US Bank 2010 Annual Report Download - page 94

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A summary of the Company’s MSRs and related characteristics by portfolio as of December 31 was as follows:
(Dollars in Millions) MRBP Government Conventional Total MRBP Government Conventional Total
2010 2009
Servicing portfolio. . . . . . . . . . . . . . . $12,646 $28,880 $132,393 $173,919 $11,915 $21,819 $117,049 $150,783
Fair market value . . . . . . . . . . . . . . . $ 166 $ 342 $ 1,329 $ 1,837 $ 173 $ 293 $ 1,283 $ 1,749
Value (bps) (a) . . . . . . . . . . . . . . . . . 131 118 100 106 145 134 110 116
Weighted-average servicing fees
(bps) . . . . . . . . . . . . . . . . . . . . . 40 38 30 32 40 41 32 34
Multiple (value/servicing fees) . . . . . . . 3.28 3.11 3.33 3.31 3.63 3.27 3.44 3.41
Weighted-average note rate . . . . . . . . 5.75% 5.35% 5.27% 5.32% 5.94% 5.68% 5.56% 5.61%
Age (in years) . . . . . . . . . . . . . . . . . 4.1 2.2 2.7 2.7 3.8 2.1 2.5 2.5
Expected prepayment (constant
prepayment rate) . . . . . . . . . . . . . 12.3% 17.2% 16.2% 16.1% 12.4% 18.8% 16.6% 16.6%
Expected life (in years). . . . . . . . . . . . 6.7 5.1 5.3 5.4 6.5 4.8 5.3 5.3
Discount rate . . . . . . . . . . . . . . . . . 11.9% 11.4% 10.3% 10.6% 11.5% 11.3% 10.5% 10.7%
(a) Value is calculated as fair market value divided by the servicing portfolio.
Note 11 INTANGIBLE ASSETS
Intangible assets consisted of the following:
December 31 (Dollars in Millions)
Estimated
Life (a)
Amortization
Method (b) 2010 2009
Balance
Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) $ 8,954 $ 9,011
Merchant processing contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 years/8 years SL/AC 421 473
Core deposit benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 years/5 years SL/AC 283 383
Mortgage servicing rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) 1,837 1,749
Trust relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 years/6 years SL/AC 200 222
Other identified intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 years/5 years SL/AC 472 579
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,167 $12,417
(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) 2010 2009 2008
Merchant processing contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $102 $117 $136
Core deposit benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 103 67
Trust relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 62 68
Other identified intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 105 84
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $367 $387 $355
The estimated amortization expense for the next five years is as follows:
(Dollars in Millions)
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $291
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
92 U.S. BANCORP