US Bank 2015 Annual Report Download - page 113

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A summary of the Company’s MSRs and related characteristics by portfolio as of December 31 follows:
2015 2014
(Dollars in Millions) HFA Government Conventional(c) Total HFA Government Conventional(c) Total
Servicing portfolio(a) .................... $26,492 $40,350 $162,533 $229,375 $19,706 $40,471 $162,620 $222,797
Fair value ............................ $ 297 $ 443 $ 1,772 $ 2,512 $ 213 $ 426 $ 1,699 $ 2,338
Value (bps)(b) .......................... 112 110 109 110 108 105 104 105
Weighted-average servicing fees (bps) ..... 36 34 27 29 37 33 27 29
Multiple (value/servicing fees) ............ 3.11 3.24 4.04 3.79 2.92 3.18 3.85 3.62
Weighted-average note rate ............. 4.46% 4.08% 4.09% 4.13% 4.58% 4.18% 4.14% 4.19%
Weighted-average age (in years) .......... 3.1 3.6 3.4 3.4 3.6 3.2 3.1 3.2
Weighted-average expected prepayment
(constant prepayment rate) ............ 12.8% 13.9% 10.4% 11.3% 12.8% 14.8% 11.4% 12.1%
Weighted-average expected life (in years) . . . 6.1 5.7 6.6 6.4 6.2 5.5 6.5 6.3
Weighted-average discount rate .......... 11.8% 11.2% 9.4% 10.0% 11.9% 11.2% 9.6% 10.1%
(a) Represents principal balance of mortgages having corresponding MSR asset.
(b) Value is calculated as fair value divided by the servicing portfolio.
(c) Represents loans sold primarily to GSEs.
NOTE 11 INTANGIBLE ASSETS
Intangible assets consisted of the following:
At December 31 (Dollars in Millions)
Estimated
Life(a)
Amortization
Method(b)
Balance
2015 2014
Goodwill ................................................................ (c) $ 9,361 $ 9,389
Merchant processing contracts .............................................. 8years/8 years SL/AC 135 174
Core deposit benefits ...................................................... 22years/5 years SL/AC 194 234
Mortgage servicing rights ................................................... (c) 2,512 2,338
Trust relationships ........................................................ 10years/6 years SL/AC 75 97
Other identified intangibles .................................................. 8years/4 years SL/AC 434 319
Total ................................................................. $12,711 $12,551
(a) Estimated life represents the amortization period for assets subject to the straight line method and the weighted average or life of the underlying cash flows amortization period for intangibles
subject to accelerated methods. If more than one amortization method is used for a category, the estimated life for each method is calculated and reported separately.
(b) Amortization methods: SL = straight line method
AC = accelerated methods generally based on cash flows
(c) Goodwill is evaluated for impairment, but not amortized. Mortgage servicing rights are recorded at fair value, and are not amortized.
Aggregate amortization expense consisted of the following:
Year Ended December 31 (Dollars in Millions) 2015 2014 2013
Merchant processing contracts .................................................................... $ 35 $ 50 $ 64
Core deposit benefits ........................................................................... 40 38 41
Trust relationships .............................................................................. 21 27 34
Other identified intangibles ....................................................................... 78 84 84
Total ....................................................................................... $174 $199 $223
The estimated amortization expense for the next five years is as follows:
(Dollars in Millions)
2016 ............................................................................................................. $173
2017 ............................................................................................................. 162
2018 ............................................................................................................. 130
2019 ............................................................................................................. 101
2020 ............................................................................................................. 78
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