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Goodwill and Other Intangible Assets (Tables)
12 Months Ended
Dec. 31, 2012
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and other intangible assets
Goodwill and other intangible assets consist of the following.
December 31, (in millions)
2012
2011
2010
Goodwill
$
48,175

$
48,188

$
48,854

Mortgage servicing rights
7,614

7,223

13,649

Other intangible assets:
 
 
 
Purchased credit card relationships
$
295

$
602

$
897

Other credit card-related intangibles
229

488

593

Core deposit intangibles
355

594

879

Other intangibles
1,356

1,523

1,670

Total other intangible assets
$
2,235

$
3,207

$
4,039

Goodwill attributed to the business segments
The following table presents goodwill attributed to the business segments.
December 31, (in millions)
2012
2011
2010
Consumer & Community Banking
$
31,048

$
30,996

$
31,018

Corporate & Investment Bank
6,895

6,944

6,958

Commercial Banking
2,863

2,864

2,866

Asset Management
6,992

7,007

7,635

Corporate/Private Equity
377

377

377

Total goodwill
$
48,175

$
48,188

$
48,854

Changes in the carrying amount of goodwill
The following table presents changes in the carrying amount of goodwill.
Year ended December 31,
(in millions)
2012
 
2011
 
2010
Balance at beginning of period(a)
$
48,188

 
$
48,854

 
$
48,357

Changes during the period from:
 
 
 
 
 

Business combinations
43

 
97

 
556

Dispositions
(4
)
 
(685
)
 
(19
)
Other(b)
(52
)
 
(78
)
 
(40
)
Balance at December 31,(a)
$
48,175

 
$
48,188

 
$
48,854

(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
The following table summarizes MSR activity for the years ended December 31, 2012, 2011 and 2010.
As of or for the year ended December 31, (in millions, except where otherwise noted)
2012

 
2011

 
2010

Fair value at beginning of period
$
7,223

 
$
13,649

 
$
15,531

MSR activity
 
 
 
 
 

Originations of MSRs
2,376

 
2,570

 
3,153

Purchase of MSRs
457

 
33

 
26

Disposition of MSRs
(579
)
(e) 

 
(407
)
Changes due to modeled amortization
(1,228
)
 
(1,910
)
 
(2,386
)
Net additions and amortization
1,026

 
693

 
386

Changes due to market interest rates
(589
)
 
(5,392
)
 
(2,224
)
Other changes in valuation due to inputs and assumptions(a)
(46
)
 
(1,727
)
 
(44
)
Total change in fair value of MSRs(b)
(635
)
 
(7,119
)
 
(2,268
)
Fair value at December 31(c)
$
7,614

 
$
7,223

 
$
13,649

Change in unrealized gains/(losses) included in income related to MSRs held at December 31
$
(635
)
 
$
(7,119
)
 
$
(2,268
)
Contractual service fees, late fees and other ancillary fees included in income
$
3,783

 
$
3,977

 
$
4,484

Third-party mortgage loans serviced at December 31 (in billions)
$
867

 
$
910

 
$
976

Servicer advances at December 31 (in billions)(d)
$
10.9

 
$
11.1

 
$
9.9

(a)
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.
(b)
Includes changes related to commercial real estate of $(8) million, $(9) million and $(1) million for the years ended December 31, 2012, 2011 and 2010, respectively.
(c)
Includes $23 million, $31 million and $40 million related to commercial real estate at December 31, 2012, 2011 and 2010, respectively.
(d)
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 to investors if the collateral is insufficient to cover the advance.
(e)
Includes excess mortgage servicing rights transferred to an agency-sponsored trust in exchange for stripped mortgage backed securities (“SMBS”). A portion of the SMBS was acquired by third parties at the transaction date; the Firm acquired and has retained the remaining balance of those SMBS as trading assets.
CCB mortgage fees and related income
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, 2012, 2011 and 2010.
Year ended December 31,
(in millions)
2012
 
