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Notes to Consolidated Financial Statements (Continued)
173
The following tables present the change in fair value during the years ended December 31, 2012, 2011, and 2010, of financial
instruments for which the FVO has been elected, as well as MSRs. The tables do not reflect the change in fair value attributable
to the related economic hedges the Company used to mitigate the market-related risks associated with the financial instruments.
Generally, the changes in the fair value of economic hedges are also recognized in trading income, mortgage production related
income/(loss), or mortgage servicing-related income, as appropriate, and are designed to partially offset the change in fair
value of the financial instruments referenced in the tables below. The Company’s economic hedging activities are deployed
at both the instrument and portfolio level.
Fair Value Gain/(Loss) for the Year Ended
December 31, 2012, for Items Measured at Fair Value
Pursuant to Election of the FVO
(Dollars in millions)
Trading
Income
Mortgage
Production
Related
Income/
(Loss) 1
Mortgage
Servicing
Related
Income
Total
Changes in
Fair Values
Included in
Current-
Period
Earnings 2
Assets
Trading loans $8 $— $— $8
LHFS 10 1,043 —1,053
LHFI 120—21
MSRs —31 (353) (322)
Liabilities
Brokered time deposits 5— — 5
Long-term debt (65) — — (65)
1 For the year ended December 31, 2012, income related to LHFS includes $882 million from IRLCs, which includes $304 million related to MSRs recognized
upon the sale of loans reported at fair value. For the year ended December 31, 2012, income related to MSRs includes $31 million of MSRs recognized
upon the sale of loans reported at LOCOM.
2 Changes in fair value for the year ended December 31, 2012, exclude accrued interest for the period then ended. Interest income or interest expense on
trading loans, LHFS, LHFI, brokered time deposits, and long-term debt that have been elected to be carried at fair value are recorded in interest income or
interest expense in the Consolidated Statements of Income.
Fair Value Gain/(Loss) for the Year Ended
December 31, 2011, for Items Measured at Fair Value
Pursuant to Election of the FVO
(Dollars in millions)
Trading
Income
Mortgage
Production
Related
Income/
(Loss) 1
Mortgage
Servicing
Related
Income
Total
Changes in
Fair Values
Included in
Current-
Period
Earnings 2
Assets
Trading loans $21 $— $— $21
LHFS (10) 450 — 440
LHFI 3 11 — 14
MSRs — 7 (733) (726)
Liabilities
Brokered time deposits 32 — — 32
Long-term debt (12) — — (12)
1 For the year ended December 31, 2011, income related to LHFS includes $271 million from IRLCs, which includes $217 million related to MSRs recognized
upon the sale of loans reported at fair value. For the year ended December 31, 2011, income related to MSRs includes $7 million of MSRs recognized upon
the sale of loans reported at LOCOM.
2 Changes in fair value for the year ended December 31, 2011, exclude accrued interest for the period then ended. Interest income or interest expense on
trading loans, LHFS, LHFI, brokered time deposits, and long-term debt that have been elected to be carried at fair value are recorded in interest income or
interest expense in the Consolidated Statements of Income.