Goodwill and Mortgage Servicing Rights (Tables)

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill attributed to the business segments

The following table presents goodwill attributed to the business segments.

(in millions)	March 31, 2021		December 31, 2020
Consumer & Community Banking	$	31,326	$	31,311
Corporate & Investment Bank	7,912		7,913
Commercial Banking	2,985		2,985
Asset & Wealth Management	7,020		7,039
Total goodwill	$	49,243	$	49,248

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

	Three months ended March 31,
(in millions)	2021			2020
Balance at beginning of period	$	49,248		$	47,823
Changes during the period from:
Other	(5)		(a)	(23)		(b)
Balance at March 31,	$	49,243		$	47,800

(a)Includes adjustments to goodwill related to the prior period acquisitions of cxLoyalty in CCB and 55ip in AWM during the fourth quarter of 2020. Refer to Note 15 of JPMorgan Chase’s 2020 Form 10-K for additional information on these acquisitions.

(b)Primarily foreign currency adjustments.

Mortgage servicing rights activity

The following table summarizes MSR activity for the three months ended March 31, 2021 and 2020.

	As of or for the three months ended March 31,
(in millions, except where otherwise noted)	2021		2020
Fair value at beginning of period	$	3,276	$	4,699
MSR activity:
Originations of MSRs	404		271
Purchase of MSRs	179		2
Disposition of MSRs(a)	1		(75)
Net additions/(dispositions)	584		198
Changes due to collection/realization of expected cash flows	(187)		(248)
Changes in valuation due to inputs and assumptions:
Changes due to market interest rates and other(b)	836		(1,370)
Changes in valuation due to other inputs and assumptions:
Projected cash flows (e.g., cost to service)	(24)		(1)
Discount rates	—		—
Prepayment model changes and other(c)	(15)		(11)
Total changes in valuation due to other inputs and assumptions	(39)		(12)
Total changes in valuation due to inputs and assumptions	797		(1,382)
Fair value at March 31,	$	4,470	$	3,267
Changes in unrealized gains/(losses) included in income related to MSRs held at March 31,	$	797	$	(1,382)
Contractual service fees, late fees and other ancillary fees included in income	291		364
Third-party mortgage loans serviced at March 31, (in billions)	444		506
Servicer advances, net of an allowance for uncollectible amounts, at March 31, (in billions)(d)	1.8		1.7

(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.

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, 2021 and 2020.

	Three months ended March 31,
(in millions)	2021		2020
CCB mortgage fees and related income
Production revenue	$	757	$	319
Net mortgage servicing revenue:
Operating revenue:
Loan servicing revenue	248		339
Changes in MSR asset fair value due to collection/realization of expected cash flows	(187)		(248)
Total operating revenue	61		91
Risk management:
Changes in MSR asset fair value due to market interest rates and other(a)	836		(1,370)
Other changes in MSR asset fair value due to other inputs and assumptions in model(b)	(39)		(12)
Changes in derivative fair value and other	(912)		1,292
Total risk management	(115)		(90)
Total net mortgage servicing revenue	(54)		1
Total CCB mortgage fees and related income	703		320
All other	1		—
Mortgage fees and related income	$	704	$	320

(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, 2021, and December 31, 2020, and outlines hypothetical sensitivities of those fair values to immediate adverse changes in those assumptions, as defined below.

(in millions, except rates)	Mar 31, 2021			Dec 31, 2020
Weighted-average prepayment speed assumption (constant prepayment rate)	10.28		%	14.90		%
Impact on fair value of 10% adverse change	$	(195)		$	(206)
Impact on fair value of 20% adverse change	(375)			(392)
Weighted-average option adjusted spread(a)	6.65		%	7.19		%
Impact on fair value of a 100 basis point adverse change	$	(197)		$	(134)
Impact on fair value of a 200 basis point adverse change	(379)			(258)

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