Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]


NOTE 6—GOODWILL AND OTHER INTANGIBLE ASSETS

The table below presents our goodwill, other intangible assets and MSRs as of December 31, 2022 and 2021. Goodwill is presented separately, while other intangible assets and MSRs are included in other assets on our consolidated balance sheets.

Table 6.1: Components of Goodwill, Other Intangible Assets and MSRs


	December 31, 2022
(Dollars in millions)	Carrying Amount of Assets		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Amortization Period
Goodwill	$	14,777	N/A		$	14,777	N/A
Other intangible assets:
Purchased credit card relationship (“PCCR”) intangibles	147		$	(26)	121		7.8 years

Other(1)	195		(157)		38		5.4 years
Total other intangible assets	342		(183)		159		7.3 years
Total goodwill and other intangible assets	$	15,119	$	(183)	$	14,936
Commercial MSRs(2)	$	660	$	(223)	$	437

	December 31, 2021
(Dollars in millions)	Carrying Amount of Assets		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Amortization Period
Goodwill	$	14,782	N/A		$	14,782	N/A
Other intangible assets:
Purchased credit card relationship (“PCCR”) intangibles	29		$	(10)	19		5.9 years

Other(1)	213		(121)		92		4.1 years
Total other intangible assets	242		(131)		111		4.4 years
Total goodwill and other intangible assets	$	15,024	$	(131)	$	14,893
Commercial MSRs(2)	$	622	$	(202)	$	420

__________

(1)Primarily consists of intangibles for sponsorship, customer and merchant relationships, trade names and other customer contract intangibles.

(2)Commercial MSRs are accounted for under the amortization method under which we recorded $93 million and $79 million of amortization expense for the years ended December 31, 2022 and 2021 , respectively.

Goodwill

The following table presents changes in carrying amount of goodwill by each of our business segments as of December 31, 2022, 2021 and 2020. There were no changes in the carrying amount of goodwill by each of our business segments for the year ended December 31, 2020. We did not recognize any goodwill impairment during 2022, 2021 and 2020.

Table 6.2: Goodwill by Business Segments


(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking		Total
Balance as of December 31, 2019	$	5,088	$	4,645	$	4,920	$	14,653



Balance as of December 31, 2020	$	5,088	$	4,645	$	4,920	$	14,653
Acquisitions	0		0		130		130

Other adjustments(1)	(1)		0		0		(1)
Balance as of December 31, 2021	$	5,087	$	4,645	$	5,050	$	14,782


Other adjustments(1)	(9)		0		4		(5)
Balance as of December 31, 2022	$	5,078	$	4,645	$	5,054	$	14,777

__________

(1)Represents foreign currency translation adjustments and measurement period adjustments on prior period acquisitions.

The goodwill impairment test is performed as of October 1 of each year. An impairment of a reporting unit’s goodwill is determined based on the amount by which the reporting unit’s carrying value exceeds its fair value, limited to the amount of goodwill allocated to the reporting unit.

The fair value of reporting units is calculated using a discounted cash flow methodology, a form of the income approach. The calculation uses projected cash flows based on each reporting unit’s internal forecast and uses the perpetuity growth method to calculate terminal values. These cash flows and terminal values are then discounted using appropriate discount rates, which are largely based on our external cost of equity with adjustments for risk inherent in each reporting unit. The carrying amount for a reporting unit is the sum of its respective capital requirements, goodwill and other intangibles balances. Capital is allocated based on each reporting unit’s specific regulatory capital requirements, economic capital requirements, and underlying risks. Consolidated stockholder’s equity in excess of the sum of all reporting unit’s capital requirements that is not identified for future capital needs, such as dividends, share buybacks, or other strategic initiatives, is allocated to the reporting units and the Other category and assumed distributed to equity holders in future periods. Our discounted cash flow analysis requires management to make judgments about future loan and deposit growth, revenue growth, credit losses, and capital rates. The reasonableness of our fair value calculation is assessed by reference to a market-based approach using comparable market multiples and recent market transactions where available.

Intangible Assets

In connection with our acquisitions, we recorded intangible assets that include PCCR intangibles, sponsorship, customer and merchant relationships, partnership, trade names, and other customer contract intangibles. At acquisition, the PCCR intangibles reflect the estimated value of existing credit card holder relationships. There was a $10 million impairment of intangible assets in 2022. There were no impairments of intangible assets in 2021 and 2020.

Intangible assets are typically amortized over their respective estimated useful lives on either an accelerated or straight-line basis. The following table summarizes the actual amortization expense recorded for the years ended December 31, 2022, 2021 and 2020 and the estimated future amortization expense for intangible assets as of December 31, 2022:

Table 6.3: Amortization Expense


(Dollars in millions)	Amortization Expense
Actual for the year ended December 31,
2020	$	60
2021	29
2022	60
Estimated future amounts for the year ending December 31,
2023	38
2024	31
2025	26
2026	19
2027	15
Thereafter	21
Total estimated future amounts	$	150