 0.36 %
Net interest income and net yield:$54,981 1.98 %
U.S.49,242 2.25 
Non-U.S.5,739 0.97 
Percentage of total assets and liabilities attributable to non-U.S. operations:
Assets23.5 
Liabilities20.9 
(a)Negative interest income and yield are related to the impact of current interest rates combined with the fees paid on client-driven securities borrowed balances. The negative interest expense related to prime brokerage customer payables is recognized in interest expense and reported within trading liabilities - debt and all other interest-bearing liabilities.
(Table continued on next page)    
 2018
(Unaudited)
Year ended December 31,
(Taxable-equivalent interest and rates; in millions, except rates)		Average balanceInterest Average rate
Interest-earning assets    
Deposits with banks:    
U.S.$305,117
$5,703
 1.87%
Non-U.S.100,397
204
 0.20
Federal funds sold and securities purchased under resale agreements:    
U.S.102,144
2,427
 2.38
Non-U.S.115,006
1,392
 1.21
Securities borrowed:    
U.S.77,027
640
 0.83
Non-U.S.38,055
88
 0.23
Trading assets – debt instruments:    
U.S.141,134
5,068
 3.59
Non-U.S.119,917
3,695
 3.08
Investment securities:    
U.S.200,883
6,943
 3.46
Non-U.S.35,805
697
 1.95
Loans:    
U.S.864,149
45,395
 5.25
Non-U.S.80,736
2,401
 2.97
All other interest-earning assets, predominantly U.S.48,818
3,417
 7.00
Total interest-earning assets2,229,188
78,070
 3.50
Interest-bearing liabilities    
Interest-bearing deposits:    
U.S.816,305
4,562
 0.56
Non-U.S.244,300
1,411
 0.58
Federal funds purchased and securities loaned or sold under repurchase agreements:    
U.S.117,754
2,562
 2.18
Non-U.S.71,528
504
 0.70
Trading liabilities – debt, short-term and all other interest-bearing liabilities:(a)
    
U.S.150,694
3,389
 2.25
Non-U.S.90,990
1,484
 1.63
Beneficial interests issued by consolidated VIEs, predominantly U.S.21,079
493
 2.34
Long-term debt:    
U.S.256,220
7,954
 3.10
Non-U.S.20,194
24
 0.12
Intercompany funding:    
U.S.(51,933)(746) —
Non-U.S.51,933
746
 —
Total interest-bearing liabilities1,789,064
22,383
 1.25
Noninterest-bearing liabilities(b)
440,124
   
Total investable funds$2,229,188
$22,383
 1.00%
Net interest income and net yield: $55,687
 2.50%
U.S. 50,236
 2.91
Non-U.S. 5,451
 1.09
Percentage of total assets and liabilities attributable to non-U.S. operations:    
Assets   24.7
Liabilities   22.3
Effective January 1, 2018,(b)In the third quarter of 2020, the Firm adopted several new accounting standards. Certainreclassified certain fair value option elected lending-related positions from trading assets to loans and other assets. Prior-period amounts have been revised to conform with the current presentation.
(c)Includes commercial paper.
(d)Represents the amount of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.
(a)Includes commercial paper.
(b)Represents the amount of noninterest-bearing liabilities funding interest-earning assets.
(c)Negative interest income and yield is related to client-driven demand for certain securities combined with the impact of low interest rates; this is matched book activity and the negative interest expense on the corresponding securities loaned is recognized in interest expense and reported within trading liabilities – debt, short-term and all other interest-bearing liabilities.

noninterest-bearing liabilities funding interest-earning assets.
290302JPMorgan Chase & Co./20182020 Form 10-K


For further information, referRefer to the “Net interest income” discussion in Consolidated Results of Operations on pages 48–51.54-56 for further information.



(Table continued from previous page)
20192018
Average balanceInterestRateAverage balanceInterestRate
$165,066 $3,588 2.17 %$305,117 $5,703 1.87 %
114,938 299 0.26 100,397 204 0.20 
150,205 4,068 2.71 102,144 2,427 2.38 
125,224 2,078 1.66 115,006 1,392 1.21 
92,625 1,423 1.54 77,027 825 1.07 
38,666 151 0.39 38,055 88 0.23 
 
200,811 6,157 3.07 121,967 4,229 3.47 
94,147 3,032 3.22 86,299 2,977 3.45 
287,961 8,963 3.11 200,883 6,943 3.46 
31,914 654 2.05 35,805 697 1.95 
898,570 49,058 5.46 882,314 46,227 5.24 
91,373 2,954 3.23 95,092 2,981 3.13 
53,779 2,146 3.99 52,551 2,035 3.87 
2,345,279 84,571 3.61 2,212,657 76,728 3.47 
 
 
850,493 6,896 0.81 802,786 4,562 0.57 
265,355 2,061 0.78 242,251 1,411 0.58 
164,284 3,989 2.43 117,754 2,562 2.18 
63,710 641 1.01 71,528 504 0.70 
 
147,247 2,574 1.75 147,512 2,225 1.51 
87,284 1,259 1.44 85,269 1,306 1.53 
22,501 568 2.52 21,079 493 2.34 
241,914 8,766 3.62 239,718 7,954 3.32 
6,054 41 0.68 3,528 24 0.68 
 
(42,947)(1,414)— (51,933)(746)— 
42,947 1,414 — 51,933 746 — 
1,848,842 26,795 1.45 1,731,425 21,041 1.22 
496,437 481,232 
$2,345,279 $26,795 1.14 %$2,212,657 $21,041 0.95 %
$57,776 2.46 %$55,687 2.52 %
52,217 2.86 50,236 2.95 
5,559 1.07 5,451 1.05 
24.5 24.7 
22.1 22.3 
(Table continued from previous page)        
2017 2016 
Average balanceInterest Average rate  Average balanceInterest Average rate 
           
           
$366,814
$4,093
 1.12 %  $329,498
$1,707
 0.52 % 
72,849
145
 0.20
  64,101
172
 0.27
 
           
90,879
1,360
 1.50
  112,901
1,166
 1.03
 
100,941
967
 0.96
  92,466
1,099
 1.19
 
           
68,110
(66)
(c) 
(0.10)  73,297
(341)
(c) 
(0.46) 
27,214
29
 0.11
  29,667
9
 0.03
 
 
          
128,293
4,186
 3.26
  116,211
3,825
 3.29
 
108,913
3,528
 3.24
  99,354
3,548
 3.57
 
           
223,140
7,490
 3.36
  216,726
6,971
 3.22
 
45,538
813
 1.79
  62,661
1,229
 1.97
 
           
832,608
39,439
 4.74
  788,213
35,110
 4.45
 
73,789
1,857
 2.52
  78,165
1,756
 2.25
 
41,504
1,844
 4.44
  38,344
859
 2.24
 
2,180,592
65,685
 3.01
  2,101,604
57,110
 2.72
 
 
          
 
          
776,049
2,223
 0.29
  703,738
1,029
 0.15
 
237,172
634
 0.27
  221,532
327
 0.15
 
           
115,574
1,349
 1.17
  121,945
773
 0.63
 
71,812
262
 0.37
  56,775
316
 0.56
 
 
          
138,470
1,271
 0.92
  133,788
86
 0.06
 
79,876
1,280
 1.60
  80,117
1,219
 1.52
 
32,457
503
 1.55
  40,180
504
 1.25
 
           
276,750
6,745
 2.44
  283,169
5,533
 1.95
 
14,739
8
 0.05
  12,404
31
 0.25
 
 
          
(2,874)(25) —
  (20,405)10
 —
 
2,874
25
 —
  20,405
(10) —
 
1,742,899
14,275
 0.82
  1,653,648
9,818
 0.59
 
437,693
     447,956
    
$2,180,592
$14,275
 0.65 %  $2,101,604
$9,818
 0.47 % 
 $51,410
 2.36 %   $47,292
 2.25 % 
 46,059
 2.68
   40,705
 2.49
 
 5,351
 1.15
   6,587
 1.42
 
           
   22.5
     23.1
 
   21.1
     20.7
 


JPMorgan Chase & Co./20182020 Form 10-K291303
Changes in net interest income, volume and rate analysis


The table below presents an attribution of net interest income between volume and rate. The attribution between volume and rate is calculated using annual average balances for each category of assets and liabilities shown in the table and the corresponding annual average rates (refer to pages 288–292300–304 for more information on average balances and rates). In this analysis, when the change cannot be isolated to either volume or rate, it has been allocated to volume. The average annual rates include the impact of changes in market rates, as well as the impact of any change in composition of the various products within each category of asset or liability. This analysis is calculated separately for each category without consideration of the relationship between categories (for example, the net spread between the rates earned on assets and the rates paid on liabilities that fund those assets). As a result, changes in the granularity or groupings considered in this analysis would produce a different attribution result, and due to the complexities involved, precise allocation of changes in interest rates between volume and rates is inherently complex and judgmental.
 2018 versus 2017 2017 versus 2016
(Unaudited)Increase/(decrease) due to change in:   Increase/(decrease) due to change in:  
Year ended December 31,
(On a taxable-equivalent basis; in millions)		Volume Rate Net
change		 Volume Rate Net
change
Interest-earning assets           
Deposits with banks:           
U.S.$(1,141) $2,751
 $1,610
 $409
 $1,977
 $2,386
Non-U.S.59
 —
 59
 18
 (45) (27)
Federal funds sold and securities purchased under resale agreements:        
  
U.S.267
 800
 1,067
 (337) 531
 194
Non-U.S.173
 252
 425
 81
 (213) (132)
Securities borrowed:        
  
U.S.73
 633
 706
 11
 264
 275
Non-U.S.26
 33
 59
 (4) 24
 20
Trading assets – debt instruments:        
  
U.S.459
 423
 882
 396
 (35) 361
Non-U.S.341
 (174) 167
 308
 (328) (20)
Investment securities:        
  
U.S.(770) 223
 (547) 216
 303
 519
Non-U.S.(189) 73
 (116) (303) (113) (416)
Loans:        
  
U.S.1,710
 4,246
 5,956
 2,043
 2,286
 4,329
Non-U.S.212
 332
 544
 (110) 211
 101
All other interest-earning assets, predominantly U.S.510
 1,063
 1,573
 141
 844
 985
Change in interest income1,730
 10,655
 12,385
 2,869
 5,706
 8,575
Interest-bearing liabilities           
Interest-bearing deposits:           
U.S.244
 2,095
 2,339
 209
 985
 1,194
Non-U.S.42
 735
 777
 41
 266
 307
Federal funds purchased and securities loaned or sold under repurchase agreements:      
 
  
U.S.46
 1,167
 1,213
 (83) 659
 576
Non-U.S.5
 237
 242
 54
 (108) (54)
Trading liabilities – debt, short-term and all other interest-bearing liabilities: (a)
      
 
  
U.S.276
 1,842
 2,118
 45
 1,140
 1,185
Non-U.S.180
 24
 204
 (3) 64
 61
Beneficial interests issued by consolidated VIEs, predominantly U.S.(266) 256
 (10) (122) 121
 (1)
Long-term debt:      

 

 

U.S.(618) 1,827
 1,209
 (176) 1,388
 1,212
Non-U.S.6
 10
 16
 2
 (25) (23)
Intercompany funding:           
U.S.(704) (17) (721) 151
 (186) (35)
Non-U.S.704
 17
 721
 (151) 186
 35
Change in interest expense(85) 8,193
 8,108
 (33) 4,490
 4,457
Change in net interest income$1,815
 $2,462
 $4,277
 $2,902
 $1,216
 $4,118
Effective January 1, 2018,
2020 versus 20192019 versus 2018
(Unaudited)Increase/(decrease) due to change in:Increase/(decrease) due to change in:
Year ended December 31,
(On a taxable-equivalent basis; in millions)		VolumeRateNet
change		VolumeRateNet
change
Interest-earning assets
Deposits with banks:
U.S.$333 $(3,153)$(2,820)$(3,030)$915 $(2,115)
Non-U.S.(8)(310)(318)35 60 95 
Federal funds sold and securities purchased under resale agreements:
U.S.(83)(2,644)(2,727)1,304 337 1,641 
Non-U.S.81 (1,064)(983)168 518 686 
Securities borrowed:(a)
U.S.(24)(1,704)(1,728)236 362 598 
Non-U.S.(1)(147)(148)2 61 63 
Trading assets – debt instruments:(b)
U.S.365 (1,466)(1,101)2,416 (488)1,928 
Non-U.S.336 (555)(219)253 (198)55 
Investment securities:
U.S.3,426 (3,686)(260)2,723 (703)2,020 
Non-U.S.38 (115)(77)(79)36 (43)
Loans:(b)
 
