Note 9 Goodwill and Other Intangible Assets

Changes in goodwill by business segment during the first nine months of 2011 follow:

Changes in Goodwill by Business Segment (a)

				Corporate &		Asset				Residential
		Retail		Institutional		Management				Mortgage
In millions		Banking		Banking		Group		BlackRock		Banking		Total
December 31, 2010		$	5,302	$	2,728	$	62	$	14	$	43	$	8,149
BankAtlantic branch acquisition			35		6								41
Other			11		7		2		(3)				17
September 30, 2011		$	5,348	$	2,741	$	64	$	11	$	43	$	8,207
(a)	The Distressed Assets Portfolio business segment does not have any goodwill allocated to it.

Changes in goodwill and other intangible assets during the first nine months of 2011 follow:

Summary of Changes in Goodwill and Other Intangible Assets

				Customer-		Servicing
In millions		Goodwill		Related		Rights
December 31, 2010		$	8,149	$	903	$	1,701
Additions/adjustments:
	BankAtlantic branch acquisition		41		1
	Other		17
	Mortgage and other loan servicing rights						(250)
	Impairment charge						(157)
	Amortization				(122)		(127)
September 30, 2011		$	8,207	$	782	$	1,167

Assets and liabilities of acquired entities are recorded at estimated fair value as of the acquisition date.

The gross carrying amount, accumulated amortization and net carrying amount of other intangible assets by major category consisted of the following:

Other Intangible Assets

				September 30		December 31
In millions				2011		2010
Customer-related and other intangibles
	Gross carrying amount			$	1,524	$	1,524
	Accumulated amortization				(742)		(621)
		Net carrying amount		$	782	$	903
Mortgage and other loan servicing rights
	Gross carrying amount			$	2,025	$	2,293
	Valuation allowance				(197)		(40)
	Accumulated amortization				(661)		(552)
		Net carrying amount		$	1,167	$	1,701
			Total	$	1,949	$	2,604

While certain of our other intangible assets have finite lives and are amortized primarily on a straight-line basis, certain core deposit intangibles are amortized on an accelerated basis.

For customer-related and other intangibles, the estimated remaining useful lives range from 1 year to 10 years, with a weighted-average remaining useful life of 9 years.

Amortization expense on existing intangible assets, including the impact of impairment charges follows:

Amortization Expense on Existing Intangible Assets, Net (a)

In millions
Nine months ended September 30, 2011		$	406
Nine months ended September 30, 2010			324
Remainder of 2011			67
2012			250
2013			196
2014			198
2015			184
2016			165
(a)	Includes the impact of impairment charges.

Changes in commercial mortgage servicing rights follow:

Commercial Mortgage Servicing Rights

In millions		2011		2010
January 1		$	665	$	921
Additions (a)			100		59
Sale of servicing rights (b)					(192)
Impairment charge			(157)		(99)
Amortization expense			(126)		(73)
	September 30	$	482	$	616
(a)	Additions for the first nine months of 2011 included $37 million from loans sold with servicing retained and $63 million from purchases of servicing rights from third
	parties. Comparable amounts for the first nine months of 2010 were $34 million and $25 million.
(b)	Reflects the sale of a duplicative agency servicing operation in 2010.

We recognize as an other intangible asset the right to service mortgage loans for others. Commercial mortgage servicing rights are purchased in the open market and originated when loans are sold with servicing retained. Commercial mortgage servicing rights are initially recorded at fair value. These rights are subsequently accounted for using the amortization method, and are substantially amortized in proportion to and over the period of estimated net servicing income of 5 to 10 years.

Commercial mortgage servicing rights are periodically evaluated for impairment. For purposes of impairment, the commercial mortgage servicing rights are stratified based on asset type, which characterizes the predominant risk of the underlying financial asset. If the carrying amount of any individual stratum exceeds its fair value, a valuation reserve is established with a corresponding charge to Corporate Services on our Consolidated Income Statement.

The fair value of commercial mortgage servicing rights is estimated by using an internal valuation model. The model calculates the present value of estimated future net servicing cash flows considering estimates of servicing revenue and costs, discount rates and prepayment speeds.

