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Goodwill and Other Intangible Assets (Tables)
9 Months Ended
Sep. 30, 2011
Goodwill and Other Intangible Assets (Tables) [Abstract] 
Goodwill and other intangible assets
(in millions)
September 30, 2011
December 31, 2010
Goodwill
$
48,180

$
48,854

Mortgage servicing rights
7,833

13,649

Other intangible assets:
 
 
Purchased credit card relationships
$
668

$
897

Other credit card-related intangibles
508

593

Core deposit intangibles
662

879

Other intangibles
1,558

1,670

Total other intangible assets
$
3,396

$
4,039

Goodwill attributed to the business segments
(in millions)
September 30, 2011
December 31, 2010
Investment Bank
$
5,283

$
5,278

Retail Financial Services
16,489

16,496

Card Services & Auto
14,514

14,522

Commercial Banking
2,864

2,866

Treasury & Securities Services
1,667

1,680

Asset Management
6,986

7,635

Corporate/Private Equity
377

377

Total goodwill
$
48,180

$
48,854

Changes in the carrying amount of goodwill
 
Three months ended September 30,
 
Nine months ended September 30,
(in millions)
2011
 
2010
 
2011
 
2010
Balance at beginning of period(a)
$
48,882

 
$
48,320

 
$
48,854

 
$
48,357

Changes during the period from:
 
 
 
 
 
 
 
Business combinations
60

 
381

 
66

 
400

Dispositions
(645
)
 
—

 
(645
)
 
(19
)
Other(b)
(117
)
 
35

 
(95
)
 
(2
)
Balance at September 30(a)
$
48,180

 
$
48,736

 
$
48,180

 
$
48,736

(a)
Reflects gross goodwill balances as the Firm has not recognized any impairment losses to date.
(b)
Includes foreign currency translation adjustments and other tax-related adjustments.
Mortgage servicing rights activity
 
Three months ended September 30,
 
Nine months ended September 30,
(in millions, except where otherwise noted)
2011

 
2010

 
2011

 
2010

Fair value at beginning of period
$
12,243

 
$
11,853

 
$
13,649

 
$
15,531

MSR activity
 
 
 
 
 
 
 
Originations of MSRs
623

 
803

 
1,942

 
2,025

Purchase of MSRs
1

 
9

 
31

 
23

Disposition of MSRs
—

 
(257
)
 
—

 
(262
)
Total net additions
624

 
555

 
1,973

 
1,786

Changes in fair value due to market interest rates
(4,575
)
 
(1,398
)
 
(5,129
)
 
(4,997
)
Changes in fair value due to modeled servicing portfolio runoff(a)
(459
)
 
(606
)
 
(1,503
)
 
(1,835
)
Other changes in valuation due to inputs and assumptions(b)
—

 
(99
)
 
(1,157
)
 
(180
)
Total change in fair value of MSRs(c)
(5,034
)
 
(2,103
)
 
(7,789
)
 
(7,012
)
Fair value at September 30(d)
$
7,833

 
$
10,305

 
$
7,833

 
$
10,305

Change in unrealized gains/(losses) included in income related to MSRs held at September 30
$
(4,575
)
 
$
(1,497
)
 
$
(6,286
)
 
$
(5,177
)
Contractual service fees, late fees and other ancillary fees included in income
$
986

 
$
1,113

 
$
2,994

 
$
3,393

Third-party mortgage loans serviced at September 30 (in billions)
$
932.6

 
$
1,021.2

 
$
932.6

 
$
1,021.2

Servicer advances, net at September 30 (in billions)(e)
$
11.0

 
$
9.3

 
$
11.0

 
$
9.3

(a)
Predominantly represents modeled MSR asset amortization.
(b)
Represents the aggregate impact of changes in model inputs and assumptions such as costs to service, home prices, mortgage spreads, ancillary income, and assumptions used to derive prepayment speeds, as well as changes to the valuation models themselves.
(c)
Includes changes related to commercial real estate of $(3) million and $(2) million for the three months ended September 30, 2011 and 2010, respectively, and $(7) million and $(6) million for the nine months ended September 30, 2011 and 2010, respectively.
(d)
Includes $33 million and $35 million related to commercial real estate at September 30, 2011 and 2010, respectively.
(e)
Represents amounts the Firm pays as the servicer (e.g., scheduled principal and interest to a trust, 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 advances is minimal because reimbursement of the advances is senior to all cash payments to investors. In addition, the Firm maintains the right to stop payment if the collateral is insufficient to cover the advance.
RFS mortgage fees and related income
 
