Notes to consolidated financial statements J. P.  Morgan Chase & Co.
## Table 0 ##
JPMorgan Chase enters into resale agreements, repurchase agreements, securities borrowed transactions and securities loaned transactions primarily to finance the Firm’s inventory positions, acquire securities to cover short positions and settle other securities obligations.
The Firm also enters into these transactions to accommodate customers’ needs.
Securities purchased under resale agreements (“resale agreements”) and securities sold under repurchase agreements (“repurchase agreements”) are generally treated as collateralized financing transactions and are carried on the Consolidated balance sheet at the amounts the securities will be subsequently sold or repurchased, plus accrued interest.
Where appropriate, resale and repurchase agreements with the same counterparty are reported on a net basis in accordance with FIN 41.
JPMorgan Chase takes possession of securities purchased under resale agreements.
On a daily basis, JPMorgan Chase monitors the market value of the underlying collateral received from its counterparties, consisting primarily of U. S.  and non-U.
S.  government and agency securities, and requests additional collateral from its counterparties when necessary.
Similar transactions that do not meet the SFAS 140 definition of a repurchase agreement are accounted for as “buys” and “sells” rather than financing transactions.
These transactions are accounted for as a purchase (sale) of the underlying securities with a forward obligation to sell (purchase) the securities.
The forward purchase (sale) obligation, a derivative, is recorded on the Consolidated balance sheet at its fair value, with changes in fair value recorded in Trading revenue.
Notional amounts of these transactions accounted for as purchases under SFAS 140 were $15 billion and $8 billion at December 31, 2003 and 2002, respectively.
Notional amounts of these transactions accounted for as sales under SFAS 140 were $8 billion and $13 billion at December 31, 2003 and 2002, respectively.
Based on the short-term duration of these contracts, the unrealized gain or loss is insignificant.
Securities borrowed and securities lent are recorded at the amount of cash collateral advanced or received.
Securities borrowed consist primarily of government and equity securities.
JPMorgan Chase monitors the market value of the securities borrowed and lent on a daily basis and calls for additional collateral when appropriate.
Fees received or paid are recorded in Interest income or Interest expense JPMorgan Chase pledges certain financial instruments it owns to collateralize repurchase agreements and other securities financings.
Pledged securities that can be sold or repledged by the secured party are identified as financial instruments owned (pledged to various parties) on the Consolidated balance sheet.
At December 31, 2003, the Firm had received securities as collateral that can be repledged, delivered or otherwise used with a fair value of approximately $210 billion.
This collateral was generally obtained under resale or securities-borrowing agreements.
Of these securities, approximately $197 billion was repledged, delivered or otherwise used, generally as collateral under repurchase agreements, securities-lending agreements or to cover short sales.
Loans are reported at the principal amount outstanding, net of the allowance for loan losses, unearned income and any net deferred loan fees.
Loans held for sale are carried at the lower of aggregate cost or fair value.
Loans are classified as “trading” for secondary market trading activities where positions are bought and sold to make profits from short-term movements in price.
Loans held for trading purposes are included in Trading assets and are carried at fair value, with the gains and losses included in Trading revenue.
Interest income is recognized using the interest method, or on a basis approximating a level rate of return over the term of the loan.
Nonaccrual loans are those on which the accrual of interest is discontinued.
Loans (other than certain consumer loans discussed below) are placed on nonaccrual status immediately if, in the opinion of management, full payment of principal or interest is in doubt, or when principal or interest is 90 days or more past due and collateral, if any, is insufficient to cover principal and interest.
Interest accrued but not collected at the date a loan is placed on nonaccrual status is reversed against Interest income.
In addition, the amortization of net deferred loan fees is suspended.
Interest income on nonaccrual loans is recognized only to the extent it is received in cash.
However, where there is doubt regarding the ultimate collectibility of loan principal, all cash thereafter received is applied to reduce the carrying value of the loan.
Loans are restored to accrual status only when interest and principal payments are brought current and future payments are reasonably assured.
Consumer loans are generally charged to the Allowance for loan losses upon reaching specified stages of delinquency, in accordance with the Federal Financial Institutions Examination Council (“FFIEC”) policy.
For example, credit card loans are charged off at the earlier of 180 days past due or within 60 days from receiving notification of the filing of bankruptcy.
Residential mortgage products are generally charged off to net realizable value at 180 days past due.
Other consumer products are generally charged off (to net realizable value if collateralized) at 120 days past due.
Accrued interest on residential mortgage products, automobile financings and certain other consumer loans are accounted for in accordance with the nonaccrual loan policy
## Table 1 ##
Loans The commercial specific loss component of the allowance was $917 million at December 31, 2003, a decrease of 43% from year-end 2002.
The decrease was attributable to the improvement in the credit quality of the commercial loan portfolio, as well as the reduction in the size of the portfolio.