2011
 
2010
Mortgage fees and related income
 
 
 
 
 
Net production revenue:
 
 
 
 
 
Production revenue
$
5,783

 
$
3,395

 
$
3,440

Repurchase losses
(272
)
 
(1,347
)
 
(2,912
)
Net production revenue
5,511

 
2,048

 
528

Net mortgage servicing revenue
 
 
 
 
 

Operating revenue:
 
 
 
 
 

Loan servicing revenue
3,772

 
4,134

 
4,575

Changes in MSR asset fair value due to modeled amortization
(1,222
)
 
(1,904
)
 
(2,384
)
Total operating revenue
2,550

 
2,230

 
2,191

Risk management:
 
 
 
 
 

Changes in MSR asset fair value due to market interest rates
(587
)
 
(5,390
)
 
(2,224
)
Other changes in MSR asset fair value due to inputs or assumptions in model(a)
(46
)
 
(1,727
)
 
(44
)
Change in derivative fair value and other
1,252

 
5,553

 
3,404

Total risk management
619

 
(1,564
)
 
1,136

Net mortgage servicing revenue
3,169

 
666

 
3,327

All other
7

 
7

 
15

Mortgage fees and related income
$
8,687

 
$
2,721

 
$
3,870

(a)
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)
The table below outlines the key economic assumptions used to determine the fair value of the Firm’s MSRs at December 31, 2012 and 2011, and outlines the sensitivities of those fair values to immediate adverse changes in those assumptions, as defined below.
December 31,
(in millions, except rates)
2012
 
2011
Weighted-average prepayment speed assumption (“CPR”)
13.04
%
 
18.07
%
Impact on fair value of 10% adverse change
$
(517
)
 
$
(585
)
Impact on fair value of 20% adverse change
(1,009
)
 
(1,118
)
Weighted-average option adjusted spread
7.61
%
 
7.83
%
Impact on fair value of 100 basis points adverse change
$
(306
)
 
$
(269
)
Impact on fair value of 200 basis points adverse change
(591
)
 
(518
)
CPR: Constant prepayment rate.
Intangible assets components of credit card relationships, core deposits and other intangible assets
The components of credit card relationships, core deposits and other intangible assets were as follows.
 
2012
 
2011
 
Gross amount(a)
Accumulated amortization(a)
Net
carrying value
 
Gross amount
Accumulated amortization
Net
carrying value
December 31, (in millions)
 
Purchased credit card relationships
$
3,775

$
3,480

$
295

 
$
3,826

$
3,224

$
602

Other credit card-related intangibles
850

621

229

 
844

356

488

Core deposit intangibles
4,133

3,778

355

 
4,133

3,539

594

Other intangibles(b)
2,390

1,034

1,356

 
2,467

944

1,523

(a)
The decrease in the gross amount and accumulated amortization from December 31, 2011, was due to the removal of fully amortized assets.
(b)
Includes intangible assets of approximately $600 million consisting primarily of asset management advisory contracts, which were determined to have an indefinite life and are not amortized.
Amortization expense related to credit card relationships, core deposits and other intangible assets
The following table presents amortization expense related to credit card relationships, core deposits and other intangible assets.
December 31, (in millions)
2012
 
2011
 
2010
Purchased credit card relationships
$
309

 
$
295

 
$
355

Other credit card-related intangibles
265

 
106

 
111

Core deposit intangibles
239

 
285

 
328

Other intangibles
144

 
162

 
142

Total amortization expense
$
957

 
$
848

 
$
936

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]
The following table presents estimated future amortization expense related to credit card relationships, core deposits and other intangible assets at December 31, 2012.
Year ended December 31,
(in millions)
Purchased credit card relationships
Other credit
card-related intangibles
Core deposit intangibles
Other
intangibles
Total
2013
$
192

$
57

$
196

$
132

$
577

2014
91

49

102

116

358

2015
7

39

26

96

168

2016
4

34

14

89

141

2017
1

29

13

88

131