U.S.557 (7,907)(7,350)890 1,941 2,831 
Non-U.S.74 (850)(776)(122)95 (27)
All other interest-earning assets, predominantly U.S.(b)
324 (1,447)(1,123)48 63 111 
Change in interest income5,418 (25,048)(19,630)4,844 2,999 7,843 
Interest-bearing liabilities
Interest-bearing deposits:
U.S.495 (5,103)(4,608)407 1,927 2,334 
Non-U.S.25 (2,017)(1,992)165 485 650 
Federal funds purchased and securities loaned or sold under repurchase agreements:
U.S.176 (3,302)(3,126)1,133 294 1,427 
Non-U.S.(51)(395)(446)(85)222 137 
Trading liabilities – debt, short-term and all other interest-bearing liabilities: (a)(c)
U.S.2 (2,606)(2,604)(5)354 349 
Non-U.S.36 (698)(662)30 (77)(47)
Beneficial interests issued by consolidated VIEs, predominantly U.S.(37)(317)(354)37 38 75 
Long-term debt:
U.S.131 (3,193)(3,062)93 719 812 
Non-U.S.6 13 19 17 — 17 
Intercompany funding:
U.S.(89)249 160 293 (961)(668)
Non-U.S.89 (249)(160)(293)961 668 
Change in interest expense783 (17,618)(16,835)1,792 3,962 5,754 
Change in net interest income$4,635 $(7,430)$(2,795)$3,052 $(963)$2,089 
(a)Negative interest income and yield are related to the impact of current interest rates combined with the fees paid on client-driven securities borrowed balances. The negative interest expense related to prime brokerage customer payables is recognized in interest expense and reported within trading liabilities - debt and all other interest-bearing liabilities.
(b)In the third quarter of 2020, the Firm adopted several new accounting standards. Certain ofreclassified certain fair value option elected lending-related positions from trading assets to loans and other assets. Prior-period amounts have been revised to conform with the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.current presentation.
(a)Includes commercial paper.

(c)Includes commercial paper.
292304JPMorgan Chase & Co./20182020 Form 10-K
Glossary of Terms and Acronyms


20182020 Form 10-K: Annual report on Form 10-K for year ended December 31, 2018,2020, filed with the U.S. Securities and Exchange Commission.
ABS: Asset-backed securities
AFS: Available-for-sale
ALCO: Asset Liability Committee
AWM:Amortized cost: Asset & Wealth ManagementAmount at which a financing receivable or investment is originated or acquired, adjusted for accretion or amortization of premium, discount, and net deferred fees or costs, collection of cash, charge-offs, foreign exchange, and fair value hedge accounting adjustments. For AFS securities, amortized cost is also reduced by any impairment losses recognized in earnings. Amortized cost is not reduced by the allowance for credit losses, except where explicitly presented net.
AOCI: Accumulated other comprehensive income/(loss)
ARM: Adjustable rate mortgage(s)
AUC: Assets under custody
AUM: “Assets under management”: Represent assets managed by AWM on behalf of its Private Banking, Institutional and Retail clients. Includes “Committed capital not Called.”
Auto loan and lease origination volume: Dollar amount of auto loans and leases originated.
AWM: Asset & Wealth Management
Beneficial interests issued by consolidated VIEs: Represents the interest of third-party holders of debt, equity securities, or other obligations, issued by VIEs that JPMorgan Chase consolidates.
Benefit obligation: Refers to the projected benefit obligation for pension plans and the accumulated postretirement benefit obligation for OPEB plans.
BHC: Bank holding company
Card Services includes the Credit Card and Merchant Services businesses.
CB: Commercial Banking
CBB: Consumer & Business Banking
CCAR: Comprehensive Capital Analysis and Review
CCB: Consumer & Community Banking
CCO: Chief Compliance Officer
CCP: “Central counterparty” is a clearing house that interposes itself between counterparties to contracts traded in one or more financial markets, becoming the buyer to every seller and the seller to every buyer and thereby ensuring the future performance of open contracts. A CCP becomes a counterparty to trades with market participants through novation, an open offer system, or another legally binding arrangement.
CDS: Credit default swaps
CECL: Current Expected Credit Losses
CEO: Chief Executive Officer
CET1 Capital: Common equity Tier 1 capital
CFTC: Commodity Futures Trading Commission
CFO: Chief Financial Officer
CFP: Contingency funding plan
Chase Bank USA, N.A.: Chase Bank USA, National Association
CIB: Corporate & Investment Bank
CIO: Chief Investment Office
Client assets: Represent assets under management as well as custody, brokerage, administration and deposit accounts.
Client deposits and other third-party liabilities: Deposits, as well as deposits that are swept to on-balance sheet liabilities (e.g., commercial paper, federal funds purchased and securities loaned or sold under repurchase agreements) as part of client cash management programs.
CLO: Collateralized loan obligations
CLTV: Combined loan-to-value
Collateral-dependent: A loan is considered to be collateral-dependent when repayment of the loan is expected to be provided solely bysubstantially through the underlyingoperation or sale of the collateral rather than by cash flows fromwhen the borrower’s operations, income or other resources.borrower is experiencing financial difficulty, including when foreclosure is deemed probable based on borrower delinquency.
Commercial Card: provides a wide range of payment services to corporate and public sector clients worldwide through the commercial card products. Services include procurement, corporate travel and entertainment, expense management services, and business-to-business payment solutions.
Core loans: Represents loans considered central to the Firm’s ongoing businesses; core loans excludes loans classified as trading assets, runoff portfolios, discontinued portfolios and portfolios the Firm has an intent to exit.
Credit cycle: A period of time over which credit quality improves, deteriorates and then improves again (or vice versa). The duration of a credit cycle can vary from a couple of years to several years.
Credit derivatives: Financial instruments whose value is derived from the credit risk associated with the debt of a third-party issuer (the reference entity) which allow one party (the protection purchaser) to transfer that risk to another party (the protection seller). Upon the occurrence of a credit event by the reference entity, which may include, among other events, the bankruptcy or failure to pay its obligations, or certain restructurings of the debt of the reference entity, neither party has recourse to the reference entity. The protection purchaser has recourse to the protection seller for the difference between the face value of the CDS contract and the fair value at the time of settling the credit derivative contract. The determination as to whether a credit event has occurred is generally made by the relevant International Swaps and Derivatives Association (“ISDA”) Determinations Committee.
JPMorgan Chase & Co./2020 Form 10-K305
Glossary of Terms and Acronyms

Criticized: Criticized loans, lending-related commitments and derivative receivables that are classified as special mention, substandard and doubtful categories for regulatory purposes and are generally consistent with a rating of CC

JPMorgan Chase & Co./2018 Form 10-K293
Glossary of Terms and Acronyms


C+/Caa1 and below, as defined by S&P and Moody’s.purposes.
CRO: Chief Risk Officer
CRSC: Conduct Risk Steering Committee
CTC: CIO, Treasury and Corporate
CVA: Credit valuation adjustment
Debit and credit card sales volume: Dollar amount of card member purchases, net of returns.
Deposit margin/deposit spread: Represents net interest income expressed as a percentage of average deposits.
Distributed denial-of-service attack: The use of a large number of remote computer systems to electronically send a high volume of traffic to a target website to create a service outage at the target. This is a form of cyberattack.
Dodd-Frank Act: Wall Street Reform and Consumer Protection Act
DRPC: Board of Directors’ Risk Policy Committee
DVA: Debit valuation adjustment
EC: European Commission
Eligible HQLA: Eligible high-quality liquid assets, for purposes of calculating the LCR, is the amount of unencumbered HQLA that satisfy certain operational considerations as defined in the LCR rule.
Eligible LTD: Long-term debt satisfying certain eligibility criteria
Embedded derivatives: are implicit or explicit terms or features of a financial instrument that affect some or all of the cash flows or the value of the instrument in a manner similar to a derivative. An instrument containing such terms or features is referred to as a “hybrid.” The component of the hybrid that is the non-derivative instrument is referred to as the “host.” For example, callable debt is a hybrid instrument that contains a plain vanilla debt instrument (i.e., the host) and an embedded option that allows the issuer to redeem the debt issue at a specified date for a specified amount (i.e., the embedded derivative). However, a floating rate instrument is not a hybrid composed of a fixed-rate instrument and an interest rate swap.
ERISA: Employee Retirement Income Security Act of 1974
EPS: Earnings per share
ETD: “Exchange-traded derivatives”: Derivative contracts that are executed on an exchange and settled via a central clearing house.
Expense categories:
•Volume- and revenue-related expenses generally correlate with changes in the related business/transaction volume or revenue. Examples of volume- and revenue-related expenses include commissions and incentive compensation, depreciation expense related to
operating lease assets, and brokerage expense related to equities trading transaction volume.
•Investments include expenses associated with supporting medium- to longer-term strategic plans of the Firm. Examples of investments include initiatives in technology (including related compensation), marketing, and compensation for new bankers and client advisors.
•Structural expenses are those associated with the day-today cost of running the bank and are expenses not covered by the above two categories. Examples of structural expenses include employee salaries and benefits, as well as noncompensation costs such as real estate and all other expenses.
EU: European Union
Fannie Mae: Federal National Mortgage Association
FASB: Financial Accounting Standards Board
FCA: Financial Conduct Authority
FCC: Firmwide Control Committee
FDIA: Federal Depository Insurance Act
FDIC: Federal Deposit Insurance Corporation
Federal Reserve: The Board of the Governors of the Federal Reserve System
FFELP: Federal Family Education Loan Program
FFIEC: Federal Financial Institutions Examination Council
FHA: Federal Housing Administration
FHLB: Federal Home Loan Bank
FICC: The Fixed Income Clearing Corporation
FICO score: A measure of consumer credit risk provided by credit bureaus, typically produced from statistical models by Fair Isaac Corporation utilizing data collected by the credit bureaus.
FINRA: Financial Industry Regulatory Authority
Firm: JPMorgan Chase & Co.
Forward points: Represents the interest rate differential between two currencies, which is either added to or subtracted from the current exchange rate (i.e., “spot rate”) to determine the forward exchange rate.
FRBB: Federal Reserve Bank of Boston
FRBNY: Federal Reserve Bank of New York
FRC: Firmwide Risk Committee
Freddie Mac: Federal Home Loan Mortgage Corporation
Free standing derivatives: a derivative contract entered into either separate and apart from any of the Firm’s other financial instruments or equity transactions. Or, in conjunction with some other transaction and is legally detachable and separately exercisable.
FSB: Financial Stability Board
306JPMorgan Chase & Co./2020 Form 10-K
Glossary of Terms and Acronyms

FTE: Fully taxable equivalent
FVA: Funding valuation adjustment
FX: Foreign exchange
G7: Group of Seven nations: Countries in the G7 are Canada, France, Germany, Italy, Japan, the U.K. and the U.S.
G7 government bonds: Bonds issued by the government of one of the G7 nations.
Ginnie Mae:Government National Mortgage Association
GSE: Fannie Mae and Freddie Mac
GSIB: Global systemically important banks
Headcount-related expense: Includes salary and benefits (excluding performance-based incentives), and other noncompensation costs related to employees.
HELOAN: Home equity loan
HELOC: Home equity line of credit
Home equity – senior lien: Represents loans and commitments where JPMorgan Chase holds the first security interest on the property.
Home equity – junior lien: Represents loans and commitments where JPMorgan Chase holds a security interest that is subordinate in rank to other liens.