The commercial expected loss component of the allowance was $454 million at December 31, 2003, a decrease of 26% from yearend 2002.
The decrease reflected an improvement in the average quality of the loan portfolio, as well as the improving credit environment, which affected inputs to the expected loss model.
The consumer expected loss component of the allowance was $2.3 billion at December 31, 2003, a decrease of 4% from yearend 2002.
Although the consumer managed loan portfolio increased by 10%, the businesses that drove the increase, Home Finance and Auto Finance, have collateralized products with lower expected loss rates.
The residual component of the allowance was $895 million at December 31, 2003.
The residual component, which incorporates management's judgment, addresses uncertainties that are not considered in the formula-based commercial specific and expected components of the allowance for credit losses.
The $121 million increase addressed uncertainties in the economic environment and concentrations in the commercial loan portfolio that existed during the first half of 2003.
In the second half of the year, as commercial credit quality continued to improve and the commercial allowance declined further, the residual component was reduced as well.
At December 31, 2003, the residual component represented approximately 20% of the total allowance for loan losses, within the Firm’s target range of between 10% and 20%.
The Firm anticipates that if the current positive trend in economic conditions and credit quality continues, the commercial and residual components will continue to be reduced.
Lending-related commitments To provide for the risk of loss inherent in the credit-extension process, management also computes specific and expected loss components as well as a residual component for commercial lending–related commitments.
This is computed using a methodology similar to that used for the commercial loan portfolio, modified for expected maturities and probabilities of drawdown.
The allowance decreased by 11% to $324 million as of December 31, 2003, due to improvement in the criticized portion of the Firm’s lending-related commitments.
between the Firm, QSPEs and nonconsolidated VIEs are reflected on JPMorgan Chase’s Consolidated balance sheet or in the Notes to consolidated financial statements.
Investments in companies that are considered to be votinginterest entities under FIN 46, in which the Firm has significant influence over operating and financing decisions (generally defined as owning a voting or economic interest of 20% to 50%), are accounted for in accordance with the equity method of accounting.
These investments are generally included in Other assets, and the Firm’s share of income or loss is included in Other revenue.
For a discussion of private equity investments, see Note 15 on page 106 of this Annual Report.
Assets held for clients in an agency or fiduciary capacity by the Firm are not assets of JPMorgan Chase and are not included in the Consolidated balance sheet.
Certain amounts in prior periods have been reclassified to conform to the current presentation.
Use of estimates in the preparation of consolidated financial statements The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expense and disclosures of contingent assets and liabilities.
Actual results could be different from these estimates.
Foreign currency translation Assets and liabilities denominated in foreign currencies are translated into U. S.  dollars using applicable rates of exchange.
JPMorgan Chase translates revenues and expenses using exchange rates at the transaction date.
Gains and losses relating to translating functional currency financial statements for U. S.  reporting are included in Other comprehensive income (loss) within Stockholders’ equity.
Gains and losses relating to nonfunctional currency transactions, including non-U.
S.  operations where the functional currency is the U. S.  dollar and operations in highly inflationary environments, are reported in the Consolidated statement of income.
Statement of cash flows For JPMorgan Chase’s Consolidated statement of cash flows, cash and cash equivalents are defined as those amounts included in Cash and due from banks.
Significant accounting policies The following table identifies JPMorgan Chase’s significant accounting policies and the Note and page where a detailed description of each policy can be found:
## Table 2 ##
Note 2 Business changes and developments Agreement to merge with Bank One Corporation On January 14, 2004, JPMorgan Chase and Bank One Corporation (“Bank One”) announced an agreement to merge.
The merger agreement, which has been approved by the boards of directors of both companies, provides for a stock-for-stock merger in which 1.32 shares of JPMorgan Chase common stock will be exchanged, on a tax-free basis, for each share of Bank One common stock.
The merged company, headquartered in New York, will be known as J. P.  Morgan Chase & Co.  and will continue to trade on the New York Stock Exchange under the symbol JPM.
The merger is subject to approval by the shareholders of both institutions as well as U. S.  federal and state and non-U.
S.  regulatory authorities.
Completion of the transaction is expected to occur in mid-2004.
Acquisition of the Providian Master Trust On February 5, 2002, JPMorgan Chase acquired the Providian Master Trust from Providian National Bank.
The acquisition consisted of credit card receivables of approximately $7.9 billion and related relationships.
The acquired portfolio consisted of approximately 3.3 million credit card accounts.
Note 3 Trading activities Trading assets include debt and equity securities held for trading purposes that JPMorgan Chase owns (“long” positions).
Trading liabilities include debt and equity securities that the Firm has sold to other parties but does not own (“short” positions).
The Firm is obligated to purchase securities at a future date to cover the short positions.
