US Bank 2012 Annual Report Download - page 108

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A summary of the Company’s MSRs and related characteristics by portfolio as of December 31 follows:
2012 2011
(Dollars in Millions) MRBP Government Conventional (b) Total MRBP Government Conventional (b) Total
Servicing portfolio ........................ $14,143 $39,048 $162,446 $215,637 $13,357 $32,567 $145,158 $191,082
Fair value ................................. $ 154 $ 314 $ 1,232 $ 1,700 $ 155 $ 290 $ 1,074 $ 1,519
Value (bps) (a) ............................. 109 80 76 79 116 89 74 79
Weighted-average servicing fees (bps) . . . 40 33 30 31 40 36 29 31
Multiple (value/servicing fees) ............ 2.73 2.42 2.53 2.55 2.90 2.47 2.55 2.55
Weighted-average note rate .............. 5.13% 4.57% 4.48% 4.54% 5.50% 5.08% 4.97% 5.03%
Weighted-average age (in years).......... 4.2 2.4 2.5 2.6 4.2 2.5 2.8 2.8
Weighted-average expected prepayment
(constant prepayment rate) ............ 13.2% 21.2% 20.4% 20.1% 12.9% 21.1% 22.1% 21.3%
Weighted-average expected life
(in years) ............................... 6.1 4.2 4.1 4.2 6.4 4.0 3.8 4.0
Weighted-average discount rate .......... 12.1% 11.4% 10.0% 10.4% 12.1% 11.3% 10.0% 10.4%
(a) Value is calculated as fair value divided by the servicing portfolio.
(b) Represents loans sold primarily to GSEs.
NOTE 10 Intangible Assets
Intangible assets consisted of the following:
Estimated Life (a)
Amortization
Method (b)
Balance
At December 31 (Dollars in Millions) 2012 2011
Goodwill .................................................................. (c) $ 9,143 $ 8,927
Merchant processing contracts .......................................... 10 years/8 years SL/AC 281 348
Core deposit benefits .................................................... 22 years/5 years SL/AC 176 232
Mortgage servicing rights ................................................ (c) 1,700 1,519
Trust relationships ........................................................ 14 years/6 years SL/AC 149 166
Other identified intangibles ............................................... 9 years/5 years SL/AC 400 471
Total ................................................................... $11,849 $11,663
(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) 2012 2011 2010
Merchant processing contracts .................................................................................. $ 74 $ 90 $102
Core deposit benefits ............................................................................................ 60 81 102
Trust relationships ................................................................................................ 39 35 49
Other identified intangibles ....................................................................................... 101 93 114
Total ........................................................................................................... $274 $299 $367
The estimated amortization expense for the next five years is as follows:
(Dollars in Millions)
2013 ...................................................................................................................................... $218
2014 ...................................................................................................................................... 171
2015 ...................................................................................................................................... 138
2016 ...................................................................................................................................... 111
2017 ...................................................................................................................................... 91
104 U.S. BANCORP