294JPMorgan Chase & Co./2018 Form 10-K
Glossary of Terms and Acronyms


Households: A household is a collection of individuals or entities aggregated together by name, address, tax identifier and phone number.
HQLA: “High-quality liquid assets”High quality consist of cash and certain high-quality liquid assetssecurities as defined in the LCR rule.
HTM: Held-to-maturity
IBOR: Interbank Offered Rate
ICAAP: Internal capital adequacy assessment process
IDI: Insured depository institutions
IHC: JPMorgan Chase Holdings LLC, an intermediate holding company
Impaired loan: Impaired loans are loans measured at amortized cost, for which it is probable that the Firm will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the agreement. Impaired loans include the following:
•
All wholesale nonaccrual loans
•
All TDRs (both wholesale and consumer), including ones that have returned to accrual status
Investment-grade: An indication of credit quality based on JPMorgan Chase’s internal risk assessment system. “Investment grade” generally represents a risk profile similar to a ratingassessment. The Firm considers ratings of a “BBB-”BBB-/“Baa3”Baa3 or better,higher as defined by independent rating agencies.investment-grade.
IPO: Initial public offering
ISDA: International Swaps and Derivatives Association
JPMorgan Chase: JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.: JPMorgan Chase Bank, National Association
JPMorgan Clearing: J.P. Morgan Clearing Corp.
JPMorgan Securities: J.P. Morgan Securities LLC
Loan-equivalent: Represents the portion of the unused commitment or other contingent exposure that is expected, based on historical portfolio experience, to become drawn prior to an event of a default by an obligor.
LCR: Liquidity coverage ratio
LDA: Loss Distribution Approach
LGD: Loss given default
LIBOR: London Interbank Offered Rate
LLC: Limited Liability Company
LOB: Line of business
LOB CROs: Line of Business and CTC Chief Risk Officers
Loss emergence period: Represents the time period between the date at which the loss is estimated to have been incurred and the ultimate realization of that loss.
LTIP: Long-term incentive plan
LTV: “Loan-to-value”: For residential real estate loans, the relationship, expressed as a percentage, between the principal amount of a loan and the appraised value of the collateral (i.e., resi
dentialresidential real estate) securing the loan.


Origination date LTV ratio
The LTV ratio at the origination date of the loan. Origination date LTV ratios are calculated based on the actual appraised values of collateral (i.e., loan-level data) at the origination date.
Current estimated LTV ratio
An estimate of the LTV as of a certain date. The current estimated LTV ratios are calculated using estimated collateral values derived from a nationally recognized home price index measured at the metropolitan statistical area (“MSA”) level. These MSA-level home price indices consist of actual data to the extent available and forecasted data where actual data is not available. As a result, the estimated collateral values used to calculate these ratios do not represent actual appraised loan-level collateral values; as such, the resulting LTV ratios are necessarily imprecise and should therefore be viewed as estimates.
Combined LTV ratio
The LTV ratio considering all available lien positions, as well as unused lines, related to the property. Combined LTV ratios are used for junior lien home equity products.
Managed basis: A non-GAAP presentation of Firmwide financial results that includes reclassifications to present revenue on a fully taxable-equivalent basis. Management also uses this financial measure at the segment level, because it believes this provides information to enable investors to understand the underlying operational performance and trends of the particular business segment and facilitates a comparison of the business segment with the performance of competitors.
Master netting agreement: A single agreement with a counterparty that permits multiple transactions governed by that agreement to be terminated or accelerated and settled through a single payment in a single currency in the event of a default (e.g., bankruptcy, failure to make a required payment or securities transfer or deliver collateral or margin when due).
JPMorgan Chase & Co./2020 Form 10-K307
Glossary of Terms and Acronyms

MBS: Mortgage-backed securities
MD&A: Management’s discussion and analysis
Measurement alternative: Measures equity securities without readily determinable fair values at cost less impairment (if any), plus or minus observable price changes from an identical or similar investment of the same issuer.
MBS: Mortgage-backed securities
MD&A: Management’s discussion and analysis
Merchant Services: isa business that primarily processes transactions for merchants.offers merchants payment processing capabilities, fraud and risk management, data and analytics, and other payments services. Through Merchant Services, merchants of all sizes can accept payments via credit and debit cards and payments in multiple currencies.
MMDA:MEV: Macroeconomic variable
MMLF: Money Market Deposit AccountsMutual Fund Liquidity Facility
Moody’s: Moody’s Investor Services
Mortgage origination channels:

JPMorgan Chase & Co./2018 Form 10-K295
Glossary of Terms and Acronyms


Retail – Borrowers who buy or refinance a home through direct contact with a mortgage banker employed by the Firm using a branch office, the Internet or by phone. Borrowers are frequently referred to a mortgage banker by a banker in a Chase branch, real estate brokers, home builders or other third parties.
Correspondent – Banks, thrifts, other mortgage banks and other financial institutions that sell closed loans to the Firm.
Mortgage product types:
Alt-A
Alt-A loans are generally higher in credit quality than subprime loans but have characteristics that would disqualify the borrower from a traditional prime loan. Alt-A lending characteristics may include one or more of the following: (i) limited documentation; (ii) a high CLTV ratio; (iii) loans secured by non-owner occupied properties; or (iv) a debt-to-income ratio above normal limits. A substantial proportion of the Firm’s Alt-A loans are those where a borrower does not provide complete documentation of his or her assets or the amount or source of his or her income.
Option ARMs
The option ARM real estate loan product is an adjustable-rate mortgage loan that provides the borrower with the option each month to make a fully amortizing, interest-only or minimum payment. The minimum payment on an option ARM loan is based on the interest rate charged during the introductory period. This introductory rate is usually significantly below the fully indexed rate. The fully indexed rate is calculated using an index rate plus a margin. Once the introductory period ends, the contractual interest rate charged on the loan increases to the fully indexed rate and adjusts monthly to reflect movements in the index. The minimum payment is typically insufficient to cover interest accrued in the prior month, and any unpaid interest is deferred and added to the principal balance of the loan. Option ARM loans are subject to payment recast, which converts the loan to a variable-rate fully amortizing loan upon meeting specified loan balance and anniversary date triggers.
Prime
triggers.
Prime
Prime mortgage loans are made to borrowers with good credit records who meet specific underwriting requirements, including prescriptive requirements related to income and overall debt levels. New prime mortgage borrowers provide full documentation and generally have reliable payment histories.
Subprime
Subprime loans are loans that, prior to mid-2008, were offered to certain customers with one or more high risk characteristics, including but not limited to: (i) unreliable or poor payment histories; (ii) a high LTV ratio of greater than 80% (without borrower-paid mortgage insurance); (iii) a high debt-to-income ratio; (iv) an occupancy type for the
loan is other than the borrower’s primary residence; or (v) a history of delinquencies or late payments on the loan.
MSA: Metropolitan statistical areas
MSR: Mortgage servicing rights
Multi-asset: Any fund or account that allocates assets under management to more than one asset class.
NA: Data is not applicable or available for the period presented.
NAV: Net Asset Value
Net Capital Rule: Rule 15c3-1 under the Securities Exchange Act of 1934.
Net charge-off/(recovery) rate: Represents net charge-offs/(recoveries) (annualized) divided by average retained loans for the reporting period.
Net interchange income includes the following components:
•Interchange income: Fees earned by credit and debit card issuers on sales transactions.
•Reward costs: The cost to the Firm for points earned by cardholders enrolled in credit card rewards programs generally tied to sales transactions.
•Partner payments: Payments to co-brand credit card partners based on the cost of loyalty program rewards earned by cardholders on credit card transactions.
Net mortgage servicing revenue: Includes operating revenue earned from servicing third-party mortgage loans, which is recognized over the period in which the service is provided,provided; changes in the fair value of MSRs andMSRs; the impact of risk management activities associated with MSRs.MSRs; and gains and losses on securitization of excess mortgage servicing. Net mortgage servicing revenue also includes gains and losses on sales and lower of cost or fair value adjustments of certain repurchased loans insured by U.S. government agencies.
Net production revenue: Includes fees and income recognized as earned on mortgage loans originated with the
308JPMorgan Chase & Co./2020 Form 10-K
Glossary of Terms and Acronyms

intent to sell;sell, and the impact of risk management activities associated with the mortgage pipeline and warehouse loans; and changes in the fair value of any residual interests held from mortgage securitizations.loans. Net production revenue also includes gains and losses on sales of mortgage loans,and lower of cost or fair value adjustments on mortgage loans held-for-sale (excluding certain repurchased loans insured by U.S. government agencies), and changes in the fair value on mortgage loans originated with the intent to sell andof financial instruments measured at fair value under the fair value option, as well as losses recognized as incurred related to repurchases of previously sold loans.option.
Net revenue rate: Represents Credit Card Services net revenue (annualized) expressed as a percentage of average loans for the period.
Net interchange income includes the following components:
•
Interchange income: Fees earned by credit and debit card issuers on sales transactions.
•
Rewards costs: The cost to the Firm for points earned by cardholders enrolled in credit card rewards programs.
•
Partner payments: Payments to co-brand credit card partners based on the cost of loyalty program rewards earned by cardholders on credit card transactions.
Net yield on interest-earning assets: The average rate for interest-earning assets less the average rate paid for all sources of funds.
NFA: National Futures Association
NM: Not meaningful
NOL: Net operating loss
Nonaccrual loans: Loans for which interest income is not recognized on an

296JPMorgan Chase & Co./2018 Form 10-K
Glossary of Terms and Acronyms


accrual basis. Loans (other than credit card loans and certain consumer loans insured by U.S. government agencies) are placed on nonaccrual status when full payment of principal and interest is not expected, regardless of delinquency status, or when principal and interest have been in default for a period of 90 days or more unless the loan is both well-secured and in the process of collection. Collateral-dependent loans are typically maintained on nonaccrual status.
Nonperforming assets: Nonperforming assets include nonaccrual loans, nonperforming derivatives and certain assets acquired in loan satisfaction, predominantly real estate owned and other commercial and personal property.
NOW: Negotiable Order of Withdrawal
NSFR: Net Stable Funding Ratio
OAS: Option-adjusted spread
OCC: Office of the Comptroller of the Currency
OCI: Other comprehensive income/(loss)
OPEB: Other postretirement employee benefit
ORMF: Operational Risk Management Framework
OTTI: Other-than-temporary impairment
Over-the-counter (“OTC”) derivatives: Derivative contracts that are negotiated, executed and settled bilaterally between two derivative counterparties, where one or both counterparties is a derivatives dealer.
Over-the-counter cleared (“OTC-cleared”) derivatives: Derivative contracts that are negotiated and executed bilaterally, but subsequently settled via a central clearing house, such that each derivative counterparty is only exposed to the default of that clearing house.
Overhead ratio: Noninterest expense as a percentage of total net revenue.
Parent Company: JPMorgan Chase & Co.
Participating securities: Represents unvested share-based compensation awards containing nonforfeitable rights to dividends or dividend equivalents (collectively, “dividends”), which are included in the earnings per share calculation using the two-class method. JPMorgan Chase grants RSUs to certain employees under its share-based compensation programs, which entitle the recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock. These unvested awards meet the definition of participating securities. Under the two-class method, all earnings (distributed and undistributed) are allocated to each class of common stock and participating securities, based on their respective rights to receive dividends.
PCA: Prompt corrective action
PCD: “Purchased credit deteriorated” assets represent acquired financial assets that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by the Firm.
PCI: “Purchased credit-impaired” loansrepresentsrepresented certain loans that were acquired and deemed to be credit-impaired on the acquisition date in accordance with thedate. The superseded FASB guidance of the FASB. The guidance allowsallowed purchasers to aggregate credit-impaired loans acquired in the s
amesame fiscal quarter into one or more pools, provided that the loans havehad common risk characteristics(e.g.characteristics (e.g., product type, LTV ratios, FICO scores, past due status, geographic location). A pool iswas then accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows.
PD: Probability of default
PDCF: Primary Dealer Credit Facility
PPP: Paycheck Protection Program
PPPL Facility: Paycheck Protection Program Lending Facility
PRA: Prudential RegulatoryRegulation Authority
Pre-provision profit/(loss): Represents total net revenue less noninterest expense. The Firm believes that this financial measure is useful in assessing the ability of a lending institution to generate income in excess of its provision for credit losses.
Pretax margin: Represents income before income tax expense divided by total net revenue, which is, in management’s view, a comprehensive measure of pretax performance derived by measuring earnings after all costs are taken into consideration. It is one basis upon which management evaluates the performance of AWM against the performance of their respective competitors.
Principal transactions revenue: Principal transactions revenue is driven by many factors, including including:
•the bid-offer spread, which is the difference between the price at which a market participant is willing and able to
JPMorgan Chase & Co./2020 Form 10-K309
Glossary of Terms and Acronyms

sell an instrument to the Firmis willing to buy a financial or other instrument and the price at which another market participant is willing and able to buy it from the Firm, and vice versa; and
•is willing to sell that instrument. It also consists of realized (as a result of closing out or termination of transactions, or interim cash payments) and unrealized (as a result of changes in valuation) gains and losses on financial instruments and other instruments (includingcommodities transactions, including those accounted for under the fair value option)option, primarily used in client-driven market-making activities, and on private equity investments.
–Realized gains and losses result from the sale of instruments, closing out or termination of transactions, or interim cash payments.
–Unrealized gains and losses result from changes in valuation.
In connection with its client-driven market-making activities, the Firm transacts in debt and equity instruments, derivatives and commodities, (includingincluding physical commodities inventories and financial instruments that reference commodities).commodities.
Principal transactions revenue also includes certain realized and unrealized gains and losses related to hedge accounting and specified risk-management activities, including: (a) certain to:
•derivatives designated in qualifying hedge accounting relationships, (primarilyprimarily fair value hedges of commodity and foreign exchange risk), (b) certain risk;
•derivatives used for specific risk management purposes, primarily to mitigate credit risk, and foreign exchange risk and commodity risk, and (c) other derivatives.risk.
PSU(s):PSUs: Performance share units
REIT: “Real estate investment trust”: A special purpose investment vehicle that provides investors with the ability to participate directly in the ownership or financing of real-estate related assets by pooling their capital to purchase and manage income property (i.e., equity REIT) and/or mortgage loans (i.e., mortgage REIT). REITs can be publicly or privately held and they also qualify for certain favorable tax considerations.