Included in Trading assets and Trading liabilities
Notes to consolidated financial statements J. P.  Morgan Chase & C Postretirement medical and life insurance JPMorgan Chase offers postretirement medical and life insurance benefits to qualifying U. S.  employees.
These benefits vary with length of service and date of hire and provide for lim- its on the Firm’s share of covered medical benefits.
The medical benefits are contributory, while the life insurance benefits are noncontributory.
Postretirement medical benefits are also offered to qualifying U. K.  employees.
JPMorgan Chase’s U. S.  postretirement benefit obligation is partially funded with corporate-owned life insurance (“ COLI” ) purchased on the lives of eligible employees and retirees While the Firm owns the COLI policies, 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 expenses.
The U. K.  postre- tirement benefit plan is unfunded.
The following tables present the funded status and amounts reported on the Consolidated balance sheet, the accumulated benefit obligation and the components of net periodic benefit costs reported in the Consolidated statement of income for the Firm’s U. S.  and non-U.
S.  defined benefit pension and postretire- ment benefit plan
## Table 3 ##
(a) Includes postretirement benefit obligation of $36 million and $38 million and postretirement benefit liability (included in Accrued expenses) of $54 million and $49 million at December 31,2003 and 2002, respectively,for the U. K. plan,which is unfunded.
(b) At December 31,2003 and 2002,approximately $315 million and $295 million,respectively,of U. S. plan assets relate to surplus assets of group annuity contracts.
(c) At December 31,2003 and 2002,Accrued expenses related to non-U.
S. defined benefit pension plans that JPMorgan Chase elected not to prefund fully totaled $99 million and $81 million,respectively.

<table><tr><td>December 31, (in millions)</td><td>2003</td><td>2002</td></tr><tr><td>Securities purchased under resale agreements</td><td>$62,801</td><td>$57,645</td></tr><tr><td>Securities borrowed</td><td>41,834</td><td>34,143</td></tr><tr><td>Securities sold under repurchase agreements</td><td>$105,409</td><td>$161,394</td></tr><tr><td>Securities loaned</td><td>2,461</td><td>1,661</td></tr></table>
<table><tr><td>For the year ended December 31</td><td>2003</td><td>2002</td></tr><tr><td>(in millions)</td><td>Commercial</td><td>Consumer</td><td>Residual</td><td>Total</td><td>Commercial</td><td>Consumer</td><td>Residual</td><td>Total</td></tr><tr><td>Provision for loan losses</td><td>$-30</td><td>$1,491</td><td>$118</td><td>$1,579</td><td>$2,371</td><td>$1,589</td><td>$79</td><td>$4,039</td></tr><tr><td>Provision for lending-related commitments</td><td>-47</td><td>—</td><td>8</td><td>-39</td><td>309</td><td>—</td><td>-17</td><td>292</td></tr><tr><td>Securitized credit losses</td><td>—</td><td>1,870</td><td>—</td><td>1,870</td><td>—</td><td>1,439</td><td>—</td><td>1,439</td></tr><tr><td>Total managed credit costs</td><td>$-77</td><td>$3,361</td><td>$126</td><td>$3,410</td><td>$2,680</td><td>$3,028</td><td>$62</td><td>$5,770</td></tr></table>
<table><tr><td>Trading activities</td><td>Note 3</td><td>Page 87</td></tr><tr><td>Other noninterest revenue</td><td>Note 4</td><td>Page 88</td></tr><tr><td>Postretirement employee benefit plans</td><td>Note 6</td><td>Page 89</td></tr><tr><td>Employee stock-based incentives</td><td>Note 7</td><td>Page 93</td></tr><tr><td>Securities</td><td>Note 9</td><td>Page 96</td></tr><tr><td>Securities financing activities</td><td>Note 10</td><td>Page 98</td></tr><tr><td>Loans</td><td>Note 11</td><td>Page 98</td></tr><tr><td>Allowance for credit losses</td><td>Note 12</td><td>Page 100</td></tr><tr><td>Loan securitizations</td><td>Note 13</td><td>Page 100</td></tr><tr><td>Variable interest entities</td><td>Note 14</td><td>Page 103</td></tr><tr><td>Private equity investments</td><td>Note 15</td><td>Page 106</td></tr><tr><td>Goodwill and other intangibles</td><td>Note 16</td><td>Page 107</td></tr><tr><td>Premises and equipment</td><td>Note 17</td><td>Page 109</td></tr><tr><td>Income taxes</td><td>Note 24</td><td>Page 113</td></tr><tr><td>Derivative instruments and hedging activities</td><td>Note 28</td><td>Page 116</td></tr><tr><td>Off-balance sheet lending-related financial instrumentsand guarantees</td><td>Note 29</td><td>Page 117</td></tr><tr><td>Fair value of financial instruments</td><td>Note 31</td><td>Page 120</td></tr></table>
