Goodwill, Mortgage Servicing Rights, and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill attributed to the business segments and corporate

The following table presents goodwill attributed to the reportable business segments and Corporate.

(in millions)	March 31, 2024		December 31, 2023
Consumer & Community Banking	$	32,116	$	32,116
Corporate & Investment Bank	8,291		8,266
Commercial Banking	2,985		2,985
Asset & Wealth Management	8,565		8,582
Corporate	679		685
Total goodwill	$	52,636	$	52,634

The following table presents changes in the carrying amount of goodwill.

	Three months ended March 31,
(in millions)	2024		2023
Balance at beginning of period	$	52,634	$	51,662
Changes during the period from:
Business combinations(a)	34		451
Other(b)	(32)		31
Balance at March 31,	$	52,636	$	52,144

(a)For the three months ended March 31, 2024, represents estimated goodwill associated with the acquisition of LayerOne Financial in CIB. For the three months ended March 31, 2023, represents estimated goodwill in AWM, as a result of the Firm's acquisition of the remaining 51% interest in CIFM.

(b)Primarily foreign currency adjustments.

Mortgage servicing rights activity

The following table summarizes MSR activity for the three months ended March 31, 2024 and 2023.

	As of or for the three months ended March 31,
(in millions, except where otherwise noted)	2024		2023
Fair value at beginning of period	$	8,522	$	7,973
MSR activity:
Originations of MSRs	58		32
Purchase of MSRs(a)	2		(1)
Disposition of MSRs	5		2
Net additions/(dispositions)	65		33
Changes due to collection/realization of expected cash flows	(260)		(240)
Changes in valuation due to inputs and assumptions:
Changes due to market interest rates and other(b)	268		(22)
Changes in valuation due to other inputs and assumptions:
Projected cash flows (e.g., cost to service)	7		—
Discount rates	—		—
Prepayment model changes and other(c)	3		11
Total changes in valuation due to other inputs and assumptions	10		11
Total changes in valuation due to inputs and assumptions	278		(11)
Fair value at March 31,	$	8,605	$	7,755
Changes in unrealized gains/(losses) included in income related to MSRs held at March 31,	$	278	$	(11)
Contractual service fees, late fees and other ancillary fees included in income	399		388
Third-party mortgage loans serviced at March 31, (in billions)	627		577
Servicer advances, net of an allowance for uncollectible amounts, at March 31(d)	607		671

(a)Includes purchase price adjustments associated with MSRs purchased in the prior quarter, primarily as a result of loans that prepaid within 90 days of settlement, allowing the Firm to recover the purchase price.

(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.

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 months ended March 31, 2024 and 2023.

	Three months ended March 31,
(in millions)	2024		2023
CCB mortgage fees and related income
Production revenue	$	130	$	75
Net mortgage servicing revenue:
Operating revenue:
Loan servicing revenue	405		400
Changes in MSR asset fair value due to collection/realization of expected cash flows	(260)		(240)
Total operating revenue	145		160
Risk management:
Changes in MSR asset fair value due to market interest rates and other(a)	268		(22)
Other changes in MSR asset fair value due to other inputs and assumptions in model(b)	10		11
Changes in derivative fair value and other	(279)		(1)
Total risk management	(1)		(12)
Total net mortgage servicing revenue	144		148
Total CCB mortgage fees and related income	274		223
All other	1		(2)
Mortgage fees and related income	$	275	$	221

(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 March 31, 2024 and December 31, 2023, and outlines the sensitivities of those fair values to immediate adverse changes in those assumptions, as defined below.

(in millions, except rates)	Mar 31, 2024			Dec 31, 2023
Weighted-average prepayment speed assumption (constant prepayment rate)	6.22		%	6.29		%
Impact on fair value of 10% adverse change	$	(201)		$	(206)
Impact on fair value of 20% adverse change	(391)			(401)
Weighted-average option adjusted spread(a)	5.99		%	6.10		%
Impact on fair value of a 100 basis point adverse change	$	(370)		$	(369)
Impact on fair value of a 200 basis point adverse change	(712)			(709)

(a)Includes the impact of operational risk and regulatory capital.