JPMorgan Chase & Co./2018 Form 10-K297
Glossary of Terms and Acronyms


Receivables from customers: These receivables are reported within accrued interest and accounts receivable on the Firm’s Consolidated balance sheets.Primarily represents held-for-investment margin loans to brokerage customers that are collateralized through assets maintained in the clients’ brokerage accounts, as such no allowance is held against these receivables.These receivables are reported within accrued interest and accounts receivable on the Firm’s Consolidated balance sheets.
Regulatory VaR: Daily aggregated VaR calculated in accordance with regulatory rules.
REO: Real estate owned
Reported basis: Financial statements prepared under U.S. GAAP, which excludes the impact of taxable-equivalent adjustments.
Retained loans: Loans that are held-for-investment (i.e., excludes loans held-for-sale and loans at fair value).
Revenue wallet: Proportion of fee revenue based on estimates of investment banking fees generated across the industry (i.e., the revenue wallet) from investment banking transactions in M&A, equity and debt underwriting, and loan syndications. Source: Dealogic, a third-party provider of investment banking competitive analysis and volume-based league tables for the above noted industry products.
RHS: Rural Housing Service of the U.S. Department of Agriculture
Risk-rated portfolio: Credit loss estimates are based on estimates of the probability of default (“PD”) and loss severity given a default. The probability of default is the likelihood that a borrower will default on its obligation; the loss given default (“LGD”) is the estimated loss on the loan that would be realized upon the default and takes into consideration collateral and structural support for each credit facility.
ROA: Return on assets
ROE: Return on equity
ROTCE: Return on tangible common equity
ROU assets: Right-of-use assets
RSU(s): Restricted stock units
RWA: “Risk-weighted assets”:Basel III establishes two comprehensive approaches for calculating RWA (a Standardized approach and an Advanced approach) which include capital requirements for credit risk, market risk, and in the case of Basel III Advanced, also operational risk. Key differences in the calculation of credit risk RWA between the Standardized and Advanced approaches are that for Basel III Advanced, credit risk RWA is based on risk-sensitive approaches which largely rely on the use of internal credit models and parameters, whereas for Basel III Standardized, credit risk RWA is generally based on supervisory risk-weightings which vary primarily by counterparty type and asset class. Market risk RWA is calculated on a generally consistent basis between Basel III Standardized and Basel III Advanced.
S&P: Standard and Poor’s 500 Index
SAR(s): Stock appreciation rights
SCB: Stress Capital Buffer
Scored portfolio:portfolios: The scored portfolioConsumer loan portfolios that predominantly includesinclude residential real estate loans, credit card loans, auto loans to individuals and certain auto andsmall business banking loans where credit loss estimates are based on statistical analysis of credit losses over discrete periods of time. The statistical analysis uses portfolio modeling, credit scoring and decision-support tools.loans.
SEC: Securities and Exchange Commission
Securities financing agreements: Include resale, repurchase, securities borrowed and securities loaned agreements
Seed capital: Initial JPMorgan capital invested in products, such as mutual funds, with the intention of ensuring the fund is of sufficient size to represent a viable offering to clients, enabling pricing of its shares, and allowing the manager to develop a track record. After these goals are achieved, the intent is to remove the Firm’s capital from the investment.
Shelf securities: Securities registered with the SEC under a shelf registration statement that have not been issued, offered or sold. These securities are not included in league tables until they have actually been issued.
Single-name: Single reference-entities
310JPMorgan Chase & Co./2020 Form 10-K
Glossary of Terms and Acronyms

SLR: Supplementary leverage ratio
SMBS: Stripped mortgage-backed securities
SOFR: Secured Overnight Financing Rate
SPEs: Special purpose entities
Structural interest rate risk: Represents interest rate risk of the non-trading assets and liabilities of the Firm.
Structured notes: Structured notes are financial instruments whose cash flows are linked to the movement in one or more indexes, interest rates, foreign exchange rates, commodities prices, prepayment rates, or other market variables. The notes typically contain embedded (but not separable or detachable) derivatives. Contractual cash flows for principal, interest, or both can vary in amount and timing throughout the life of the note based on non-traditional indexes or non-traditional uses of traditional interest rates or indexes.
Taxable-equivalent basis: In presenting results on a managed basis, the total net revenue for each of the business segments and the Firm is presented on a tax-equivalent basis. Accordingly, revenue from investments that receive tax credits and tax-exempt securities is presented in managed basis results on a level comparable to taxable investments and securities; the corresponding income tax impact related to tax-exempt items is recorded within income tax expense.
TBVPS: Tangible book value per share
TCE: Tangible common equity
TDR: “Troubled debt restructuring”is deemed to occur when the Firm modifies the original terms of a loan agreement by granting a concession to a borrower that is experiencing financial difficulty. Loans with short-term and other insignificant modifications that are not considered concessions are not TDRs.
TLAC: Total Loss Absorbing Capacityloss-absorbing capacity
U.K.: United Kingdom
Unaudited: Financial statements and information that have not been su

298JPMorgan Chase & Co./2018 Form 10-K
Glossary of Terms and Acronyms


bjectedsubjected to auditing procedures sufficient to permit an independent certified public accountant to express an opinion.
U.S.: United States of America
U.S. government agencies: U.S. government agencies include, but are not limited to, agencies such as Ginnie Mae and FHA, and do not include Fannie Mae and Freddie Mac which are U.S. government-sponsored enterprises (“U.S. GSEs”). In general, obligations of U.S. government agencies are fully and explicitly guaranteed as to the timely payment of principal and interest by the full faith and credit of the U.S. government in the event of a default.
U.S. GAAP: Accounting principles generally accepted in the U.S.
U.S. GSE(s): “U.S. government-sponsored enterprises (“U.S. GSEs”) and U.S. GSE obligations: Inenterprises” are quasi-governmental, privately-held entities established or chartered by the U.S., GSEs are quasi-governmental, privately held entities established government to serve public purposes as specified by the U.S. Congress to improve the flow of credit to specific sectors of the economy and provide certain essential services to the public. U.S. GSEs include Fannie Mae and Freddie Mac, but do not include Ginnie Mae which is directly owned by the U.S. Department of Housing and Urban Development.or FHA. U.S. GSE obligations are not explicitly guaranteed as to the timely payment of principal and interest by the full faith and credit of the U.S. government.
U.S. LCR: Liquidity coverage ratio under the final U.S. rule.
U.S. Treasury: U.S. Department of the Treasury
VA: U.S. Department of Veterans Affairs
VaR: “Value-at-risk” is a measure of the dollar amount of potential loss from adverse market moves in an ordinary market environment.
VCG: Valuation Control Group
VGF: Valuation Governance Forum
VIEs: Variable interest entities
Warehouse loans: Consist of prime mortgages originated with the intent to sell that are accounted for at fair value and classified as trading assets.loans.

JPMorgan Chase & Co./20182020 Form 10-K299311
Investment securities portfolio


ForRefer to Note 10 for information regarding the investment securities portfolio as of December 31, 20182020 and 2017,2019, and for the years ended December 31, 20182020 and 2017, refer to Note 10.2019.

2018
(Unaudited)
December 31, (in millions)
Amortized
cost		Fair
value
Available-for-sale securities
Mortgage-backed securities: U.S. GSEs and government agencies$69,026 $68,646 
U.S. Treasury and government agencies55,771 56,059 
All other AFS securities103,972 105,689 
Total available-for-sale securities$228,769 $230,394 
Held-to-maturity securities
Mortgage-backed securities: U.S. GSEs and government agencies26,610 26,544 
All other HTM securities4,824 4,914 
Total held-to-maturity securities$31,434 $31,458 
Total investment securities$260,203 $261,852 
 2016
(Unaudited)
December 31, (in millions)
Amortized
cost		 Fair
value
Available-for-sale securities   
Mortgage-backed securities: U.S Government agencies$63,367
 $64,005
U.S. Treasury and government agencies44,822
 44,101
All other AFS securities128,241
 130,785
Total available-for-sale securities$236,430
 $238,891
    
Held-to-maturity securities   
Mortgage-backed securities: U.S Government agencies29,910
 30,511
All other HTM securities20,258
 20,378
Total held-to-maturity securities$50,168
 $50,889
Total investment securities$286,598
 $289,780