Changes in the residential mortgage servicing rights follow:

Residential Mortgage Servicing Rights

In millions		2011		2010
January 1		$	1,033	$	1,332
Additions:
	From loans sold with servicing retained		94		61
	Purchases		48
Changes in fair value due to:
	Time and payoffs (a)		(122)		(133)
	Other (b)		(369)		(472)
September 30		$	684	$	788
Unpaid principal balance of loans serviced for others at September 30		$	121,229	$	131,594
(a)	Represents decrease in mortgage servicing rights value due to passage of time, including the impact from both regularly scheduled loan principal payments and loans that
	were paid down or paid off during the period.
(b)	Represents mortgage servicing rights value changes resulting primarily from market-driven changes in interest rates.

We recognize mortgage servicing right assets on residential real estate loans when we retain the obligation to service these loans upon sale and the servicing fee is more than adequate compensation. Mortgage servicing rights are subject to declines in value principally from actual or expected prepayment of the underlying loans and defaults. We manage this risk by economically hedging the fair value of mortgage servicing rights with securities and derivative instruments which are expected to increase in value when the value of mortgage servicing rights declines.

The fair value of residential MSRs is estimated by using a cash flow valuation model which calculates the present value of estimated future net servicing cash flows, taking into consideration actual and expected mortgage loan prepayment rates, discount rates, servicing costs, and other economic factors which are determined based on current market conditions.

The fair value of residential and commercial MSRs and significant inputs to the valuation model as of September 30, 2011 are shown in the tables below. The expected and actual rates of mortgage loan prepayments are significant factors driving the fair value. Management uses a third party model to estimate future residential mortgage loan prepayments and internal proprietary models to estimate future commercial mortgage loan prepayments. This model has been refined based on current market conditions. Future interest rates are another important factor in the valuation of MSRs. Management utilizes market implied forward interest rates to estimate the future direction of mortgage and discount rates. Changes in the shape and slope of the forward curve in future periods may result in volatility in the fair value estimate.

A sensitivity analysis of the hypothetical effect on the fair value of MSRs to adverse changes in key assumptions is presented below. These sensitivities do not include the impact of the related hedging activities. Changes in fair value generally cannot be extrapolated because the relationship of the change in the assumption to the change in fair value may not be linear. Also, the effect of a variation in a particular assumption on the fair value of the MSRs is calculated independently without changing any other assumption. In reality, changes in one factor may result in changes in another (for example, changes in mortgage interest rates, which drive changes in prepayment rate estimates, could result in changes in the interest rate spread), which could either magnify or counteract the sensitivities.

The following tables set forth the fair value of commercial and residential MSRs and the sensitivity analysis of the hypothetical effect on the fair value of MSRs to immediate adverse changes of 10% and 20% in those assumptions:

Commercial Mortgage Loan Servicing Assets - Key Valuation Assumptions
	September 30,			December 31,
Dollars in millions	2011			2010
Fair value	$	484		$	674
Weighted-average life (years)		6.0			6.3
Prepayment rate range		13%-27	%		10%-24	%
Decline in fair value from 10% adverse change	$	6		$	8
Decline in fair value from 20% adverse change	$	12		$	16
Effective discount rate range		5%-9	%		7%-9	%
Decline in fair value from 10% adverse change	$	9		$	13
Decline in fair value from 20% adverse change	$	19		$	26

Residential Mortgage Loan Servicing Assets - Key Valuation Assumptions
	September 30,			December 31,
Dollars in millions	2011			2010
Fair value	$	684		$	1,033
Weighted-average life (years)		3.8			5.8
Weighted-average constant prepayment rate		21.02	%		12.61	%
Decline in fair value from 10% adverse change	$	46		$	41
Decline in fair value from 20% adverse change	$	87		$	86
Spread over forward interest rate swap rates		11.80	%		12.18	%
Decline in fair value from 10% adverse change	$	27		$	43
Decline in fair value from 20% adverse change	$	51		$	83

Revenue from mortgage and other loan servicing comprised of contractually specified servicing fees, late fees, and ancillary fees follows:

Revenue from Mortgage and Other Loan Servicing

In millions	2011		2010
Nine months ended September 30	$	481	$	526
Three months ended September 30		163		170

We also generate servicing revenue from fee-based activities provided to others.

Revenue from commercial mortgage servicing rights, residential mortgage servicing rights and other loan servicing are reported on our Consolidated Income Statement in the line items Corporate services, Residential mortgage, and Consumer services, respectively.