PNC Bank 2012 Annual Report Download - page 206

N OTE 10 G OODWILL AND O THER I NTANGIBLE A SSETS
Changes in goodwill by business segment during 2012 and 2011 follow:
Table 101: Changes in Goodwill by Business Segment (a)
In millions
Retail
Banking
Corporate &
Institutional
Banking
Asset
Management
Group
Residential
Mortgage
Banking Other (b) Total
December 31, 2010 $5,302 $2,728 $62 $ 43 $ 14 $8,149
BankAtlantic branch acquisition 35 6 41
Flagstar branch acquisition 17 17
Other (c) 40 29 7 2 78
December 31, 2011 $5,394 $2,763 $69 $ 43 $ 16 $8,285
RBC Bank (USA) acquisition 429 473 2 46 950
SmartStreet divestiture (46) (46)
Residential Mortgage Banking impairment charge (45) (45)
Other (c) (29) (22) (5) (16) (72)
December 31, 2012 $5,794 $3,214 $64 $ – $ – $9,072
(a) The Non-Strategic Assets Portfolio business segment does not have any goodwill allocated to it.
(b) Includes goodwill related to BlackRock.
(c) Primarily related to correction of amounts for an acquisition affecting prior periods.
Changes in goodwill and other intangible assets during 2012
follow:
Table 102: Summary of Changes in Goodwill and Other
Intangible Assets
In millions Goodwill
Customer-
Related
Servicing
Rights
December 31, 2011 $8,285 $ 742 $1,117
Additions/adjustments:
RBC Bank (USA) acquisition 950 164 16
SmartStreet divestiture (46) (13)
Residential Mortgage Banking
impairment charge (45)
Other (a) (72)
Change in valuation allowance 21
Amortization (167) (143)
Mortgage and other loan
servicing rights 60
December 31, 2012 $9,072 $ 726 $1,071
(a) Primarily related to correction of amounts for an acquisition affecting prior periods.
Assets and liabilities of acquired entities are recorded at
estimated fair value as of the acquisition date.
We conduct a goodwill impairment test on our reporting units
at least annually, in the fourth quarter, or more frequently if
events occur or circumstances have changed significantly
from the annual test date. The fair value of our reporting units
is determined by using discounted cash flow and, when
applicable, market comparability methodologies.
Our residential mortgage banking business, similar to other
residential mortgage banking businesses, is operating in an
unsettled environment, which has and may continue to result
in higher operating costs, and has experienced increased
uncertainties such as elevated indemnification and repurchase
liabilities and foreclosure related issues. Additionally, the
current level of refinance volumes is not expected to continue
indefinitely given that interest rates have been low for a
prolonged period of time. Step 1 of the annual goodwill
impairment test indicated that the fair value of the Residential
Mortgage Banking reporting unit using a discounted cash flow
approach was less than its carrying value. Step 2 of the
impairment test was performed and indicated that the implied
fair value of goodwill was less than its carrying value. An
impairment charge of $45 million was recorded which wrote
down the entire balance of goodwill in the Residential
Mortgage Banking reporting unit. The Residential Mortgage
Banking reporting unit does not have any remaining goodwill
as of December 31, 2012.
The PNC Financial Services Group, Inc. – Form 10-K 187