300312
Loan portfolio

Effective January 1, 2020, the Firm adopted the CECL accounting guidance. The adoption resulted in a change in the accounting for PCI loans, which are considered PCD loans under CECL. In conjunction with the adoption of CECL, the Firm reclassified risk-rated loans and lending-related commitments from the consumer, excluding credit card portfolio segment to the wholesale portfolio segment, to align with the methodology applied when determining the allowance. Prior-period amounts have been revised to conform with the current presentation. Refer to Note 1 for further information.
Additionally, in the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans. Prior-period amounts have been revised to conform with the current presentation.
The table below presents loans by portfolio segment and loan class that are presented in CreditNote 12.
(Unaudited)
December 31, (in millions)		20202019201820172016
U.S. consumer, excluding credit card loans
Residential real estate$241,578 $266,135 $296,677 $291,054 $281,774 
Auto and other76,825 51,682 52,324 55,296 63,380 
Total U.S. consumer, excluding credit card loans318,403 317,817 349,001 346,350 345,154 
Non-U.S. consumer, excluding credit card loans
Residential real estate176 — — 836 1,976 
Auto and other— — — — — 
Total Non-U.S. consumer, excluding credit card loans176 — — 836 1,976 
Total consumer, excluding credit card loans
Residential real estate241,754 266,135 296,677 291,890 283,750 
Auto and other76,825 51,682 52,324 55,296 63,380 
Total consumer, excluding credit card loans318,579 317,817 349,001 347,186 347,130 
Credit card Loans
U.S. credit card loans144,103 168,787 156,312 149,107 141,447 
Non-U.S. credit card loans113 137 320 404 369 
Total credit card loans144,216 168,924 156,632 149,511 141,816 
Total consumer loans462,795 486,741 505,633 496,697 488,946 
U.S. wholesale loans
Secured by real estate124,887 126,735 121,169 120,078 112,134 
Commercial and industrial112,911 115,389 138,374 115,537 110,555 
Other185,945 154,633 136,609 120,608 111,509 
Total U.S. wholesale loans423,743 396,757 396,152 356,223 334,198 
Non-U.S. wholesale loans
Secured by real estate3,090 2,837 2,709 2,625 2,905 
Commercial and industrial44,076 38,214 37,035 36,438 35,673 
Other79,149 73,071 74,231 67,446 61,109 
Total non-U.S. wholesale loans126,315 114,122 113,975 106,509 99,687 
Total wholesale loans
Secured by real estate127,977 129,572 123,878 122,703 115,039 
Commercial and industrial156,987 153,603 175,409 151,975 146,228 
Other265,094 227,704 210,840 188,054 172,618 
Total wholesale loans550,058 510,879 510,127 462,732 433,885 
Total loans(a)
$1,012,853 $997,620 $1,015,760 $959,429 $922,831 
Memo:
Loans held-for-sale$7,873 $7,064 $11,988 $3,351 $2,628 
Loans at fair value44,474 44,955 34,357 31,240 30,296 
Total loans held-for-sale and loans at fair value$52,347 $52,019 $46,345 $34,591 $32,924 
(a)Loans (other than those for which the fair value option has been elected) are presented net of unamortized discounts and Investment Risk Management on page 105, pages 106–111premiums and page 112,net deferred loan fees or costs. These amounts were not material as of December 31, 2020, 2019, 2018, 2017 and in Note 12, at the periods indicated.
(Unaudited)
December 31, (in millions)
2018
2017
2016
2015
2014
U.S. consumer, excluding credit card loans     
Residential mortgage$246,244
$236,157
$215,178
$192,714
$139,973
Home equity37,303
44,249
51,965
60,548
69,837
Auto63,573
66,242
65,814
60,255
54,536
Other26,612
26,033
31,687
31,304
31,028
Total U.S. consumer, excluding credit card loans373,732
372,681
364,644
344,821
295,374
Credit card Loans     
U.S. credit card loans156,312
149,107
141,447
131,132
129,067
Non-U.S. credit card loans320
404
369
331
1,981
Total credit card loans156,632
149,511
141,816
131,463
131,048
Total consumer loans530,364
522,192
506,460
476,284
426,422
U.S. wholesale loans     
Commercial and industrial111,208
93,522
91,393
83,739
78,664
Real estate115,401
112,562
104,268
90,836
77,022
Financial institutions29,165
23,819
20,499
12,708
13,743
Governments & Agencies11,037
12,603
12,655
9,838
7,574
Other83,386
69,602
66,363
67,925
49,838
Total U.S. wholesale loans350,197
312,108
295,178
265,046
226,841
Non-U.S. wholesale loans     
Commercial and industrial30,450
29,233
31,340
30,385
34,782
Real estate3,397
3,302
3,975
4,577
2,224
Financial institutions18,563
16,845
15,196
17,188
21,099
Governments & Agencies3,150
2,906
3,726
1,788
1,122
Other48,433
44,111
38,890
42,031
44,846
Total non-U.S. wholesale loans103,993
96,397
93,127
95,969
104,073
Total wholesale loans     
Commercial and industrial141,658
122,755
122,733
114,124
113,446
Real estate118,798
115,864
108,243
95,413
79,246
Financial institutions47,728
40,664
35,695
29,896
34,842
Governments & Agencies14,187
15,509
16,381
11,626
8,696
Other131,819
113,713
105,253
109,956
94,684
Total wholesale loans454,190
408,505
388,305
361,015
330,914
Total loans(a)
$984,554
$930,697
$894,765
$837,299
$757,336
Memo:     
Loans held-for-sale$11,988
$3,351
$2,628
$1,646
$7,217
Loans at fair value3,151
2,508
2,230
2,861
2,611
Total loans held-for-sale and loans at fair value$15,139
$5,859
$4,858
$4,507
$9,828
(a)Loans (other than purchased credit-impaired loans and those for which the fair value option have been elected) are presented net of unamortized discounts and premiums and net deferred loan fees or costs. These amounts were not material as of December 31, 2018, 2017, 2016, 2015 and 2014.


2016.
301313

Maturities and sensitivity to changes in interest rates
The table below sets forth at December 31, 2018, wholesale loan maturitymaturities and the distribution between fixed and floating interest rates based on the stated terms of the loan agreements. The table below also presents loans by loan class that are presented in Wholesale credit portfolio on pages 112–119 and Note 12. The table does not include the impact of derivative instruments.
(Unaudited)
December 31, 2020
(in millions)
Within
1 year (a)
1-5
years		After 5
years		Total
U.S.
Secured by real estate$4,847 $25,575 $94,465 $124,887 
Commercial and industrial35,318 72,084 5,509 112,911 
Other81,462 73,964 30,519 185,945 
Total U.S.121,627 171,623 130,493 423,743 
Non-U.S.
Secured by real estate907 1,797 386 3,090 
Commercial and industrial13,307 26,460 4,309 44,076 
Other55,249 20,142 3,758 79,149 
Total non-U.S.69,463 48,399 8,453 126,315 
Total wholesale loans$191,090 $220,022 $138,946 $550,058 
Loans at fixed interest rates$36,693 $31,548 
Loans at variable interest rates183,329 107,398 
Total wholesale loans$220,022 $138,946 
(a)Includes demand loans and overdrafts.
(Unaudited)
December 31, 2018
(in millions)
Within
1 year (a)
 
1-5
years
 
After 5
years
 Total
U.S.       
Commercial and industrial$31,145
 $69,357
 $10,706
 $111,208
Real estate10,440
 23,554
 81,407
 115,401
Financial institutions15,190
 13,639
 336
 29,165
Governments & Agencies1,498
 3,308
 6,231
 11,037
Other28,066
 52,722
 2,598
 83,386
Total U.S.86,339
 162,580
 101,278
 350,197
Non-U.S.       
Commercial and industrial11,636
 16,390
 2,424
 30,450
Real estate1,073
 2,261
 63
 3,397
Financial institutions12,879
 5,653
 31
 18,563
Governments & Agencies497
 1,843
 810
 3,150
Other35,423
 12,040
 970
 48,433
Total non-U.S.61,508
 38,187
 4,298
 103,993
Total wholesale loans$147,847
 $200,767
 $105,576
 $454,190
Loans at fixed interest rates  $14,221
 $11,335
  
Loans at variable interest rates  186,546
 94,241
  
Total wholesale loans  $200,767
 $105,576
  
(a)Includes demand loans and overdrafts.
Risk elements
The following tables set forth nonperforming assets, contractually past-due assets, and accruing restructured loans by portfolio segment and loan class that are presented in Note 12.
(Unaudited)
December 31, (in millions)		20202019201820172016
Nonperforming assets
U.S. nonaccrual loans:
Consumer, excluding credit card loans$6,467 $3,366 $3,853 $4,463 $4,662 
Credit card loansNANANANANA
Total U.S. nonaccrual consumer loans6,467 3,366 3,853 4,463 4,662 
Wholesale:
Secured by real estate966 267 483 251 253 
Commercial and industrial1,249 759 700 887 1,487 
Other897 33 35 126 127 
Total U.S. wholesale nonaccrual loans3,112 1,059 1,218 1,264 1,867 
Total U.S. nonaccrual loans9,579 4,425 5,071 5,727 6,529 
Non-U.S. nonaccrual loans:
Consumer, excluding credit card loans— — — — — 
Credit card loansNANANANANA
Total non-U.S. nonaccrual consumer loans— — — — — 
Wholesale:
Secured by real estate18 — 67 81 35 
Commercial and industrial856 209 395 807 459 
Other120 3 9 21 79 
Total non-U.S. wholesale nonaccrual loans994 212 471 909 573 
Total non-U.S. nonaccrual loans994 212 471 909 573 
Total nonaccrual loans10,573 4,637 5,542 6,636 7,102 
Derivative receivables56 30 60 130 223 
Assets acquired in loan satisfactions277 387 299 353 429 
Nonperforming assets$10,906 $5,054 $5,901 $7,119 $7,754 
Memo:
Loans held-for-sale$284 $7 $— $— $162 
Loans at fair value1,507 647 931 693 219 
Total loans held-for-sale and loans at fair value$1,791 $654 $931 $693 $381 
314

(Unaudited)
December 31, (in millions)		20202019201820172016
Contractually past-due loans(a)
U.S. loans:
Consumer, excluding credit card loans(b)
$— $— $— $— $— 
Credit card loans1,317 1,605 1,442 1,378 1,143 
Total U.S. consumer loans1,317 1,605 1,442 1,378 1,143 
Wholesale:
Secured by real estate15 1 11 10 9 
Commercial and industrial20 36 166 67 90 
Other19 5 7 62 24 
Total U.S. wholesale loans54 42 184 139 123 
Total U.S. loans1,371 1,647 1,626 1,517 1,266 
Non-U.S. loans:
Consumer, excluding credit card loans— — — — — 
Credit card loans2 2 3 1 2 
Total non-U.S. consumer loans2 2 3 1 2 
Wholesale:     
Secured by real estate— — — — — 
Commercial and industrial— 1 2 1 9 
Other3 — 2 1 — 
Total non-U.S. wholesale loans3 1 4 2 9 
Total non-U.S. loans5 3 7 3 11 
Total contractually past due loans$1,376 $1,650 $1,633 $1,520 $1,277 
(a)Represents accruing loans past-due 90 days or more as to principal and interest, which are not characterized as nonaccrual loans. Prior to the adoption of CECL, excluded PCI loans which were accounted for on a pool basis. Since each pool was accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, the past-due status of the pools, or that of individual loans within the pools, was not meaningful. The Firm recognized interest income on each pool of loans as each of the pools was performing.
(b)At December 31, 2020, 2019, 2018, 2017 and 2016, excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $364 million, $193 million, $1.6 billion, $2.7 billion and $2.7 billion, respectively. At December 31, 2016, student loans insured by U.S. government agencies under the Federal Family Education Loan Program of $263 million were also excluded prior to sale of the student loan portfolio in 2017. These amounts have been excluded from nonaccrual loans based upon the government guarantee.
(Unaudited)
December 31, (in millions)		20202019201820172016
Accruing restructured loans(a)
U.S.:
Consumer, excluding credit card loans$3,007 $3,600 $4,171 $4,972 $5,528 
Credit card loans(b)
1,375 1,452 1,319 1,215 1,240 
Total U.S. consumer loans4,382 5,052 5,490 6,187 6,768 
Wholesale:
Secured by real estate16 14 9 6 18 
Commercial and industrial202 34 59 129 64 
Other61 2 4 2 — 
Total U.S. wholesale loans279 50 72 137 82 
Total U.S.4,661 5,102 5,562 6,324 6,850 
Non-U.S.:
Consumer, excluding credit card loans— — — — — 
Credit card loans(b)
— — — — — 
Total non-U.S. consumer loans— — — — — 
Wholesale:
Secured by real estate— 30 — — — 
Commercial and industrial75 2 45 21 17 
Other4 3 — — — 
Total non-U.S. wholesale loans79 35 45 21 17 
Total non-U.S.79 35 45 21 17 
Total accruing restructured notes$4,740 $5,137 $5,607 $6,345 $6,867 
(a)Represents performing loans modified in TDRs in which an economic concession was granted by the Firm and the borrower has demonstrated its ability to repay the loans according to the terms of the restructuring. As defined in U.S. GAAP, concessions include the reduction of interest rates or the deferral of interest or principal payments, resulting from deterioration in the borrowers’ financial condition. Excludes nonaccrual assets and contractually past-due assets, which are included in the sections above.
(b)Includes credit card loans that have been modified in a TDR.
Refer to Credit and Investment Risk Management on page 105, page 107pages 110–134, and page 112, at the periods indicated.
(Unaudited)
December 31, (in millions)
2018 2017 2016 2015 2014
Nonperforming assets         
U.S. nonaccrual loans:         
Consumer, excluding credit card loans$3,461
 $4,209
 $4,820
 $5,413
 $6,509
Credit card loans—
 —
 —
 —
 —
Total U.S. nonaccrual consumer loans3,461
 4,209
 4,820
 5,413
 6,509
Wholesale:         
Commercial and industrial624
 703
 1,145
 315
 184
Real estate212
 95
 148
 175
 237
Financial institutions4
 2
 4
 4
 12
Governments & Agencies—
 —
 —
 —
 —
Other89
 137
 198
 86
 59
Total U.S. wholesale nonaccrual loans929
 937
 1,495
 580
 492
Total U.S. nonaccrual loans4,390
 5,146
 6,315
 5,993
 7,001
Non-U.S. nonaccrual loans:         
Consumer, excluding credit card loans—
 —
 —
 —
 —
Credit card loans—
 —
 —
 —
 —
Total non-U.S. nonaccrual consumer loans—
 —
 —
 —
 —
Wholesale:         
Commercial and industrial358
 654
 454
 314
 21
Real estate12
 41
 52
 63
 23
Financial institutions—
 —
 5
 6
 7
Governments & Agencies—
 —
 —
 —
 —
Other71
 102
 57
 53
 81
Total non-U.S. wholesale nonaccrual loans441
 797
 568
 436
 132
Total non-U.S. nonaccrual loans441
 797
 568
 436
 132
Total nonaccrual loans4,831
 5,943
 6,883
 6,429
 7,133
Derivative receivables60
 130
 223
 204
 275
Assets acquired in loan satisfactions299
 353
 429
 401
 559
Nonperforming assets$5,190
 $6,426
 $7,535
 $7,034
 $7,967
Memo:         
Loans held-for-sale$—
 $—
 $162
 $101
 $95
Loans at fair value220
 —
 —
 25
 21
Total loans held-for-sale and loans at fair value$220
 $—
 $162
 $126
 $116


