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Goodwill and Intangible Assets | 12 Months Ended
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Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets |
NOTE 6—GOODWILL AND INTANGIBLE ASSETS
The table below presents our goodwill, intangible assets and MSRs as of December 31, 2020 and 2019. Goodwill is presented separately, while intangible assets and MSRs are included in other assets on our consolidated balance sheets. Table 6.1: Components of Goodwill, Intangible Assets and MSRs
|  | December 31, 2020
(Dollars in millions) |  | Carrying Amount of Assets |  | Accumulated Amortization |  | Net Carrying Amount |  | Weighted Average Remaining Amortization Period
Goodwill |  | $ | 14,653 |  |  | N/A |  | $ | 14,653 |  |  | N/A
Intangible assets: |  |  |  |  |  |  |  |
Purchased credit card relationship (“PCCR”) intangibles |  | 148 |  |  | $ | (138) |  |  | 10 |  |  | 6.2 years
Other(1) |  | 248 |  |  | (168) |  |  | 80 |  |  | 7.3 years
Total intangible assets |  | 396 |  |  | (306) |  |  | 90 |  |  | 7.1 years
Total goodwill and intangible assets |  | $ | 15,049 |  |  | $ | (306) |  |  | $ | 14,743 |  |  |
Commercial MSRs(2) |  | $ | 542 |  |  | $ | (175) |  |  | $ | 367 |  |  |
|  | December 31, 2019
(Dollars in millions) |  | Carrying Amount of Assets |  | Accumulated Amortization |  | Net Carrying Amount |  | Weighted Average Remaining Amortization Period
Goodwill |  | $ | 14,653 |  |  | N/A |  | $ | 14,653 |  |  | N/A
Intangible assets: |  |  |  |  |  |  |  |
PCCR intangibles |  | 1,932 |  |  | $ | (1,864) |  |  | 68 |  |  | 3.9 years
Other(1) |  | 246 |  |  | (140) |  |  | 106 |  |  | 6.7 years
Total intangible assets |  | 2,178 |  |  | (2,004) |  |  | 174 |  |  | 5.6 years
Total goodwill and intangible assets |  | $ | 16,831 |  |  | $ | (2,004) |  |  | $ | 14,827 |  |  |
Commercial MSRs(2) |  | $ | 555 |  |  | $ | (255) |  |  | $ | 300 |  |  |
__________ (1)Primarily consists of intangibles for sponsorship, customer and merchant relationships, partnership, trade name and other contract intangibles. (2)Commercial MSRs are accounted for under the amortization method on our consolidated balance sheets. We recorded $69 million and $70 million of amortization expense for the years ended December 31, 2020 and 2019, respectively. Goodwill There were no changes in the carrying amount of goodwill by each of our business segments for the year ended December 31, 2020, and the following table presents such changes for the years ended December 31, 2019 and 2018.We did not recognize any goodwill impairment during 2020, 2019 or 2018. Table 6.2: Goodwill by Business Segments
(Dollars in millions) |  | Credit Card |  | Consumer Banking |  | Commercial Banking |  | Total
Balance as of December 31, 2017 |  | $ | 5,032 |  |  | $ | 4,600 |  |  | $ | 4,901 |  |  | $ | 14,533 |
Acquisitions |  | 33 |  |  | 0 |  |  | 0 |  |  | 33 |
Reductions in goodwill related to divestitures |  | 0 |  |  | 0 |  |  | (17) |  |  | (17) |
Other adjustments(1) |  | (5) |  |  | 0 |  |  | 0 |  |  | (5) |
Balance as of December 31, 2018 |  | 5,060 |  |  | 4,600 |  |  | 4,884 |  |  | 14,544 |
Acquisitions |  | 25 |  |  | 46 |  |  | 36 |  |  | 107 |
Reductions in goodwill related to divestitures |  | 0 |  |  | (1) |  |  | 0 |  |  | (1) |
Other adjustments(1) |  | 3 |  |  | 0 |  |  | 0 |  |  | 3 |
Balance as of December 31, 2019 |  | $ | 5,088 |  |  | $ | 4,645 |  |  | $ | 4,920 |  |  | $ | 14,653 |
Balance as of December 31, 2020 |  | $ | 5,088 |  |  | $ | 4,645 |  |  | $ | 4,920 |  |  | $ | 14,653 |
__________ (1)Represents foreign currency translation adjustments and measurement period adjustments on prior period acquisitions. The goodwill impairment test is performed as of October 1 of each year. An impairment of a reporting unit’s goodwill is determined based on the amount by which the reporting unit’s carrying value exceeds its fair value, limited to the amount of goodwill allocated to the reporting unit. The fair value of reporting units is calculated using a discounted cash flow methodology, a form of the income approach. The calculation uses projected cash flows based on each reporting unit’s internal forecast and uses the perpetuity growth method to calculate terminal values. These cash flows and terminal values are then discounted using appropriate discount rates, which are largely based on our external cost of equity with adjustments for risk inherent in each reporting unit. Capital is allocated based on each reporting unit’s specific regulatory capital requirements, economic capital requirements, and underlying risks. Consolidated stockholder’s equity in excess of the sum of all reporting unit’s capital requirements that is not identified for future capital needs, such as dividends, share buybacks, or other strategic initiatives, is allocated to the reporting units and Other category and assumed distributed to equity holders in future periods. Our discounted cash flow analysis requires management to make judgments about future loan and deposit growth, revenue growth, credit losses, and capital rates. The reasonableness of our fair value calculation is assessed by reference to a market-based approach using comparable market multiples and recent market transactions where available. Intangible Assets In connection with our acquisitions, we recorded intangible assets including PCCRs, sponsorships, customer and merchant relationships, partnerships, trade names and other contract intangibles. At acquisition, the PCCRs reflect the estimated value of existing credit card holder relationships. Intangible assets are typically amortized over their respective estimated useful lives on either an accelerated or straight-line basis. The following table summarizes the actual amortization expense recorded for the years ended December 31, 2020, 2019 and 2018 and the estimated future amortization expense for intangible assets as of December 31, 2020: Table 6.3: Amortization Expense
(Dollars in millions) |  | Amortization Expense
Actual for the year ended December 31, |  |
2018 |  | $ | 174 |
2019 |  | 112 |
2020 |  | 60 |
Estimated future amounts for the year ending December 31, |  |
2021 |  | 20 |
2022 |  | 16 |
2023 |  | 13 |
2024 |  | 10 |
2025 |  | 9 |
Thereafter |  | 14 |
Total estimated future amounts |  | $ | 82 |

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