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Goodwill and Other Intangible Assets (Tables)
 6 Months Ended
Jun. 30, 2011
Goodwill and Other Intangible Assets (Tables) [Abstract]  
Goodwill and other intangible assets
(in millions)
June 30, 2011
December 31, 2010
Goodwill
$
48,882


$
48,854


Mortgage servicing rights
12,243


13,649


Other intangible assets:
 
 
Purchased credit card relationships
$
744


$
897


Other credit card-related intangibles
558


593


Core deposit intangibles
734


879


Other intangibles
1,643


1,670


Total other intangible assets
$
3,679


$
4,039
Goodwill attributed to the business segments
(in millions)
June 30, 2011
December 31, 2010
Investment Bank
$
5,250


$
5,278


Retail Financial Services
16,807


16,813


Card Services
14,264


14,205


Commercial Banking
2,864


2,866


Treasury & Securities Services
1,670


1,680


Asset Management
7,650


7,635


Corporate/Private Equity
377


377


Total goodwill
$
48,882


$
48,854
Changes in the carrying amount of goodwill
 
Three months ended June 30,
 
Six months ended June 30,
(in millions)
2011
 
2010
 
2011
 
2010
Balance at beginning of period(a)
$
48,856


 
$
48,359


 
$
48,854


 
$
48,357


Changes during the period from:
 
 
 
 
 
 
 
Business combinations
11


 
10


 
6


 
19


Dispositions
—


 
—


 
—


 
(19
)
Other(b)
15


 
(49
)
 
22


 
(37
)
Balance at June 30(a)
$
48,882


 
$
48,320


 
$
48,882


 
$
48,320


(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 June 30,
 
Six months ended June 30,
(in millions, except where otherwise noted)
2011


 
2010


 
2011


 
2010


Fair value at beginning of period
$
13,093


 
$
15,531


 
$
13,649


 
$
15,531


MSR activity
 
 
 
 
 
 
 
Originations of MSRs
562


 
533


 
1,319


 
1,222


Purchase of MSRs
29


 
—


 
30


 
14


Disposition of MSRs
—


 
(5
)
 
—


 
(5
)
Total net additions
591


 
528


 
1,349


 
1,231


Change in valuation due to inputs and assumptions(a)
(960
)
 
(3,584
)
 
(1,711
)
 
(3,680
)
Other changes in fair value(b)
(481
)
 
(622
)
 
(1,044
)
 
(1,229
)
Total change in fair value of MSRs(c)
(1,441
)
 
(4,206
)
 
(2,755
)
 
(4,909
)
Fair value at June 30(d)
$
12,243


 
$
11,853


 
$
12,243


 
$
11,853


Change in unrealized gains/(losses) included in income related to MSRs held at June 30
$
(960
)
 
$
(3,584
)
 
$
(1,711
)
 
$
(3,680
)
Contractual service fees, late fees and other ancillary fees included in income
$
983


 
$
1,148


 
$
2,008


 
$
2,280


Third-party mortgage loans serviced at June 30 (in billions)
$
949


 
$
1,064


 
$
949


 
$
1,064


Servicer advances, net at June 30 (in billions)(e)
$
10.9


 
$
9.3


 
$
10.9


 
$
9.3


(a)
Represents MSR asset fair value adjustments due to changes in inputs, such as interest rates and volatility, as well as updates to assumptions used in the valuation model.
(b)
Includes changes in MSR value due to modeled servicing portfolio runoff (i.e., amortization or time decay).
(c)
Includes changes related to commercial real estate of $(2) million and $(2) million for the three months ended June 30, 2011 and 2010, respectively, and $(4) million and $(4) million for the six months ended June 30, 2011 and 2010, respectively.
(d)
Includes $36 million and $37 million related to commercial real estate at June 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 June 30,
 
Six months ended June 30,
(in millions)
2011
 
2010
 
2011
 
2010
RFS mortgage fees and related income
 
 
 
 
 
 
 
Net production revenue:
 
 
 
 
 
 
 
Production revenue
$
767


 
$
676


 
$
1,446


 
$
1,109


Repurchase losses
(223
)
 
(667
)
 
(643
)
 
(1,099
)
Net production revenue
544


 
9


 
803


 
10


Net mortgage servicing revenue
 
 
 
 
 
 
 
Operating revenue:
 
 
 
 
 
 
 
Loan servicing revenue
1,011


 
1,186


 
2,063


 
2,293


Other changes in MSR asset fair value(a)
(478
)
 
(620
)
 
(1,041
)
 
(1,225
)
Total operating revenue
533


 
566


 
1,022


 
1,068


Risk management:
 
 
 
 
 
 
 
Changes in MSR asset fair value due to inputs or assumptions in model(b)
(960
)
 
(3,584
)
 
(1,711
)
 
(3,680
)
Derivative valuation adjustments and other
983


 
3,895


 
497


 
4,143


Total risk management
23


 
311


 
(1,214
)
 
463


Total RFS net mortgage servicing revenue
556


 
877


 
(192
)
 
1,531


All other
3


 
2


 
5


 
5


Mortgage fees and related income
$
1,103


 
$
888


 
$
616


 
$
1,546


(a)
Includes changes in the MSR value due to modeled servicing portfolio runoff (i.e., amortization or time decay).
(b)
Represents MSR asset fair value adjustments due to changes in inputs, such as interest rates and volatility, as well as updates to assumptions used in the MSR valuation model.
Key economic assumptions used to determine the fair value of the Firm's Mortgage Servicing Rights (MSRs)
(in millions, except rates)
June 30, 2011
 
December 31, 2010
Weighted-average prepayment speed assumption (“CPR”)
10.63
%
 
11.29
%
Impact on fair value of 10% adverse change
$
(775
)
 
$
(809
)
Impact on fair value of 20% adverse change
(1,500
)
 
(1,568
)
Weighted-average option adjusted spread
3.85
%
 
3.94
%
Impact on fair value of 100 basis points adverse change
$
(587
)
 
$
(578
)
Impact on fair value of 200 basis points adverse change
(1,125
)
 
(1,109
)
CPR: Constant prepayment rate.
Intangible assets components of credit card relationships, core deposits and other intangible assets
 
June 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
$
3,830


$
3,086


$
744


 
$
5,789


$
4,892


$
897


Other credit card-related intangibles
861


303


558


 
907


314


593


Core deposit intangibles
4,132


3,398


734


 
4,280


3,401


879


Other intangibles
2,498


855


1,643


 
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 June 30,
 
Six months ended June 30,
(in millions)
2011
 
2010
 
2011
 
2010
Purchased credit card relationships
$
77


 
$
97


 
$
157


 
$
194


All other intangibles:
 
 
 
 
 
 
 
Other credit card-related intangibles
27


 
26


 
53


 
52


Core deposit intangibles
72


 
83


 
144


 
166


Other intangibles
36


 
29


 
75


 
66


Total amortization expense
$
212


 
$
235


 
$
429


 
$
478
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


$
107


$
284


$
143


$
828


2012
254


110


240


137


741


2013
213


107


195


130


645


2014
110


105


100


114


429


2015
24


98


25


96


243


(a)
Includes $157 million, $53 million, $144 million, and $75 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 six months ended June 30, 2011.