Bank of America Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangible Assets

Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2011

Goodwill and Intangible Assets [Abstract]

Goodwill and Intangible Assets

NOTE 10 – Goodwill and Intangible Assets

Goodwill

The table below presents goodwill balances by business segment at June 30, 2011 and December 31, 2010. The reporting units utilized for goodwill impairment tests are the operating segments or one level below. The Corporation performs its annual goodwill impairment test during the three months ending September 30, based on June 30 information.


	June 30		December 31
(Dollars in millions)	2011		2010

Deposits	$	17,875	$	17,875
Global Card Services		11,896		11,889
Consumer Real Estate Services		-		2,796
Global Commercial Banking		20,668		20,656
Global Banking & Markets		10,673		10,671
Global Wealth & Investment Management		9,928		9,928
All Other		34		46

Total goodwill	$	71,074	$	73,861

In connection with the sale of Balboa Insurance Company’s lender-placed insurance business that closed on June 1, 2011, the Corporation allocated $193 million of CRES goodwill to the business in determining the gain on sale based upon the relative fair value of the business sold.

During the three months ended June 30, 2011, as a consequence of the BNY Mellon Settlement entered into by the Corporation on June 28, 2011, the adverse impact of the incremental mortgage-related charges recorded during the three months ended June 30, 2011, and the continued economic slowdown in the mortgage business, the Corporation performed an impairment test for the CRES reporting unit on the remaining goodwill balance of $2.6 billion. Based on the results of step one of the impairment test, the Corporation determined that a step two analysis was necessary. In step two, the Corporation compared the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill and concluded that the remaining balance of goodwill of $2.6 billion was impaired as of June 30, 2011. Accordingly, the Corporation recorded a non-cash, non-tax deductible goodwill impairment charge of $2.6 billion to reduce the carrying value of the goodwill in CRES to zero during the three months ended June 30, 2011.

On June 29, 2011, the Federal Reserve issued a final rule which will be effective October 1, 2011 that establishes debit card interchange fees in connection with the Durbin Amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In light of the issuance of the final rules, the Corporation performed an updated impairment analysis for the Global Card Services reporting unit during the three months ended June 30, 2011.

In step one of the goodwill impairment test, the fair value of Global Card Services was estimated using the income approach. The significant assumptions under the income approach included the discount rate, terminal value, cash flow estimates and expected new account growth. The step one fair value estimate also included the impact of the Federal Reserve’s final rule on debit card interchange fees. At June 30, 2011, the carrying amount, fair value and goodwill for the Global Card Services reporting unit were $24.8 billion, $37.3 billion and $11.9 billion, respectively. The estimated fair value as a percent of the carrying amount was 150 percent. Although, the fair value exceeded the carrying amount in step one of the Global Card Services goodwill impairment test indicating no impairment, to further substantiate the value of goodwill, the Corporation also performed step two for this reporting unit. Under step two of the goodwill impairment test, significant assumptions in measuring the fair value of the assets and liabilities of the reporting unit, including discount rates, loss rates and interest rates were updated to reflect the current economic conditions. The results of step two of the goodwill impairment test indicated that the remaining balance of goodwill of $11.9 billion was not impaired as of June 30, 2011. Given the recent Federal Reserve rulemaking and improved economic environment, the uncertainty concerning the recoverability of Global Card Services goodwill has been significantly reduced.

Intangible Assets

The table below presents the gross carrying amounts and accumulated amortization related to intangible assets at June 30, 2011 and December 31, 2010.


	June 30, 2011				December 31, 2010
	Gross		Accumulated		Gross		Accumulated
(Dollars in millions)	Carrying Value		Amortization		Carrying Value		Amortization

Purchased credit card relationships	$	7,179	$	4,372	$	7,162	$	4,085
Core deposit intangibles		5,394		4,253		5,394		4,094
Customer relationships		4,229		1,440		4,232		1,222
Affinity relationships		1,649		969		1,647		902
Other intangibles		3,091		1,332		3,087		1,296

Total intangible assets	$	21,542	$	12,366	$	21,522	$	11,599

None of the intangible assets were impaired at June 30, 2011 or December 31, 2010.

Amortization of intangibles expense was $382 million and $767 million for the three and six months ended June 30, 2011 compared to $439 million and $885 million for the same periods in 2010. The Corporation estimates aggregate amortization expense will be approximately $370 million for each of the remaining quarters of 2011, and $1.3 billion, $1.2 billion, $1.0 billion, $890 million and $785 million for 2012 through 2016, respectively.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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