<table><tr><td></td><td colspan="4">Defined benefit pension plans</td><td colspan="2" rowspan="2"Postretirement benefit plans<sup>(a)</sup>></td></tr><tr><td></td><td colspan="2">U.S.</td><td colspan="2">Non-U.S.</td></tr><tr><td>As of December 31, (in millions)</td><td>2003</td><td>2002</td><td>2003</td><td>2002</td><td>2003</td><td>2002</td></tr><tr><td> Change in benefit obligation</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Benefit obligation at beginning of year</td><td>$-4,241</td><td>$-4,007</td><td>$-1,329</td><td>$-1,100</td><td>$-1,126</td><td>$-1,056</td></tr><tr><td>Benefits earned during the year</td><td>-180</td><td>-174</td><td>-16</td><td>-16</td><td>-15</td><td>-12</td></tr><tr><td>Interest cost on benefit obligations</td><td>-262</td><td>-275</td><td>-74</td><td>-62</td><td>-73</td><td>-69</td></tr><tr><td>Plan amendments</td><td>-89</td><td>—</td><td>-1</td><td>—</td><td>—</td><td>10</td></tr><tr><td>Employee contributions</td><td>—</td><td>—</td><td>-1</td><td>-1</td><td>-11</td><td>-14</td></tr><tr><td>Actuarial gain (loss)</td><td>-262</td><td>-226</td><td>-125</td><td>-92</td><td>-134</td><td>-50</td></tr><tr><td>Benefits paid</td><td>386</td><td>377</td><td>55</td><td>47</td><td>113</td><td>99</td></tr><tr><td>Curtailment gain</td><td>15</td><td>64</td><td>—</td><td>22</td><td>-2</td><td>27</td></tr><tr><td>Settlement gain</td><td>—</td><td>—</td><td>—</td><td>6</td><td>—</td><td>—</td></tr><tr><td>Special termination benefits</td><td>—</td><td>—</td><td>-1</td><td>-3</td><td>—</td><td>-57</td></tr><tr><td>Foreign exchange impact and other</td><td>—</td><td>—</td><td>-167</td><td>-130</td><td>-4</td><td>-4</td></tr><tr><td>Benefit obligation at end of year</td><td>$-4,633</td><td>$-4,241</td><td>$-1,659</td><td>$-1,329</td><td>$-1,252</td><td>$-1,126</td></tr><tr><td> Change in plan assets</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Fair value of plan assets at beginning of year</td><td>$4,114</td><td>$4,048</td><td>$1,281</td><td>$1,058</td><td>$1,020</td><td>$1,089</td></tr><tr><td>Actual return on plan assets</td><td>811</td><td>-406</td><td>133</td><td>-150</td><td>154</td><td>-74</td></tr><tr><td>Firm contributions</td><td>327</td><td>849</td><td>87</td><td>304</td><td>2</td><td>16</td></tr><tr><td>Settlement payments</td><td>—</td><td>—</td><td>-12</td><td>-6</td><td>—</td><td>—</td></tr><tr><td>Benefits paid</td><td>-386</td><td>-377</td><td>-43</td><td>-47</td><td>-27</td><td>-11</td></tr><tr><td>Foreign exchange impact and other</td><td>—</td><td>—</td><td>157</td><td>122</td><td>—</td><td>—</td></tr><tr><td>Fair value of plan assets at end of year</td><td>$4,866(b)</td><td>$4,114(b)</td><td>$1,603</td><td>$1,281</td><td>$1,149</td><td>$1,020</td></tr><tr><td> Reconciliation of funded status</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Funded status</td><td>$233</td><td>$-127</td><td>$-56</td><td>$-48</td><td>$-103</td><td>$-106</td></tr><tr><td>Unrecognized amounts:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Net transition asset</td><td>—</td><td>—</td><td>-1</td><td>-1</td><td>—</td><td>—</td></tr><tr><td>Prior service cost</td><td>137</td><td>56</td><td>5</td><td>4</td><td>8</td><td>10</td></tr><tr><td>Net actuarial (gain) loss</td><td>920</td><td>1,224</td><td>564</td><td>477</td><td>156</td><td>86</td></tr><tr><td> Prepaid (accrued) benefit cost reported inOther assets (Accrued expenses), respectively</td><td>$1,290</td><td>$1,153</td><td>$512(c)</td><td>$432(c)</td><td>$61</td><td>$-10</td></tr><tr><td> Accumulated benefit obligation</td><td>$-4,312</td><td>$-3,949</td><td>$-1,626</td><td>$-1,295</td><td>NA</td><td>NA</td></tr></table>

Question: what was the consumer expected loss allowance at 12/31/2002 , in billions?
Answer: 2.39583