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Goodwill and Mortgage Servicing Rights (Tables)
 6 Months Ended
Jun. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill attributed to the business segments
The following table presents goodwill attributed to the business segments.
(in millions)
June 30,
2019

December 31,
2018

Consumer & Community Banking
$
30,991

$
30,984

Corporate & Investment Bank
6,769

6,770

Commercial Banking
2,860

2,860

Asset & Wealth Management
6,857

6,857

Total goodwill
$
47,477

$
47,471


The following table presents changes in the carrying amount of goodwill.
 
Three months ended June 30,
 
Six months ended June 30,
(in millions)
2019

 
2018

 
2019

 
2018

Balance at beginning
of period
$
47,474

 
$
47,499

 
$
47,471

 
$
47,507

Changes during the period from:
 
 
 
 
 
 
 
Other(a)
3

 
(11
)
 
6

 
(19
)
Balance at June 30,
$
47,477

 
$
47,488

 
$
47,477

 
$
47,488

(a)
Primarily relates to foreign currency remeasurement.
Mortgage servicing rights activity
The following table summarizes MSR activity for the three and six months ended June 30, 2019 and 2018.
 
As of or for the three months
ended June 30,
 
As of or for the six months
ended June 30,
(in millions, except where otherwise noted)
2019

 
2018

 
2019

 
2018

Fair value at beginning of period
$
5,957

 
$
6,202

 
$
6,130

 
$
6,030

MSR activity:
 
 
 
 
 
 
 
Originations of MSRs
424

 
157

 
756

 
333

Purchase of MSRs
2

 
79

 
106

 
146

Disposition of MSRs(a)
(217
)
 
(104
)
 
(328
)
 
(399
)
Net additions/(dispositions)
209

 
132

 
534

 
80

 
 
 
 
 
 
 
 
Changes due to collection/realization of expected cash flows
(247
)
 
(187
)
 
(446
)
 
(347
)
 
 
 
 
 
 
 
 
Changes in valuation due to inputs and assumptions:
 
 
 
 
 
 
 
Changes due to market interest rates and other(b)
(540
)
 
103

 
(841
)
 
485

Changes in valuation due to other inputs and assumptions:
 
 
 
 
 
 
 
Projected cash flows (e.g., cost to service)
(350
)
(e) 
—

 
(350
)
(e) 
—

Discount rates
153

 
—

 
153

 
24

Prepayment model changes and other(c)
(89
)
 
(9
)
 
(87
)
 
(31
)
Total changes in valuation due to other inputs and assumptions
(286
)
 
(9
)
 
(284
)
 
(7
)
Total changes in valuation due to inputs and assumptions
(826
)
 
94

 
(1,125
)
 
478

Fair value at June 30,
$
5,093

 
$
6,241

 
$
5,093

 
$
6,241

 
 
 
 
 
 
 
 
Change in unrealized gains/(losses) included in income related to MSRs held at June 30,
$
(826
)
 
$
94

 
$
(1,125
)
 
$
478

Contractual service fees, late fees and other ancillary fees included in income
437

 
446

 
857

 
911

Third-party mortgage loans serviced at June 30, (in billions)
527

 
534

 
527

 
534

Servicer advances, net of an allowance for uncollectible amounts, at June 30, (in billions)(d)
2.2

 
3.3

 
2.2

 
3.3

(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)
The decrease in projected cash flows was largely related to default servicing assumption updates.
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 three and six months ended June 30, 2019 and 2018.
 
 
Three months ended June 30,
 
Six months ended June 30,
(in millions)
 
2019

 
2018

 
2019

 
2018

CCB mortgage fees and related income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net production revenue
 
$
353

 
$
93

 
$
553

 
$
188

 
 
 
 
 
 
 
 
 
Net mortgage servicing revenue:
 
 
 
 
 
 
 
 
Operating revenue:
 
 
 
 
 
 
 
 
Loan servicing revenue
 
417

 
441

 
821

 
954

Changes in MSR asset fair value due to collection/realization of expected cash flows
 
(247
)
 
(187
)
 
(446
)
 
(347
)
Total operating revenue
 
170

 
254

 
375

 
607

Risk management:
 
 
 
 
 
 
 
 
Changes in MSR asset fair value due to market interest rates and other(a)
 
(540
)
 
104

 
(841
)
 
486

Other changes in MSR asset fair value due to other inputs and assumptions
in model(b)
 
(286
)
 
(9
)
 
(284
)
 
(7
)
Change in derivative fair value and other
 
582

 
(118
)
 
872

 
(485
)
Total risk management
 
(244
)
 
(23
)
 
(253
)
 
(6
)
Total net mortgage servicing revenue
 
(74
)
 
231

 
122

 
601

 
 
 
 
 
 
 
 
 
Total CCB mortgage fees and related income
 
279

 
324

 
675

 
789

 
 
 
 
 
 
 
 
 
All other
 
—

 
—

 
—

 
—

Mortgage fees and related income
 
$
279

 
$
324

 
$
675

 
$
789

(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).
Key economic assumptions used to determine FV of MSRs
The table below outlines the key economic assumptions used to determine the fair value of the Firm’s MSRs at June 30, 2019, and December 31, 2018, and outlines hypothetical sensitivities of those fair values to immediate adverse changes in those assumptions, as defined below.
(in millions, except rates)
Jun 30,
2019

 
Dec 31,
2018

Weighted-average prepayment speed assumption (constant prepayment rate)
11.58
%
 
8.78
%
Impact on fair value of 10% adverse change
$
(216
)
 
$
(205
)
Impact on fair value of 20% adverse change
(414
)
 
(397
)
Weighted-average option adjusted spread(a)(b)
7.84
%
 
7.87
%
Impact on fair value of a 100 basis point adverse change
$
(183
)
 
$
(235
)
Impact on fair value of a 200 basis point adverse change
(353
)
 
(452
)

(a)
Includes the impact of operational risk and regulatory capital.
(b)
The prior period amount has been revised to conform with the current period presentation.