302


(Unaudited)
December 31, (in millions)
2018 2017 2016 2015 2014 
Contractually past-due loans(a)
          
U.S. loans:          
Consumer, excluding credit card loans(b)
$—
 $—
 $—
 $—
 $—
 
Credit card loans1,442
 1,378
 1,143
 944
 893
 
Total U.S. consumer loans1,442
 1,378
 1,143
 944
 893
 
Wholesale:          
Commercial and industrial167
 107
 86
 6
 14
 
Real estate3
 12
 2
 15
 33
 
Financial institutions8
 14
 12
 1
 —
 
Governments & Agencies4
 4
 4
 6
 —
 
Other2
 2
 19
 28
 26
 
Total U.S. wholesale loans184
 139
 123
 56
 73
 
Total U.S. loans1,626
 1,517
 1,266
 1,000
 966
 
Non-U.S. loans:          
Consumer, excluding credit card loans—
 —
 —
 —
 —
 
Credit card loans3
 1
 2
 —
 2
 
Total non-U.S. consumer loans3
 1
 2
 —
 2
 
Wholesale:          
Commercial and industrial1
 1
 —
 1
 —
 
Real estate—
 —
 —
 —
 —
 
Financial institutions2
 1
 9
 10
 —
 
Governments & Agencies—
 —
 —
 —
 —
 
Other1
 —
 —
 —
 3
 
Total non-U.S. wholesale loans4
 2
 9
 11
 3
 
Total non-U.S. loans7
 3
 11
 11
 5
 
Total contractually past due loans$1,633
 $1,520
 $1,277
 $1,011
 $971
 
(a)Represents accruing loans past-due 90 days or more as to principal and interest, which are not characterized as nonaccrual loans. Excludes PCI loans which are accountedNote 12 for on a pool basis. Since each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, the past-due status of the pools, or that of individual loans within the pools, is not meaningful. The Firm is recognizing interest income on each pool of loans as each of the pools is performing.
(b)At December 31, 2018, 2017, 2016, 2015 and 2014, excluded loans 90 or more days past due and still accruing as follows: (1) mortgage loans insured by U.S. government agencies of $1.6 billion, $2.7 billion, $2.7 billion, $2.8 billion and $3.4 billion, respectively; and (2) student loans insured by U.S. government agencies under the FFELP of $0 million, $0 million, $263 million, $290 million and $367 million, respectively. These amounts have been excluded from the nonaccrual loans based upon the government guarantee.
(Unaudited)
December 31, (in millions)
2018 2017 2016 2015 2014
Accruing restructured loans(a)
         
U.S.:         
Consumer, excluding credit card loans$4,185
 $4,993
 $5,561
 $5,980
 $7,814
Credit card loans(b)
1,319
 1,215
 1,240
 1,465
 2,029
Total U.S. consumer loans5,504
 6,208
 6,801
 7,445
 9,843
Wholesale:         
Commercial and industrial50
 32
 34
 12
 10
Real estate3
 5
 11
 28
 31
Financial institutions—
 79
 —
 —
 —
Other5
 —
 4
 —
 1
Total U.S. wholesale loans58
 116
 49
 40
 42
Total U.S.5,562
 6,324
 6,850
 7,485
 9,885
Non-U.S.:         
Consumer, excluding credit card loans—
 —
 —
 —
 —
Credit card loans(b)
—
 —
 —
 —
 —
Total non-U.S. consumer loans—
 —
 —
 —
 —
Wholesale:         
Commercial and industrial45
 10
 17
 —
 —
Real estate—
 —
 —
 —
 —
Financial institutions—
 11
 —
 —
 —
Other—
 —
 —
 —
 —
Total non-U.S. wholesale loans45
 21
 17
 —
 —
Total non-U.S.45
 21
 17
 —
 —
Total accruing restructured notes$5,607
 $6,345
 $6,867
 $7,485
 $9,885
(a)Represents performing loans modified in TDRs in which an economic concession was granted by the Firm and the borrower has demonstrated its ability to repay the loans according to the terms of the restructuring. As defined in U.S. GAAP, concessions include the reduction of interest rates or the deferral of interest or principal payments, resulting from deterioration in the borrowers’ financial condition. Excludes nonaccrual assets and contractually past-due assets, which are included in the sections above.
(b)Includes credit card loans that have been modified in a TDR.
For a discussion of nonaccrual loans, past-due loan accounting policies, and accruing restructured loans refer to Credit and Investment Risk Management on pages 102-123, and Note 12.

loans.
303315

Impact of nonaccrual loans and accruing restructured loans on interest income
The negative impact on interest income from nonaccrual loans represents the difference between the amount of interest income that would have been recorded on such nonaccrual loans according to their original contractual terms had they been performing and the amount of interest that actually was recognized on a cash basis. The negative impact on interest income from accruing restructured loans represents the difference between the amount of interest income that would have been recorded on such loans according to their original contractual terms and the amount of interest that actually was recognized under the modified terms. The following table sets forth this data for the years specified. The change in forgone interest income from 20162018 through 20182020 was primarily driven by the change in the levels of nonaccrual loans.
(Unaudited)
Year ended December 31, (in millions)
201820172016
Nonaccrual loans   
U.S.:   
Consumer, excluding credit card:   
Gross amount of interest that would have been recorded at the original terms$318
$367
$464
Interest that was recognized in income(187)(175)(207)
Total U.S. consumer, excluding credit card131
192
257
Credit card:   
Gross amount of interest that would have been recorded at the original terms—
—
—
Interest that was recognized in income—
—
—
Total U.S. credit card—
—
—
Total U.S. consumer131
192
257
Wholesale:   
Gross amount of interest that would have been recorded at the original terms51
46
56
Interest that was recognized in income(16)(30)(5)
Total U.S. wholesale35
16
51
Negative impact — U.S.
166
208
308
Non-U.S.:   
Consumer, excluding credit card:   
Gross amount of interest that would have been recorded at the original terms—
—
—
Interest that was recognized in income—
—
—
Total non-U.S. consumer, excluding credit card—
—
—
Credit card:   
Gross amount of interest that would have been recorded at the original terms—
—
—
Interest that was recognized in income—
—
—
Total non-U.S. credit card—
—
—
Total non-U.S. consumer—
—
—
Wholesale: 
   
Gross amount of interest that would have been recorded at the original terms13
24
25
Interest that was recognized in income(3)(12)(2)
Total non-U.S. wholesale10
12
23
Negative impact — non-U.S.
10
12
23
Total negative impact on interest income$176
$220
$331


(Unaudited)
Year ended December 31, (in millions)		202020192018
Nonaccrual loans
U.S.:
Consumer, excluding credit card:
Gross amount of interest that would have been recorded at the original terms$330 $242 $296 
Interest that was recognized in income(174)(160)(171)
Total U.S. consumer, excluding credit card156 82 125 
Credit card:
Gross amount of interest that would have been recorded at the original termsNANANA
Interest that was recognized in incomeNANANA
Total U.S. credit cardNANANA
Total U.S. consumer156 82 125 
Wholesale:
Gross amount of interest that would have been recorded at the original terms104 77 73 
Interest that was recognized in income(60)(40)(32)
Total U.S. wholesale44 37 41 
Negative impact — U.S.
200 119 166 
Non-U.S.:
Consumer, excluding credit card:
Gross amount of interest that would have been recorded at the original terms— — — 
Interest that was recognized in income— — — 
Total non-U.S. consumer, excluding credit card— — — 
Credit card:
Gross amount of interest that would have been recorded at the original termsNANANA
Interest that was recognized in incomeNANANA
Total non-U.S. credit cardNANANA
Total non-U.S. consumer— — — 
Wholesale:
Gross amount of interest that would have been recorded at the original terms59 12 13 
Interest that was recognized in income(23)(5)(3)
Total non-U.S. wholesale36 7 10 
Negative impact — non-U.S.
36 7 10 
Total negative impact on interest income$236 $126 $176 
304316

(Unaudited)
Year ended December 31, (in millions)		202020192018
Accruing restructured loans
U.S.:
Consumer, excluding credit card:
Gross amount of interest that would have been recorded at the original terms$241 $279 $326 
Interest that was recognized in income(151)(192)(215)
Total U.S. consumer, excluding credit card90 87 111 
Credit card:
Gross amount of interest that would have been recorded at the original terms255 265 227 
Interest that was recognized in income(69)(72)(65)
Total U.S. credit card186 193 162 
Total U.S. consumer276 280 273 
Wholesale:
Gross amount of interest that would have been recorded at the original terms3 5 7 
Interest that was recognized in income(2)(3)(6)
Total U.S. wholesale1 2 1 
Negative impact — U.S.277 282 274 
Non-U.S.:
Consumer, excluding credit card:
Gross amount of interest that would have been recorded at the original terms— — — 
Interest that was recognized in income— — — 
Total non-U.S. consumer, excluding credit card— — — 
Credit card:
Gross amount of interest that would have been recorded at the original terms— — — 
Interest that was recognized in income— — — 
Total non-U.S. credit card— — — 
Total non-U.S. consumer— — — 
Wholesale:
Gross amount of interest that would have been recorded at the original terms— — — 
Interest that was recognized in income— — — 
Total non-U.S. wholesale— — — 
Negative impact — non-U.S.— — — 
Total negative impact on interest income$277 $282 $274 
(Unaudited)
Year ended December 31, (in millions)
201820172016
Accruing restructured loans   
U.S.:   
Consumer, excluding credit card:   
Gross amount of interest that would have been recorded at the original terms$329
$401
$451
Interest that was recognized in income(217)(245)(256)
Total U.S. consumer, excluding credit card112
156
195
Credit card:   
Gross amount of interest that would have been recorded at the original terms227
202
207
Interest that was recognized in income(65)(59)(63)
Total U.S. credit card162
143
144
Total U.S. consumer274
299
339
Wholesale:   
Gross amount of interest that would have been recorded at the original terms4
13
2
Interest that was recognized in income(4)(13)(2)
Total U.S. wholesale—
—
—
Negative impact — U.S.274
299
339
Non-U.S.:   
Consumer, excluding credit card:   
Gross amount of interest that would have been recorded at the original terms—
—
—
Interest that was recognized in income—
—
—
Total non-U.S. consumer, excluding credit card—
—
—
Credit card:   
Gross amount of interest that would have been recorded at the original terms—
—
—
Interest that was recognized in income—
—
—
Total non-U.S. credit card—
—
—
Total non-U.S. consumer—
—
—
Wholesale:   
Gross amount of interest that would have been recorded at the original terms—
—
—
Interest that was recognized in income—
—
—
Total non-U.S. wholesale—
—
—
Negative impact — non-U.S.—
—
—
Total negative impact on interest income$274
$299
$339

305317

Cross-border outstandings
Cross-border disclosure is based on the FFIEC guidelines governing the determination of cross-border risk.
The reporting of country exposure under the FFIEC bank regulatory requirements provides information on the distribution, by country and sector, of claims on, and liabilities to, U.S. and foreign residents held by U.S. banks and bank holding companies and is used by the regulatory agencies to determine the presence of credit and related risks,
risks, including transfer and country risk. Country location under the FFIEC bank regulatory reporting is based on where the entity or counterparty is legally established.
JPMorgan Chase’sChase’s total cross-border exposure tendsexposures may fluctuate from period to fluctuate greatly,period due to client activity and the amount of exposure at year-end tends to be a function of timing rather than representing a consistent trend. For a further discussion of JPMorgan Chase’s country risk exposure, refermarket flows. Refer to Country Risk Management on pages 132–133.143-144 for a further discussion of JPMorgan Chase’s country risk exposure.