Three months ended September 30,
 
Nine months ended September 30,
(in millions)
2011
 
2010
 
2011
 
2010
RFS mortgage fees and related income
 
 
 
 
 
 
 
Net production revenue:
 
 
 
 
 
 
 
Production revenue
$
1,090

 
$
1,233

 
$
2,536

 
$
2,342

Repurchase losses
(314
)
 
(1,464
)
 
(957
)
 
(2,563
)
Net production revenue
776

 
(231
)
 
1,579

 
(221
)
Net mortgage servicing revenue
 
 
 
 
 
 
 
Operating revenue:
 
 
 
 
 
 
 
Loan servicing revenue
1,039

 
1,153

 
3,102

 
3,446

Changes in MSR asset fair value due to modeled servicing portfolio runoff(a)
(457
)
 
(604
)
 
(1,498
)
 
(1,829
)
Total operating revenue
582

 
549

 
1,604

 
1,617

Risk management:
 
 
 
 
 
 
 
Changes in MSR asset fair value due to market interest rates
(4,574
)
 
(1,398
)
 
(5,127
)
 
(4,997
)
Other changes in MSR asset fair value due to inputs or assumptions in model(b)
—

 
(99
)
 
(1,158
)
 
(180
)
Derivative valuation adjustments and other
4,596

 
1,884

 
5,093

 
6,027

Total risk management
22

 
387

 
(1,192
)
 
850

Total RFS net mortgage servicing revenue
604

 
936

 
412

 
2,467

All other
—

 
2

 
5

 
7

Mortgage fees and related income
$
1,380

 
$
707

 
$
1,996

 
$
2,253

(a)
Predominantly represents modeled MSR asset amortization.
(b)
Represents the aggregate impact of changes in model inputs and assumptions such as costs to service, home prices, mortgage spreads, ancillary income, and assumptions used to derive prepayment speeds, as well as changes to the valuation models themselves.
Key economic assumptions used to determine the fair value of the Firm's Mortgage Servicing Rights (MSRs)
(in millions, except rates)
September 30, 2011
 
December 31, 2010
Weighted-average prepayment speed assumption (“CPR”)
19.81
%
 
11.29
%
Impact on fair value of 10% adverse change
$
(822
)
 
$
(809
)
Impact on fair value of 20% adverse change
(1,584
)
 
(1,568
)
Weighted-average option adjusted spread
4.13
%
 
3.94
%
Impact on fair value of 100 basis points adverse change
$
(336
)
 
$
(578
)
Impact on fair value of 200 basis points adverse change
(645
)
 
(1,109
)
CPR: Constant prepayment rate.
Intangible assets components of credit card relationships, core deposits and other intangible assets
 
September 30, 2011
 
December 31, 2010
 
Gross amount(a)
Accumulated amortization(a)
Net
carrying value
 
Gross amount
Accumulated amortization
Net
carrying value
(in millions)
 
Purchased credit card relationships
$
3,823

$
3,155

$
668

 
$
5,789

$
4,892

$
897

Other credit card-related intangibles
838

330

508

 
907

314

593

Core deposit intangibles
4,132

3,470

662

 
4,280

3,401

879

Other intangibles
2,457

899

1,558

 
2,515

845

1,670

(a)
The decrease in the gross amount and accumulated amortization from December 31, 2010, was due to the removal of fully amortized assets.
Amortization expense related to credit card relationships, core deposits and other intangible assets
 
Three months ended September 30,
 
Nine months ended September 30,
(in millions)
2011
 
2010
 
2011
 
2010
Purchased credit card relationships
$
69

 
$
80

 
$
226

 
$
274

All other intangibles:
 
 
 
 
 
 
 
Other credit card-related intangibles
27

 
26

 
80

 
78

Core deposit intangibles
72

 
82

 
216

 
248

Other intangibles
44

 
30

 
119

 
96

Total amortization expense
$
212

 
$
218

 
$
641

 
$
696

Estimated future amortization expense related to credit card relationships, core deposits and other intangible assets
For the year: (in millions)
Purchased credit card relationships
Other credit
card-related intangibles
Core deposit intangibles
Other
intangibles
Total
2011(a)
$
294

$
105

$
284

$
153

$
836

2012
252

105

240

136

733

2013
212

102

195

129

638

2014
108

100

100

112

420

2015
22

92

25

94

233

(a)
Includes $226 million, $80 million, $216 million, and $119 million of amortization expense related to purchased credit card relationships, other credit card-related intangibles, core deposit intangibles and other intangibles, respectively, recognized during the nine months ended September 30, 2011.