JPM commercial loans for the 1st qtr. 2011 were about $100 billion or about 15% of their total. Most of these loans, I believe, are commercial and industrial (c&i) loans. Their supplemental tables shows that 8% of the total commercial loans were secured by real estate.
1st quarter 2011 charge-offs for their commercial loans only amounted to 13 bsp vs. around 100 bsp for previous quarters. Nonaccruals and ALL remained unchanged for the quarter at $1.9 billion and $2.7 billion respectively. Haven't found any info in jpm report discussing factors accounting for the big drop to 13 bsp. Spin, any comment on their 13 bsp for the quarter?
From what I've read most c&i loans are secured by working capital - 70% for receivable and 30% for inventory.
Bbt commercial loans are around $50 billion and although I do not expect charge-offs to drop anywhere close to 13 bsp for the quarter, jpm results suggest that the banks charge-offs in this area may be down significantly. Remember, Kelly King made a point last quarter that 30 to 89 day delinquencies for commercial loans dropped something like 30% sequentially and were at the lowest level in 3 or 4 years.
" Spin, any comment on their 13 bsp for the quarter?"
JPM is mainly C&I. Real estate lending as JPM define it: " Real Estate Banking provides full-service banking to investors and developers of institutional-grade real estate properties."
is ~1.1% of their loan book. Its also in heavy decline for JPM down 7% q-o-q and 27% y-o-y. CRE/ADC is not a business they are interested in.
If your question is on BBTs C&I chargeoff component and how it relates to BBT then its probably a reasonable proxy. C&I is a good business to get into and BBT went into C&I hard 3Q's ago via large internal staff ramp as it was one of the few performing lending segments. If your asking if the 13bsp chargeoff (and note for the JPM commercial segment they still built the reserve) translate into a step-down for BBT across the CRE/ADC components then no I'm not confident in extrapolating that.
I can't see your Q1-0.60c EPS - but King has surprised me before. Hes got a couple more tricks up his sleeve with the covered securities and loans.
If your asking if the "13bsp chargeoff (and note for the JPM commercial segment they still built the reserve) translate into a step-down for BBT across the CRE/ADC components then no I'm not confident in extrapolating that."
I'm not suggesting extrapolation but what I am suggesting is that bbt may show major improvement in their credit metrics of the c&i and cre-ipp portfolio next week.
Jpm built the reserve by $25 million so the 1st quarter 2011 provision for the $100 billion commercial portfolio was only 23 bsp. This type of performance was certainly not expected and was 90% better than 4th quarter charge-offs of 116 bsp. I think that's eye-poping and am puzzled why the media did not pick it up.
If the regional banks show similar data next week it has big implications going forward.