The following table lists all countries in which JPMorgan Chase’sChase’s cross-border outstandings exceed 0.75% of consolidated assets as of the dates specified.
Cross-border outstandings exceeding 0.75% of total assets
(Unaudited)
(in millions)
December 31,GovernmentsBanks
Other(a)
Net local
country
assets
Total
cross-border outstandings(b)
Commitments(c)
Total exposure
Germany2020$6,165 $842 $23,614 $55,882 $86,503 $73,712 $160,215 
20199,757 4,175 8,709 12,143 34,784 54,817 89,601 
201812,793 7,769 15,393 30,054 66,009 67,973 133,982 
Cayman Islands2020$22 $329 $123,644 $32 $124,027 $85,830 $209,857 
201915 367 89,124 — 89,506 114,398 203,904 
20181 308 105,857 20 106,186 45,073 151,259 
Japan2020$61 $11,263 $3,739 $55,200 $70,263 $31,360 $101,623 
2019191 4,863 3,495 45,654 54,203 42,049 96,252 
2018282 9,803 4,167 41,948 56,200 51,901 108,101 
France2020$10,580 $7,019 $19,686 $2,476 $39,761 $114,307 $154,068 
20199,445 5,294 12,746 2,697 30,182 107,178 137,360 
201812,556 3,499 21,571 2,771 40,397 105,845 146,242 
Italy2020$10,645 $4,169 $5,174 $1,052 $21,040 $49,832 $70,872 
201910,567 2,192 6,095 881 19,735 49,456 69,191 
20189,401 4,098 5,145 1,375 20,019 61,326 81,345 
Ireland2020$125 $301 $15,679 $— $16,105 $6,460 $22,565 
2019381 319 18,061 — 18,761 9,520 28,281 
2018185 45 19,439 — 19,669 5,585 25,254 
China: Mainland2020$2,295 $8,439 $14,924 $2,633 $28,291 $8,827 $37,118 
2019179 5,168 7,207 1,382 13,936 11,111 25,047 
2018980 6,728 5,318 1,617 14,643 14,435 29,078 
(a)Consists primarily of non-banking financial institutions.
(b)Outstandings include loans and accrued interest receivable, interest-bearing deposits with banks, acceptances, resale agreements, other monetary assets, cross-border trading debt and equity instruments, fair value of foreign exchange and derivative contracts, and local country assets, net of local country liabilities. The amounts associated with foreign exchange and derivative contracts are presented after taking into account the impact of legally enforceable master netting agreements.
Cross-border outstandings exceeding 0.75% of total assets
(Unaudited)
(in millions)
December 31,GovernmentsBanks
Other(a)
Net local
country
assets
Total
cross-border outstandings(b)
Commitments(c)
Total exposure(d)
Germany2018$12,793
$7,769
$15,393
$29,577
$65,532
$67,973
$133,505
 201717,751
5,357
12,320
20,117
55,545
65,333
120,878
 201622,332
2,118
14,310
25,269
64,029
74,099
138,128
Cayman Islands2018$1
$308
$105,857
$20
$106,186
$45,073
$151,259
 20175
462
61,268
58
61,793
12,361
74,154
 201618
107
74,810
84
75,019
10,805
85,824
Japan2018$282
$9,803
$4,167
$40,247
$54,499
$51,901
$106,400
 20171,082
17,159
12,239
25,229
55,709
52,928
108,637
 2016865
16,522
5,209
48,505
71,101
52,553
123,654
France2018$12,556
$3,499
$21,571
$2,771
$40,397
$105,845
$146,242
 201712,975
7,083
15,329
2,471
37,858
83,572
121,430
 201610,871
4,076
26,195
3,723
44,865
89,780
134,645
Italy2018$9,401
$4,098
$5,145
$1,375
$20,019
$61,326
$81,345
 201711,516
4,524
4,499
611
21,150
61,005
82,155
 201612,290
4,760
4,487
848
22,385
63,647
86,032
Ireland2018$185
$45
$19,439
$—
$19,669
$5,585
$25,254
 2017630
318
19,630
—
20,578
5,728
26,306
 2016148
664
18,916
—
19,728
5,467
25,195
(a)Consists primarily of non-banking financial institutions.
(b)Outstandings include loans and accrued interest receivable, interest-bearing deposits with banks, acceptances, resale agreements, other monetary assets, cross-border trading debt and equity instruments, fair value of foreign exchange and derivative contracts, and local country assets, net of local country liabilities. The amounts associated with foreign exchange and derivative contracts are presented after taking into account the impact of legally enforceable master netting agreements.
(c)Commitments include outstanding letters of credit, undrawn commitments to extend credit, and the gross notional value of credit derivatives where JPMorgan Chase is a protection seller.
(d)The prior period amounts have been revised to conform with the current period presentation.

(c)Commitments include outstanding letters of credit, undrawn commitments to extend credit, and the gross notional value of credit derivatives where JPMorgan Chase is a protection seller.
306318


The adoption of the CECL accounting guidance resulted in a change in the accounting for PCI loans, which are considered PCD loans. In conjunction with the adoption of CECL, the Firm reclassified risk-rated loans and lending-related commitments from the consumer, excluding credit card portfolio segment to the wholesale portfolio segment, to align with the methodology applied when determining the allowance. Prior-period amounts have been revised to conform with the current presentation. Refer to Note 1 for further information.
The following tables summarize the changes in the allowance for loan losses and the allowance for lending-related commitments, as well as loan loss analysis during the periods indicated. For a further discussion, referRefer to Allowance for credit losses on pages 120–122,132-133, and Note 13.
13 for a further discussion.
Allowance for loan losses Allowance for loan losses
(Unaudited)
Year ended December 31, (in millions)
20182017201620152014(Unaudited)
Year ended December 31, (in millions)		20202019201820172016
Balance at beginning of year$13,604
$13,776
$13,555
$14,185
$16,264
Balance at beginning of year$13,123 $13,445 $13,604 $13,776 $13,555 
Cumulative effect of a change in accounting principleCumulative effect of a change in accounting principle4,172 NA
U.S. charge-offs U.S. charge-offs
U.S. consumer, excluding credit card1,025
1,779
1,500
1,658
2,132
U.S. consumer, excluding credit card805 902 977 1,727 1,434 
U.S. credit card5,011
4,521
3,799
3,475
3,682
U.S. credit card5,077 5,436 5,011 4,521 3,799 
Total U.S. consumer charge-offs6,036
6,300
5,299
5,133
5,814
Total U.S. consumer charge-offs5,882 6,338 5,988 6,248 5,233 
U.S. wholesale: U.S. wholesale:
Commercial and industrial161
87
240
63
44
Real estate3
3
7
6
14
Financial institutions—
—
—
5
14
Governments & Agencies—
5
—
—
25
Secured by real estateSecured by real estate16 53 28 36 43 
Commercial and IndustrialCommercial and Industrial530 282 160 102 267 
Other97
19
13
6
22
Other72 27 121 28 16 
Total U.S. wholesale charge-offs261
114
260
80
119
Total U.S. wholesale charge-offs618 362 309 166 326 
Total U.S. charge-offs6,297
6,414
5,559
5,213
5,933
Total U.S. charge-offs6,500 6,700 6,297 6,414 5,559 
Non-U.S. charge-offs Non-U.S. charge-offs
Non-U.S. consumer, excluding credit card—
—
—
—
—
Non-U.S. consumer, excluding credit card— — — — — 
Non-U.S. credit card—
—
—
13
149
Non-U.S. credit card— — — — — 
Total non-U.S. consumer charge-offs—
—
—
13
149
Total non-U.S. consumer charge-offs— — — — — 
Non-U.S. wholesale: Non-U.S. wholesale:
Commercial and industrial51
89
134
5
27
Real estate—
—
1
—
4
Financial institutions—
7
1
—
—
Governments & Agencies—
—
—
—
—
Secured by real estateSecured by real estate— 1 1 2 — 
Commercial and IndustrialCommercial and Industrial315 78 51 90 135 
Other1
2
2
10
1
Other21 31 — 6 3 
Total non-U.S. wholesale charge-offs52
98
138
15
32
Total non-U.S. wholesale charge-offs336 110 52 98 138 
Total non-U.S. charge-offs52
98
138
28
181
Total non-U.S. charge-offs336 110 52 98 138 
Total charge-offs6,349
6,512
5,697
5,241
6,114
Total charge-offs6,836 6,810 6,349 6,512 5,697 
U.S. recoveries U.S. recoveries
U.S. consumer, excluding credit card(842)(634)(591)(704)(814)U.S. consumer, excluding credit card(631)(536)(827)(612)(570)
U.S. credit card(493)(398)(357)(364)(383)U.S. credit card(791)(588)(493)(398)(357)
Total U.S. consumer recoveries(1,335)(1,032)(948)(1,068)(1,197)Total U.S. consumer recoveries(1,422)(1,124)(1,320)(1,010)(927)
U.S. wholesale: U.S. wholesale:
Commercial and industrial(45)(55)(10)(32)(49)
Real estate(23)(6)(15)(20)(27)
Financial institutions—
—
(3)(8)(12)
Governments & Agencies—
—
(1)(8)—
Secured by real estateSecured by real estate(5)(10)(11)(16)(29)
Commercial and IndustrialCommercial and Industrial(97)(21)(78)(65)(15)
Other(44)(15)(3)(3)(36)Other(22)(18)(38)(17)(9)
Total U.S. wholesale recoveries(112)(76)(32)(71)(124)Total U.S. wholesale recoveries(124)(49)(127)(98)(53)
Total U.S. recoveries(1,447)(1,108)(980)(1,139)(1,321)Total U.S. recoveries(1,546)(1,173)(1,447)(1,108)(980)
Non-U.S. recoveries Non-U.S. recoveries
Non-U.S. consumer, excluding credit card—
—
—
—
—
Non-U.S. consumer, excluding credit card— — — — — 
Non-U.S. credit card—
—
—
(2)(19)Non-U.S. credit card— — — — — 
Total non-U.S. consumer recoveries—
—
—
(2)(19)Total non-U.S. consumer recoveries— — — — — 
Non-U.S. wholesale: Non-U.S. wholesale:
Commercial and industrial(2)(4)(18)(10)—
Real estate—
(1)—
—
—
Financial institutions—
(1)—
(2)(14)
Governments & Agencies—
—
—
—
—
Secured by real estateSecured by real estate— — — (1)— 
Commercial and IndustrialCommercial and Industrial(12)(4)(45)(2)(9)
Other(44)(11)(7)(2)(1)Other(19)(4)(1)(14)(16)
Total non-U.S. wholesale recoveries(46)(17)(25)(14)(15)Total non-U.S. wholesale recoveries(31)(8)(46)(17)(25)
Total non-U.S. recoveries(46)(17)(25)(16)(34)Total non-U.S. recoveries(31)(8)(46)(17)(25)
Total recoveries(1,493)(1,125)(1,005)(1,155)(1,355)Total recoveries(1,577)(1,181)(1,493)(1,125)(1,005)
Net charge-offs4,856
5,387
4,692
4,086
4,759
Net charge-offs5,259 5,629 4,856 5,387 4,692 
Write-offs of PCI loans(a)
187
86
156
208
533
Write-offs of PCI loans(a)
NA151 187 86 156 
Provision for loan losses4,885
5,300
5,080
3,663
3,224
Provision for loan losses16,291 5,449 4,885 5,300 5,080 
Other(1)1
(11)1
(11)Other1 9 (1)1 (11)
Balance at year-end$13,445
$13,604
$13,776
$13,555
$14,185
Balance at year-end$28,328 $13,123 $13,445 $13,604 $13,776 
(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 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.
(a)Prior to the adoption of CECL, write-offs of PCI loans were recorded against the allowance for loan losses when actual losses for a pool exceeded estimated losses that were recorded as purchase accounting adjustments at the time of acquisition. A write-off of a PCI loan was recognized when the underlying loan was removed from a pool.


