XML 83 R56.htm IDEA: XBRL DOCUMENT v3.8.0.1
Goodwill and Mortgage Servicing Rights (Tables)
 12 Months Ended
Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill attributed to the business segments
The following table presents goodwill attributed to the business segments.
December 31, (in millions)
2017
2016
2015
Consumer & Community Banking
$
31,013

$
30,797

$
30,769

Corporate & Investment Bank
6,776

6,772

6,772

Commercial Banking
2,860

2,861

2,861

Asset & Wealth Management
6,858

6,858

6,923

Total goodwill
$
47,507

$
47,288

$
47,325


The following table presents changes in the carrying amount of goodwill.
Year ended December 31, (in millions)
2017
 
2016
 
2015
Balance at beginning of period
$
47,288

 
$
47,325

 
$
47,647

Changes during the period from:
 
 
 
 
 
Business combinations(a)
199

 
—

 
28

Dispositions(b)
—

 
(72
)
 
(160
)
Other(c)
20

 
35

 
(190
)
Balance at December 31,
$
47,507

 
$
47,288

 
$
47,325

(a)
For 2017, represents CCB goodwill in connection with an acquisition.
(b)
For 2016, represents AWM goodwill, which was disposed of as part of an AWM sales transaction. For 2015 includes $101 million of Private Equity goodwill, which was disposed of as part of the Private Equity sale.
(c)
Includes foreign currency translation adjustments and other tax-related adjustments
Mortgage servicing rights activity
The following table summarizes MSR activity for the years ended December 31, 2017, 2016 and 2015.
As of or for the year ended December 31, (in millions, except where otherwise noted)
2017

 
2016

 
2015

 
Fair value at beginning of period
$
6,096

 
$
6,608

 
$
7,436

 
MSR activity:
 
 
 
 
 
 
Originations of MSRs
1,103

 
679

 
550

 
Purchase of MSRs
—

 
—

 
435

 
Disposition of MSRs(a)
(140
)
 
(109
)
 
(486
)
 
Net additions
963

 
570

 
499

 
 
 
 
 
 
 
 
Changes due to collection/realization of expected cash flows
(797
)
 
(919
)
 
(922
)
 
 
 
 
 
 
 
 
Changes in valuation due to inputs and assumptions:
 
 
 
 
 
 
Changes due to market interest rates and other(b)
(202
)
 
(72
)
 
(160
)
 
Changes in valuation due to other inputs and assumptions:
 
 
 
 
 
 
Projected cash flows (e.g., cost to service)
(102
)
 
(35
)
 
(112
)
 
Discount rates
(19
)
 
7

 
(10
)
 
Prepayment model changes and other(c)
91

 
(63
)
 
(123
)
 
Total changes in valuation due to other inputs and assumptions
(30
)
 
(91
)
 
(245
)
 
Total changes in valuation due to inputs and assumptions
(232
)
 
(163
)
 
(405
)
 
Fair value at December 31,
$
6,030

 
$
6,096

 
$
6,608

 
Change in unrealized gains/(losses) included in income related to MSRs held at December 31,
$
(232
)
 
$
(163
)
 
$
(405
)
 
Contractual service fees, late fees and other ancillary fees included in income
1,886

 
2,124

 
2,533

 
Third-party mortgage loans serviced at December 31, (in billions)
555.0

 
593.3

 
677.0

 
Servicer advances, net of an allowance for uncollectible amounts, at December 31, (in billions)(d)
4.0

 
4.7

 
6.5

 
(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.
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 years ended December 31, 2017, 2016 and 2015.
Year ended December 31,
(in millions)
2017
 
2016
 
2015
CCB mortgage fees and related income
 
 
 
 
 
Net production revenue
$
636

 
$
853

 
$
769

 
 
 
 
 
 
Net mortgage servicing revenue:
 
 
 
 
 

Operating revenue:
 
 
 
 
 

Loan servicing revenue
2,014

 
2,336

 
2,776

Changes in MSR asset fair value due to collection/realization of expected cash flows
(795
)
 
(916
)
 
(917
)
Total operating revenue
1,219

 
1,420

 
1,859

Risk management:
 
 
 
 
 

Changes in MSR asset fair value
due to market interest rates and other(a)
(202
)
 
(72
)
 
(160
)
Other changes in MSR asset fair value due to other inputs and assumptions in model(b)
(30
)
 
(91
)
 
(245
)
Change in derivative fair value and other
(10
)
 
380

 
288

Total risk management
(242
)
 
217

 
(117
)
Total net mortgage servicing revenue
977

 
1,637

 
1,742

 
 
 
 
 
 
Total CCB mortgage fees and related income
1,613

 
2,490

 
2,511

 
 
 
 
 
 
All other
3

 
1

 
2

Mortgage fees and related income
$
1,616

 
$
2,491

 
$
2,513

(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 the fair value of the Firm's Mortgage Servicing Rights (MSRs)
The table below outlines the key economic assumptions used to determine the fair value of the Firm’s MSRs at December 31, 2017 and 2016, and outlines the sensitivities of those fair values to immediate adverse changes in those assumptions, as defined below.
December 31,
(in millions, except rates)
2017
 
2016
Weighted-average prepayment speed assumption (“CPR”)
9.35
%
 
9.41
%
Impact on fair value of 10% adverse change
$
(221
)
 
$
(231
)
Impact on fair value of 20% adverse change
(427
)
 
(445
)
Weighted-average option adjusted spread
9.04
%
 
8.55
%
Impact on fair value of 100 basis points adverse change
$
(250
)
 
$
(248
)
Impact on fair value of 200 basis points adverse change
(481
)
 
(477
)
CPR: Constant prepayment rate.