307319
Summary of loan and lending-related commitments loss experience

Allowance for lending-related commitments
(Unaudited)
Year ended December 31, (in millions)		20202019201820172016
Balance at beginning of year$1,191 $1,055 $1,068 $1,078 $786 
Cumulative effect of a change in accounting principles98 NANANANA
Provision for lending-related commitments1,121 136 (14)(10)281 
Other(1)— 1 — 11 
Balance at year-end$2,409 $1,191 $1,055 $1,068 $1,078 
(Unaudited)
Year ended December 31, (in millions)
20182017201620152014
Balance at beginning of year$1,068
$1,078
$786
$622
$705
Provision for lending-related commitments(14)(10)281
164
(85)
Other1
—
11
—
2
Balance at year-end$1,055
$1,068
$1,078
$786
$622


Loan loss analysis
(Unaudited)
As of or for the year ended December 31,
(in millions, except ratios)		20202019201820172016
Balances
Loans – average(a)
$1,004,597 $989,943 $977,406 $936,618 $892,954 
Loans – year-end(a)
1,012,853 997,620 1,015,760 959,429 922,831 
Net charge-offs5,259 5,629 4,856 5,387 4,692 
Allowance for loan losses:
U.S.$27,343 $12,303 $12,692 $12,552 $12,738 
Non-U.S.985 820 753 1,052 1,038 
Total allowance for loan losses$28,328 $13,123 $13,445 $13,604 $13,776 
Nonaccrual loans(a)
$10,573 $4,637 $5,542 $6,636 $7,102 
Ratios
Net charge-offs to:
Loans retained – average0.55 %0.60 %0.52 %0.60 %0.54 %
Allowance for loan losses18.56 42.89 36.12 39.60 34.06 
Allowance for loan losses to:
Loans retained – year-end(b)
2.95 1.39 1.39 1.47 1.55 
Nonaccrual loans retained323 329 292 229 205 

(a)In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans. Prior-period amounts have been revised to conform with the current presentation.
(b)For factors which influenced management's judgment in determining the amount of the additions to the allowance, refer to Critical Accounting Estimates Used by the Firm on pages 152-155 and Note 13. Refer to Provision for credit losses on page 55 for a more detailed discussion of the 2019 through 2020 provision for credit losses.
Loan loss analysis     
(Unaudited)
As of or for the year ended December 31,
(in millions, except ratios)
20182017201620152014
Balances     
Loans – average$944,885
$906,397
$866,378
$787,318
$739,175
Loans – year-end984,554
930,697
894,765
837,299
757,336
Net charge-offs4,856
5,387
4,692
4,086
4,759
Allowance for loan losses:     
U.S.$12,692
$12,552
$12,738
$12,704
$13,472
Non-U.S.753
1,052
1,038
851
713
Total allowance for loan losses$13,445
$13,604
$13,776
$13,555
$14,185
Nonaccrual loans$4,831
$5,943
$6,883
$6,429
$7,133
Ratios     
Net charge-offs to:     
Loans retained – average0.52%0.60%0.54%0.52%0.65%
Allowance for loan losses36.12
39.60
34.06
30.14
33.55
Allowance for loan losses to:     
Loans retained – year-end(a)
1.39
1.47
1.55
1.63
1.90
Nonaccrual loans retained292
229
205
215
202

(a)
The allowance for loan losses as a percentage of retained loans declined from 2014 to 2018, due to improvement in credit quality of the consumer and wholesale credit portfolios. For a more detailed discussion of the 2016 through 2018 provision for credit losses, refer to Provision for credit losses on page 122.

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Deposits
The following table provides a summary of the average balances and average interest rates of JPMorgan Chase’s various deposits for the years indicated.
(Unaudited)
Year ended December 31,		Average balancesAverage interest rates
(in millions, except interest rates)202020192018202020192018
U.S. offices
Noninterest-bearing$495,722 $386,116 $391,325 NANANA
Interest-bearing
Demand(a)
269,888 195,350 177,403 0.25 %1.42 %1.09 %
Savings(b)
739,916 602,728 585,885 0.13 0.46 0.32 
Time59,053 52,415 39,498 1.10 2.56 1.94 
Total interest-bearing deposits1,068,857 850,493 802,786 0.21 0.81 0.57 
Total deposits in U.S. offices1,564,579 1,236,609 1,194,111 0.15 0.56 0.38 
Non-U.S. offices
Noninterest-bearing21,805 21,103 20,099 NANANA
Interest-bearing
Demand267,545 217,979 210,978 — 0.59 0.45 
Savings— — — NMNMNM
Time52,822 47,376 31,273 0.13 1.64 1.48 
Total interest-bearing deposits320,367 265,355 242,251 0.02 0.78 0.58 
Total deposits in non-U.S. offices342,172 286,458 262,350 0.02 0.72 0.54 
Total deposits$1,906,751 $1,523,067 $1,456,461 0.12 %0.59 %0.41 %
(Unaudited)
Year ended December 31,
Average balances Average interest rates
(in millions, except interest rates)2018 2017 2016 2018 2017 2016
U.S. offices           
Noninterest-bearing$377,806
 $387,424
 $386,528
 —% —% —%
Interest-bearing           
Demand(a)
177,403
 162,985
 128,046
 1.09
 0.50
 0.18
Savings(b)
585,885
 559,654
 515,982
 0.32
 0.15
 0.09
Time53,017
 53,410
 59,710
 1.44
 1.02
 0.59
Total interest-bearing deposits816,305
 776,049
 703,738
 0.56
 0.29
 0.15
Total deposits in U.S. offices1,194,111
 1,163,473
 1,090,266
 0.38
 0.19
 0.09
Non-U.S. offices           
Noninterest-bearing18,050
 16,741
 16,170
 —
 —
 —
Interest-bearing           
Demand210,978
 213,733
 198,919
 0.45
 0.18
 0.10
Savings—
 —
 —
 NM
 NM
 NM
Time33,322
 23,439
 22,613
 1.39
 1.08
 0.56
Total interest-bearing deposits244,300
 237,172
 221,532
 0.58
 0.27
 0.15
Total deposits in non-U.S. offices262,350
 253,913
 237,702
 0.54
 0.25
 0.14
Total deposits$1,456,461
 $1,417,386
 $1,327,968
 0.41% 0.20% 0.10%
(a)Includes Negotiable Order of Withdrawal (“NOW”) accounts, and certain trust accounts.
(a)Includes Negotiable Order of Withdrawal (“NOW”) accounts, and certain trust accounts.
(b)Includes Money Market Deposit Accounts (“MMDAs”).

(b)Includes Money Market Deposit Accounts (“MMDAs”).
At December 31, 2018,2020, other U.S. time deposits in denominations of $100,000 or more totaled $15.5$21.8 billion, substantially all of which mature in three months or less. In addition, the table below presents the maturities for U.S. time certificates of deposit in denominations of $100,000 or more.
(Unaudited)
By remaining maturity at
December 31, 2020
(in millions)		Three months
or less		Over three months
but within six months		Over six months
but within 12 months		Over 12 monthsTotal
U.S. time certificates of deposit ($100,000 or more)$9,551 $5,080 $2,108 $800 $17,539 
(Unaudited)
By remaining maturity at
December 31, 2018
(in millions)
Three months
or less
 
Over three months
but within six months
 
Over six months
 but within 12 months
 Over 12 months Total
U.S. time certificates of deposit ($100,000 or more)$6,274
 $3,265
 $3,166
 $6,740
 $19,445


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Short-term and other borrowed funds
The following table provides a summary of JPMorgan Chase’s short-term and other borrowed funds for the years indicated.
(Unaudited)
As of or for the year ended December 31, (in millions, except rates)		202020192018
Federal funds purchased and securities loaned or sold under repurchase agreements:
Balance at year-end$215,209 $183,675 $182,320 
Average daily balance during the year255,421 227,994 189,282 
Maximum month-end balance298,464 251,829 201,340 
Weighted-average rate at December 310.04 %1.77 %2.18 %
Weighted-average rate during the year0.41 2.03 1.62 
Commercial paper:
Balance at year-end$12,031 $14,754 $30,059 
Average daily balance during the year12,129 22,977 27,834 
Maximum month-end balance14,582 30,007 30,470 
Weighted-average rate at December 310.26 %2.16 %2.71 %
Weighted-average rate during the year1.12 2.66 2.27 
Other borrowed funds:(a)
Balance at year-end$97,393 $73,312 $101,513 
Average daily balance during the year106,887 106,348 108,436 
Maximum month-end balance122,860 128,488 125,544 
Weighted-average rate at December 311.00 %1.85 %2.23 %
Weighted-average rate during the year1.29 2.05 2.06 
Short-term beneficial interests:(b)
Commercial paper and other borrowed funds:
Balance at year-end$12,425 $11,103 $6,527 
Average daily balance during the year13,441 12,511 4,756 
Maximum month-end balance14,793 16,016 6,527 
Weighted-average rate at December 310.21 %1.92 %2.53 %
Weighted-average rate during the year0.71 2.39 2.10 
(Unaudited)
As of or for the year ended December 31, (in millions, except rates)
2018 2017 2016
Federal funds purchased and securities loaned or sold under repurchase agreements:     
Balance at year-end$182,320
 $158,916
 $165,666
Average daily balance during the year189,282
 187,386
 178,720
Maximum month-end balance201,340
 205,286
 207,211
Weighted-average rate at December 312.18% 1.03% 0.50%
Weighted-average rate during the year1.62
 0.86
 0.61
      
Commercial paper:     
Balance at year-end$30,059
 $24,186
 $11,738
Average daily balance during the year27,834
 19,920
 15,001
Maximum month-end balance30,470
 24,934
 19,083
Weighted-average rate at December 312.71% 1.59% 1.13%
Weighted-average rate during the year2.27
 1.39
 0.90
      
Other borrowed funds:(a)
     
Balance at year-end$101,513
 $87,652
 $89,154
Average daily balance during the year108,436
 96,331
 93,252
Maximum month-end balance125,544
 107,157
 102,310
Weighted-average rate at December 312.23% 2.09% 1.79%
Weighted-average rate during the year2.06
 1.98
 1.93
      
Short-term beneficial interests:(b)
     
Commercial paper and other borrowed funds:     
Balance at year-end$6,527
 $4,310
 $5,688
Average daily balance during the year4,756
 5,327
 8,296
Maximum month-end balance6,527
 7,573
 10,494
Weighted-average rate at December 312.53% 1.50% 0.83%
Weighted-average rate during the year2.10
 1.07
 0.67
(a)Includes interest-bearing securities sold but not yet purchased of $64.2 billion, $47.1 billion and $62.3 billion at December 31, 2020, 2019 and 2018, respectively.
(a)Includes interest-bearing securities sold but not yet purchased of $62.3 billion, $60.0 billion and $66.4 billion at December 31, 2018, 2017 and 2016, respectively.
(b)Included on the Consolidated balance sheets in beneficial interests issued by consolidated VIEs.
(b)Included on the Consolidated balance sheets in beneficial interests issued by consolidated VIEs.
Federal funds purchased represent overnight funds. Securities loaned or sold under repurchase agreements generally mature between one and ninety days. Commercial paper generally is issued in amounts not less than $100,000, and with maturities of 270 days or less. Other borrowed funds consist of demand notes, term federal funds purchased, and various other borrowings that generally have maturities of one year or less.


310322



Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf of the undersigned, thereunto duly authorized.
JPMorgan Chase & Co.

        (Registrant)
By: /s/ JAMES DIMON
 
(James Dimon

Chairman and Chief Executive Officer)
February 26, 201923, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the date indicated. JPMorgan Chase & Co. does not exercise the power of attorney to sign on behalf of any Director.
CapacityDate
/s/ JAMES DIMONDirector, Chairman and Chief Executive Officer
(Principal Executive Officer)
(James Dimon)
CapacityDate
/s/ JAMES DIMON
Director, Chairman and Chief Executive Officer
 (Principal Executive Officer)
(James Dimon)
/s/ LINDA B. BAMMANNDirector
(Linda B. Bammann)
/s/ JAMES A. BELLDirector 
(James A. Bell)
/s/ STEPHEN B. BURKEDirector 
(Stephen B. Burke)
/s/ TODD A. COMBSDirector 
(Todd A. Combs)
/s/ JAMES S. CROWNDirector February 26, 201923, 2021
(James S. Crown)
/s/ TIMOTHY P. FLYNNDirector 
(Timothy P. Flynn)
/s/ MELLODY HOBSONDirector
(Mellody Hobson)
/s/ LABAN P. JACKSON, JR.Director 
(Laban P. Jackson, Jr.)
/s/ MICHAEL A. NEALDirector
(Michael A. Neal)
/s/ LEE R. RAYMONDPHEBE N. NOVAKOVICDirector
(Lee R. Raymond)Phebe N. Novakovic)
/s/ WILLIAM C. WELDONVIRGINIA M. ROMETTYDirector
 (William C. Weldon)(Virginia M. Rometty)
/s/ MARIANNE LAKEJENNIFER PIEPSZAK
Executive Vice President and Chief Financial Officer
(Jennifer Piepszak)(Principal Financial Officer)
(Marianne Lake)
/s/ NICOLE GILES
Managing Director and Firmwide Controller
(Nicole Giles)(Principal Accounting Officer)
(Nicole Giles)


311323